If So, Your 20% Flow-Through Tax Deduction May Be Limited
- 20% Flow-Through Deduction
- Qualified Trade or Business
- Specified Service Trade or Business
- Deduction Table
- Listing of Service Businesses
If So, Your 20% Flow-Through Tax Deduction May Be Limited
“Home office” is a type of tax deduction that applies to the business use of a home; the space itself may not actually be an office. This category also includes using part of a home for storing inventory (e.g., for a wholesale or retail business for which the home is the only fixed location); as a day care center; as a physical meeting place for interacting with customers, patients, or clients; or the principal place of business for any trade or business.
Generally, except when used to store inventory, an office area must be used on a regular and continuing basis and exclusively restricted to the trade or business (i.e., no personal use). Two methods can be used to determine a home-office deduction: the actual-expense method and the simplified method.
Actual-Expense Method – The actual-expense method prorates home expenses based on the portion of the home that qualifies as a home office; this is generally based on square footage. These prorated expenses include mortgage interest, real property taxes, insurance, heating, electricity, maintenance, and depreciation. In the case of a rented home, rent replaces the interest, tax, and depreciation expenses. Aside from prorated expenses, 100% of directly related costs, such as painting and repair expenses specific to the office, can be deducted.
Simplified Method – The simplified method allows for a deduction equal to $5 per square footage of the home that is used for business, up to a maximum of 300 square feet, resulting in a maximum simplified deduction of $1,500.
Even if you qualify for a home-office deduction, your deduction is limited to the business activity’s gross income—not, as many people mistakenly believe, its net income. The gross-income limitation is equal to the gross sales minus the cost of goods sold. This amount is deducted on a self-employed individual’s business schedule.
The good news is that, under the tax reform, the home-office deduction is still allowed for self-employed taxpayers. The bad news is that this deduction is no longer available for employees, at least for 2018 through 2025. The reason for this change is that, for an employee, a home office is considered an employee business expense (a type of itemized deduction); Congress suspended this deduction as part of the tax reform.
If you have concerns or questions about how the home-office deduction applies to your specific circumstances, please give this office a call.
Isler Northwest LLC is a firm of certified public accountants and business advisors based in Portland, Oregon. Our local, regional, and global resources, our expertise, and our emphasis on innovative solutions and continuity create value for our clients. Our service goals at Isler NW is to earn our clients trust as their primary business and financial advisors.
1300 SW 5th Avenue
Portland, Oregon 97201
With all of the tax reform changes and the corresponding reductions in most taxpayers’ income tax withholding, there are serious concerns that the reduction in withholding, although providing more take-home pay now, could end up resulting in unexpected taxes due at tax time next year. For that reason, taxpayers should be overly cautious about their payroll withholding for 2018. One need only look at the W-4 instructions to realize that an individual without any substantial tax training can quickly become lost when filling out the worksheets. It is not business as usual. Read more
Article by Jared Hecht | Found on Entrepreneur
If you’re a business owner, there are dozens of reasons to have a credit card. For one thing, they are a great way to keep track of all your business expenses in one place. They also offer opportunities to earn points or rewards on purchases you would make anyway. Not to mention, they can be an excellent option for financing your business, especially if you are in the startup phase and can’t yet qualify for a small business loan. Read more
Hyderabad rape case: Yet, another rape case in brought ahead in front of you. But, this time it’s not Delhi, but it’s Hyderabad- the pearl city. The incident took place in the city where 30 years old coward was arrested for helping his friend to rape his wife. Mohammed Saleemuddin, 30 years old was married and living in Hyderabad. His close friend Chand Pasha, who was badly addicted to pornography, has raped his wife with the help of Mohammed. My review here on a complaint was then filled against the culprits by the victim with an allegation that she was raped and his husband has helped the rapist. Not only this, she also made the complaint saying that he was a drug habitant and use to consume pills and behave erratically. There was also hard pressure to get involved having sex with other men says the victim.
After giving such complaint, the police team has held the husband but the rapist friend is still absconding. The Wife, who was the victim gave a statement saying, “He (husband) told me that a woman maintains multiple sexual parts was common in the West. He once urged me to have sex with a friend while he was present in the same room.” As per the sources, the husband got addicted to taking drugs in Australia where he got addicted and continued with the same after coming back.
He used to take hard drugs -says the victim!
The victim wife was bearing lot of harassment from her husband and one fine day unable to bear the harassment has complained Seleemuddin’s mother about the same. His mother on the other side has dismissed her concerns. The victim was also asked to obey what her husband says as this would help them get the financial benefits says the victim. On the entire matter, the South Zone police are investigating the matter and say that the harassment started right before the marriage. The victim’s complaint has been logged and strict action will be imposed against the culprits says the south Zone police team.
Article By Sarah Landrum | Found on Forbes
Millennials. They grow up so fast. America’s “Generation Y” is now moving into management roles in the workplace. They’re also starting families. And all this “grown-up stuff” inevitably means one thing for them — Goodbye, work-life balance.
The generation who works harder for less money than Boomers now needs to juggle the responsibilities of gainful employment as well as leading their households. One ever-more-popular solution for reclaiming a few hours throughout the week is working from home. And millennials are making it work for them in a big way.
Right now, about a third of working millennials say achieving and maintaining this balance feels out of reach, which is probably why, as of 2015, the average worker in the U.S. telecommutes to work two days out of each month and why WFH has risen in popularity by 80% in just a little over 10 years. Read more
Article by Maya Kachroo-Levine | Found on Forbes
Early retirement is a goal most people talk themselves out of before ever starting. It involves making lifestyle changes in order to accommodate hard-to-reach savings goals, and often going to extreme lengths to pay off debt quickly. The upside, of course, is shaving 10-30 years off your workload. I’ve interviewed people who are just starting to plan for an early retirement, and others who have already successfully retired before 30. From them, I’ve gleaned some of the dos and don’ts of retiring early. If you want to pursue early retirement, here are eight things that may be holding you back.
By Robert Trinz | Article Featured on AccountingToday
The new year promises to be an challenging one for tax practitioners, as President-elect Trump and Congressional Republicans have promised to enact a significant tax reform package in 2017. However, even if there is no new law, practitioners still will have to cope with a number of tax changes that go into effect for the first time this year or apply for the first time for tax returns filed this year.
This article is a roundup of these tax changes, other than indexing changes and changes created by Congress’s failure (as of now), to enact an extenders package to revive tax provisions that expired at the end of 2016. (You can see an abridged list of the new items here.) Read more