Many of the tax provisions under tax reform were favorable to small business owners including those relating to using a car for business. Here’s what you need to know.

1. Section 179 Expense Deduction

If you bought a new car in 2018 and use it more 50 percent for business use, you can take advantage of the Section 179 expense deduction when you file your 2018 tax return. Under Section 179 you can immediately deduct (rather than depreciating) the cost of certain property in the year it is placed in service. In 2018, the Section 179 expense deduction increases to a maximum deduction of $1 million of the first $2,500,000 million of qualifying equipment placed in service during the current tax year. It is indexed to inflation for tax years after 2018.Continue reading

If you’re like most small business owners, you’re always looking for ways to lower your taxable income. Here are five ways to do just that.

1. Deducting the Cost of a Home Computer

If you purchased a computer and use it for work-related purposes, you can take advantage of the Section 179 expense election, which allows you to write off new equipment in the year it was purchased if it is used for business more than 50 percent of the time (subject to certain rules).Continue reading

With the price of Bitcoin hitting record highs in 2017, many Bitcoin holders cashed out not realizing the impact it could have on their tax bill. Many people, for example, did not understand that it was a reportable transaction and found themselves with a hefty tax bill–money they may have been hard-pressed to come up with at tax time. Others may have been unaware that they needed to report their transactions at all or failed to do so because it seemed too complicated.

The good news is that if you failed to report income from virtual currency transactions on your income tax return, it’s not too late. Even though the due date for filing your income tax return has passed, taxpayers can still report income by filing Form 1040X, Amended U.S. Individual Income Tax Return.Continue reading

Compiled annually by the IRS, the “Dirty Dozen” is a list of common scams taxpayers may encounter. While many of these scams peak during the tax filing season, they may be encountered at any time during the year. Here is this year’s list:

1. Phishing

Scam artists continue to victimize taxpayers during filing season using a steady onslaught of new and evolving phishing schemes. Email phishing schemes target payroll professionals, human resources personnel, schools as well as individual taxpayers and even tax professionals, deploying various types of phishing emails in an attempt to access client data. Thieves may use this data to impersonate taxpayers and file fraudulent tax returns for refunds.

In the most recent scam, thousands of taxpayers have been victimized by an unusual scheme that involves their own bank accounts. After stealing client data from tax professionals and filing fraudulent tax returns, the criminals use taxpayers’ real bank accounts to direct deposit refunds. Thieves are then using various tactics to reclaim the refund from the taxpayers, including falsely claiming to be from a collection agency or representing the IRS.

Fake emails and websites also can infect a taxpayer’s computer with malware without the user knowing it. The malware gives the criminal access to the device, enabling them to access all sensitive files or even track keyboard strokes, exposing login information.Continue reading

Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, and rent, as well as gains from the sale of assets, prizes and awards. You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough.

Filing and Paying Estimated Taxes

Both individuals and business owners may need to file and pay estimated taxes, which are paid quarterly. In 2018, the first estimated tax payment is due on April 17, the same day tax returns are due. If you do not pay enough by the due date of each payment period you may be charged a penalty even if you are due a refund when you file your tax return.

If you are filing as a sole proprietor, partner, S corporation shareholder, and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return.Continue reading

The Bipartisan Budget Act of 2018 (BBA) retroactively extended a number of tax provisions through 2017 for individual taxpayers. Let’s take a look at five of them.

1. Mortgage Insurance Premiums
Homeowners with less than 20 percent equity in their homes are required to pay mortgage insurance premiums (PMI). For taxpayers whose income is below certain threshold amounts, these premiums were deductible in tax years 2013, 2014, 2015, 2016 and now, once again in 2017. Mortgage insurance premiums are reported on Schedule A (1040), Itemized Deductions, under “Interest You Paid.”

2. Exclusion of Discharge of Principal Residence Indebtedness
Typically, forgiven debt is considered taxable income in the eyes of the IRS; however, this tax provision was retroactively extended through 2017. Homeowners whose homes have been foreclosed on or subjected to short sale are able to exclude from gross income up to $2 million of canceled mortgage debt.Continue reading

The Wheeler Accountants team took a short break from preparing tax returns to participate in our first annual Tax Season Olympics. Team members participated in four challenging events. The first event was a 10-key race, where participants had to add a list of numbers and were scored on time and accuracy. The second event required participants to bind multiple tax returns in the shortest amount of time. The third event was a ribbon and blue folder dancing team event. This dancing event let our staff members creativity shine. The scoring was based on creativity, talent, and the ability to make others laugh. The fourth event was Nerf Gun Relay, where teams competed for accuracy and fastest time. The medals were awarded to the following:

• 10-Key Race (Individual)
  • Gold – Kim
  • Silver – Will
  • Bronze – Jenna
• Tax Return Binding (Team)
  • Tax that Asset Baby
    • Ahn
    • Maryam
    • Jennifer
    • Joe
• Ribbon and Blue Folder Dancing (Team)
  • Wheeler Dealers
    • Anthony
    • Lyric
    • Payal
    • Linda L.
• Nerf Gun Relay (Team)
  • Taxmanian Devils
    • Kim
    • Will
    • Jenna
    • Nick
• Overall Team Winner
  • Taxmanian Devils
  • • Kim
    • Will
    • Jenna
    • Nick

See the pictures of Tax Season Olympics below: