Liz Smith, CPA, MSTFP

CCH Axcess Tax, a cloud-based professional tax preparation software for accounting firms of any size, is a single component of the full firm management system offered by CCH. Having worked with small firms, my opinion is that those with fewer than 100 clients may find some of the firm management components to be cost-prohibitive. Pricing…

The net investment income tax (NIIT) is an additional 3.8% tax on top of your regular income tax. It applies to investment income like dividends and interest. This tax can impact any taxpayer with income above thresholds assigned by the IRS to each filing status. The applicability threshold for NIIT is $250,000 for married taxpayers…

Active participation in rental property requires an individual to own at least 10% of the rental property and participate in management decisions regarding the property. By actively participating, the rental property owner receives a $25,000 rental loss allowance that permits the deduction of up to $25,000 in rental losses against nonpassive sources of income like…

Section 179 and bonus depreciation are two advantageous tax deductions for optimizing your tax savings. By claiming either or both of these deductions on your tax return, you can more quickly deduct a substantial amount of your acquisition cost. While Section 179 and bonus depreciation are similar, there are differences in the calculation, limitations, and…

Our guide walks you through how to complete Form 4835, from getting the form, providing identifying business information, and completing the parts, to filing the form. The form is generally used by farm owners who receive a portion of farming profits in place of rental payments but don’t conduct the farming operations themselves. The rental…

Qualified Improvement Property (QIP) is an asset classification for certain property improvements made to the interior of a nonresidential real estate building. The improvements must be installed after the taxpayer placed the building in service and have a 15-year tax life. QIP can be depreciated using both bonus and section 179 depreciation—these methods allow taxpayers…

From personal experience, I can attest that the IRS is fairly vigilant about disallowing expenses that do not meet the criteria for deduction. Deductible business expenses must be both ordinary and necessary. This means that deductible expenses should be customary for the industry in which the business operates, and the expenses should be useful. Expenses…

Employers claiming a $2,400 Work Opportunity Tax Credit (WOTC) for hiring felons must follow a strict set of procedures to qualify for the credit. The first step is to have the potential employee complete IRS Form 8850 before offering them employment. You’ll then need to have the qualifying candidate certified by the state and file…

Federal tax credits and deductions both reduce tax owed, but each provides tax savings in a different way. Tax deductions reduce the income subject to tax. Tax credits reduce the tax owed on the income and, in some instances, may result in a refund even when no tax is owed. Determining Your Marginal Tax Rate…

In this article, we explain how to fill out Schedule F for reporting farming and agricultural income and expenses. In accordance with the IRS’s Schedule F instructions, the information below includes details on document assembly, form completion, and filing. As an additional resource, we’ve provided a sample completed form. Step 1: Assemble Supporting Workpapers It…

Operating a limited liability company (LLC) comes with the advantages of limited liability protection, ease of setup, flexibility in ownership type, and the ability to specially allocate distributions. Meanwhile, drawbacks include inconsistency in state law, finite entity life, and self-employment tax. While an LLC does have disadvantages, the benefits frequently outweigh the cons for small…

A limited liability company (LLC) is a form of business that protects a business owner’s personal assets from legal claims against the business. Unlike with limited partnerships, protection extends to all members of the LLC, including those with managerial authority. If the election to tax the LLC as an S corporation (S-corp) is made, then…