– walkthrough by GP CPA

by | Feb 27, 2019 | Guides, Blog | 0 comments

Dear Client,

The is rather limited for your tax situation (and most people other taxpayers), especially in the trade-off between S-corp and schedule C.  The Schedule C offers better home office , but the overall tax bill is substantially higher due to the self-employment . Currently, the S-corp earnings are saving you about $XX,000 in Medicare that would otherwise be due if the COMPANY was not an S-corp. The would likely save you less than a couple of hundred dollars in overall .

The tax law changes for 2018 limited the itemized by capping the state income tax that can be deducted, thereby reducing the ability of anyone to itemize their . As long as your mortgage interest is more than $20,000 you will still be able to itemize, but the real estate and income withheld above $10K do not count anymore. The home office deduction is really limited by this measure because if your home office deduction rises, it also means that your itemized deductions are decreasing by roughly the same amount. It’s kind of a scenario where the home-related expenses can be taken on one place or another, but they cannot be more than the ultimate total house related deductions.

Depending on how aggressive you would like to be, there is the option of renting your house to the COMPANY for one day a month at the fair market value of your home. This is sometimes called the Agusta Rule, where the rental expense is deducted and the rental income to you personally is tax exempt. GP CPA has had clients pay anywhere from $1,500 per month to $2,000 a month for a one-day-a-month rental of their primary or secondary residence for corporate meetings/retreats. There is usually an agenda, meeting notes, and an attendance record to satisfy the IRS requirements for such a deduction, but not always. This option would certainly be available for 2019, and it could also be possible for 2018, although risky. Any expenses related to 2018 for this type of expenditure (so far after the fact) would most certainly be removed upon examination by either any taxing authority.

The issue of whether or not the expenses would be allowed or not allowed is based entirely on whether the IRS/ would examine your income tax returns in the next few years and require substantiation of those expenses. Some of our clients follow the documentation requirements to substantiate this rental expenses, others are taking the risk that the expense will be removed upon exam should that occur.  If you are interested, I can provide more details as to how this would work. We present this option to clients and let them decide if it fits within their risk tolerance.

 

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H. Johns
H. Johns
21:58 13 Jul 19
This firm is absolutely the best that I've dealt with when it comes to CPAs and financial advice. I'd gone to another CPA in the area for help with my small business during tax time, they stopped communicating and I was left with important documentation not filed and a lot of anxiety around what to do. My appointment with Justin was set up quickly and I was in within a couple days to sit down with him. When you first meet him, you get the impression that he's incredibly intelligent and knows what he's talking about. He took the time to guide me through each and every step that I needed to take to move forward and actually ended up saving me money. I am so grateful to him for his knowledge and professionalism. Total life saver! If you're a small business owner, you should not be taking your time, money or business anywhere else but GP CPA and their crew 🙂read more
Tina Simmons
Tina Simmons
13:38 17 May 19
This team is dedicated to their clients and committed to understanding your business and sharing their knowledge to help you succeed. I love working with these folks, they take the worry and uncertainty out of accounting and !read more
Bravo4 Autowerks
Bravo4 Autowerks
12:55 08 May 19
Gary and his team have been fantastic for me and my business. They respond well to all my questions, are very helpful and of course keep my financials in order. Highly recommended.read more
Queen City Newborn Care
Queen City Newborn Care
15:57 02 Apr 19
I was drowning before I met Justin. He totally transformed how I run my small business and has gotten me organized in ways I didn't even know were possible. I am so grateful for his advice and suggestions! This company is worth every penny.read more
Dennis Bloomberg
Dennis Bloomberg
16:01 26 Mar 19
Unfortunately, I found GMP when my mother passed. She had a trust set up and I had no experience with one. I received excellent advice prior to filing taxes, that allow for the transfer of assets with little tax implication. The tax process was simple for me, Justin took over once he had details and cleared up all question from filing our taxes. Thank you for a job well done!read more
Natalie Knight
Natalie Knight
15:35 21 Nov 18
Prusiensky CPA is up to date on technology. They handcraft a platform that works best for your company's accounting services. We really appreciate how hands on and quick their team is when replaying to any type of correspondence. Simply put, they care and want your company to succeed.read more
Ashlyn Lelej
Ashlyn Lelej
14:39 21 Nov 18
I highly recommend Justin at Prusiensky, CPA for all of your accounting and tax needs. I've been a client for over two years, and have been consistently impressed with their dedication to helping my business grow and be financially successful. His advice is invaluable. Thank you!read more
Bobby Nguyen
Bobby Nguyen
22:23 20 Nov 18
My partner and I started our very first small business last year. Justin has been a blessing to us. Being new at all of this, we didn’t understand much of how business taxes work. Justin explained and answer all of questions that we have. He took care of everything for us throughout the year and have made life so much easier for us. I couldn’t have asked for a better CPA. Highly recommended!read more
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March 2019 Tax Update. Home-office deduction and QBI
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