Recent Blog Posts

  • Pay the IRS or Lose Your Passport
    The IRS recently announced that the State Department will be denying and may revoke your passport if you have a seriously delinquent tax debt. A seriously delinquent tax debt is one where you owe more than $52,000 including interest and penalties). While this law has been on the books for some time the IRS recently started sending certifications of seriously delinquent taxpayers to the State Department last year. If you owe the IRS money and have plans to travel abroad, there are a couple of options which you can use to maintain or obtain a passport even through you may be a “seriously delinquent taxpayer.” Here are the most common options. Installment Agreement. Enter into an installment agreement with the IRS to re-pay the debt (e.g. a payment plan). So long as you are current on your installment agreement you can obtain or maintain your passport. An installment agreement is ... Read more
  • Avoiding problems with the IRS and the “Dirty Dozen”
    All of us want to save taxes, but at the same time stay out of trouble with the IRS. In fact, I would hope we would even have a higher standard of being honest in ethical in the manner in which we all report our income, deductions and file our tax returns. We live in an amazing country. Yes, it has it’s problems. But I don’t think many of us would trade our opportunities and freedom for citizenship in another country. So, let’s be honest on our tax returns. Let’s pay our fair share – but not a cent more! Here are the realities of what can happen if you push the envelope to far and get greedy in trying to save too much and sacrifice your morals and standards. Below are the top fraudulent practices the IRS is targeting known as the “Dirty Dozen.” But first, let’s look what ... Read more
  • Pay Your Taxes by Credit Card and Score Some Points!
    How many of you build, track and utilize credit card points for personal benefit?  It’s a great tax strategy (credit card point redemption benefits are currently tax-free), AND it’s an added bonus when you have to pay one of the most dreaded bills of the year. No matter how you file your income tax return—by mailing a paper copy or electronically—you can pay your taxes using a major credit card or a debit card online. Individuals can make these payments 24 hours a day, seven days a week, using certain cards as long as they follow the proper procedure. There are actually several advantages when turning to a credit card to pay your tax bill: Delay paying the actual cash for your taxes Hopefully get a lower interest rate than the IRS would give you if you were on a payment plan Avoid any penalties if you don’t have the ... Read more
  • What to do if You Can’t Pay Your Taxes
    Many of us at some point in our lifetime are going to experience at least one year where we are faced with a daunting tax bill. Even the most careful and successful people can have a problem paying their taxes due to an unforeseen situation. First, don’t stress…well, maybe a little. But there are things you can AND need to do that will lessen the pain, and frankly minimize any collateral damage. Next, always, and I mean always, file your personal and business tax returns by the final deadline (after extensions). Even if you can’t pay.  If you don’t file your tax return, it only makes things worse! The penalties for ‘Not Filing’ are far worse than for ‘Not paying’. Third, if you can, include as much of a partial payment as possible, and consider borrowing the funds for payment. As discussed below, just filing without full payment can ... Read more
  • 199A Deduction for Rental Real Estate Investors
    Unless you’ve been hiking through the Amazon jungle for the past year, you have most certainly heard about the Tax Cuts and Jobs Act (effective January 1, 2018). Furthermore, if you own a small business or own real estate, the topic of the 199A or 20% pass-through deduction has crossed your mind, or at least your email. This little gem called the 199A Pass Through is a 20% deduction off the bottom line profit of your business, but also comes with a lot of twists and turns and complexity. In fact, many don’t realize it also applies to rental property. That’s right! If you’re a landlord and have net rental income, you may qualify for one of the best tax benefits from the TCJA tax reform. Rental Real Estate under the New Law When the 199A was first passed, tax professionals didn’t think it would apply to passive income from ... Read more
  • New IRS Guidance on 20% Deduction for Rental Properties and Landlords
    If you are a landlord and you want to take advantage of one of the best tax benefits from tax reform, you need to know that the 20% deduction for small businesses can apply to rental real estate.   20% Deduction for Rental Real Estate   The Section 199A “Pass Through Deduction” offers up to a 20% deduction on  “Qualified Business Income” (QBI) operated by a sole proprietorship, partnership, LLC, S Corporation, Trust or estate.    Qualified Business Income was defined as any income from a qualified trade or business other than a specified service trade or business or the performance of services as an employee.   Even though prior court decisions had already confirmed that rental properties qualified as a trade or business, there was some uncertainty as to whether the IRS would extend the definition of QBI to include income from rental properties. In response, the IRS recently released ... Read more
  • Investing in Real Estate with an IRA: The Most Overlooked Opportunity in Real Estate
      IRAs are the most overlooked opportunity in real estate. Let me explain. First, there are over 9 Trillion Dollars in IRA accounts in the U.S. This number is staggering and makes IRAs one of the largest sections of investable cash in the world. Source, Investment Company Institute & Federal Reserve Board. But what does this have to do with real estate? Well, contrary to popular belief, IRAs have always been able to invest in and own real estate. They can own single family rentals, or flip properties, or own LLCs that own multi-family or commercial real estate. They can also invest as a private lender on real estate. At this point in the IRA and real estate conversion. I’m usually asked, why have I never heard of this before? Well, the major providers of IRAs have generally found real estate to be “administratively unfeasible” as it takes more ... Read more
  • The Domestic Asset Protection Trust may be Your most Effective Asset Protection
    The Domestic Asset Protection Trust is the most cutting edge and most affordable asset protection tool in America today. However, they aren’t statutorily recognized in each state, and because of this one has to be careful when and how to use this specialized trust. They are most commonly known as the DAPT and act as a type of trust that can give you significant asset protection in any type of lawsuit. They were created as one of the best ways to protect a personal residence from creditors, particularly in a situation where there is a great deal of equity in the home. The Basics The DAPT is a self-settled trust in which an independent trustee controls and/or distributes trust assets to the beneficiaries.  This allows the person who created the trust (known as the “settlor” or “trustor”), to reap the dual benefits of: (1) asset protection from outside creditors; and (2) ... Read more
  • 6 Ways to Protect Your Home From a Lawsuit
    For most of us, our home is one of our most valuable assets. It truly is our “castle,” but can also be one of our most vulnerable assets. Although we need to protect it at all costs, we face several dilemmas that create significant hurdles to protecting the complete value of our home. Is an LLC a solution for primary residence? First, I’m concerned about the LLC being a simple ‘silver bullet’ solution to protecting a home.  An LLC wasn’t designed or built for this purpose. The LLC is obviously perfect for income producing assets, or even a cabin, beach house, farm or 2nd home in a VRBO or Airbnb strategy. But how is a personal residence a business asset, it’s not. If I was a litigation attorney going after a debtor’s home in an LLC I would immediately attack the corporate veil and claim a co-mingling of personal and ... Read more
  • Choice of Entity – Is an S Corporation is right for you?
    I get asked almost daily if an S Corporation is a good fit for their business and I can tell you that there is a lot at stake. So much so, that it is well worth your time to know the basic differences between an S Corp and LLC before you ask a licensed professional for a recommendation. You are the captain of your own ship! You need to be able to determine if your professionals are advising you under standard and well recognized basic concepts. Surprisingly there are advisors across the country that miss the mark and give truly damaging advice that costs small business owners thousands of dollars. Here are five of the major factors that the lawyers at our office considers when making a recommendation of an S Corp to clients. Before proceeding further, I would like to clarify that when you have an LLC ‘taxed as ... Read more
  • Roth IRA Distributions Before Age 59 ½
    Every Roth IRA account owner knows that the main benefit of the Roth IRA is that there are no taxes due on withdrawals taken after the account owner is 59 ½. However, what taxes or penalties apply to distributions taken before the Roth IRA owner reaches 59 ½? Roth IRA distributions before age 59 ½ are broken into two categories, contributions and earnings.  Contributions Can Be Withdrawn Before 59 ½ Without Tax or Penalty The first first category is Roth IRA contributions. This category is distinct because these amounts have been subject to tax before the funds were included in the Roth IRA. The amounts withdrawn from a Roth IRA that do not exceed the amounts of Roth IRA contributions are not subject to taxes or penalties upon early distribution from the Roth IRA. However, any amounts distributed in excess of the Roth IRA contributions, which would typically be ... Read more
  • Roth IRA Distributions Before Age 59 1/2
    Do Taxes or Penalties Apply to My Early Roth IRA Distributions? Every Roth IRA account owner knows that the main benefit of the Roth IRA is that there are no taxes due on withdrawals taken after the account owner is 59 ½. However, what taxes or penalties apply to distributions taken before the Roth IRA owner reaches 59 ½? Roth IRA distributions before age 59 1/2 are broken into two categories, contributions and earnings.  Contributions Can Be Withdrawn Before 59 1/2 Without Tax or Penalty The first first category is Roth IRA contributions. This categories is distinct from the rest of the account because these amounts have been subject to tax before the funds were included in the Roth IRA. The amounts withdrawn from a Roth IRA that do not exceed the amounts of Roth IRA contributions are not subject to taxes or penalties upon early distribution from the Roth ... Read more
  • Why Starting a Small Business is the First Step in Building Wealth
    I realize this may sound cliché or even crazy, but the FIRST Step I have learned over my 18 years as an Attorney and CPA, is that if someone REALLY wants to build wealth and save taxes, they need to Start a Small Home Based Business. Please hear me out for those of you that work a ‘regular job’ and DON’T want a small business. Now, I’m not asking you to quit your ‘day job’, I’m just asking you to at least have a small business ‘on the side’. Read this article on ‘Why Quitting Your Day Job May Not Be a Good Idea”. HOWEVER, there are so many good reasons to have a small project brewing on the back burner, and very few reasons not to.  Some say it is too ‘risky’ in today’s economy to start a business.  I say it is too risky NOT to start a ... Read more
  • The Auto, SUV & Truck Deduction: Mileage or Actual?
    First and foremost, remember the auto deduction isn’t travel, but expenses for your car, truck or SUV. Also, remember this includes ALL your vehicles as long as they have some sort of business use, i.e. an RV, van, delivery truck or motorcycle used in your business (more articles to come)! Next, the law changed Big Time with the Tax Cuts and Jobs Act (TCJA) and from 2018 through 2023 the auto/truck/suv deduction is Amazing!! Things got a lot better for business owners with cars/autos…if not AT LEAST you have a lot more options. You can actually write-off a vehicle at lot faster and with bigger deductions! However, the big question that is always in my conversation with clients, which strategy is best: Mileage or Actual expenses. It’s not an easy question and lots of variables. Below I list 7 general rules that will help guide you through the decision process. But ... Read more
  • Utilizing a Strategic Plan in Your Business is Critical for Success
    Even experienced business owners can benefit from using a Strategic Plan as an integral part of their business. It is so difficult to manage all of the loose ends and chaos that can occur when running a small business. A “Plan” of any sort can help tremendously in creating success and reducing stress. A Strategic Plan is very different from a Business Plan. A Strategic Plan sets forth a timeline of specific tasks that need to be completed in order to make your Business Plan a reality. It’s a specific list of objectives to reach specific goals. Now once your business is up and going, we all know your Business Plan goes in the drawer and your Strategic Plan helps you implement what you conceived in the beginning. Essentially, I consider it in many ways a checklist of things that need to be completed in the next month, 3 months, ... Read more