I graduated from an HBCU (Prairie View A&M).
To all of my friends that went to a PWI, trust me when I say the education and class work at an HBCU is just as tough as it is at a PWI.
STOP LOOKING AT HBCU GRADS AS A SECONDARY OPTION TO PWI GRADS FOR TALENT!!!
The IRS announced inflation adjustments for things like:
-Tax Brackets
-Standard deductions
-Estate and Gift exemptions
-Retirement contribution limits
But decided NOT to update the $3k capital loss deduction, which has been the same since 1978 and would be nearly $14k today!
If you want to take full advantage of the tax code, you will have to be one of two things:
1. Business owner
2. Real estate investor
Doing one these things opens you up to tons of different tax strategies.
Here are the best tax incentives available for only these 2 groups.
Did you know the $3,000 capital loss deduction hasn’t been updated since 1978?!
$3,000 in 1978 would be worth nearly $14,000 today!
Someone tell congress to update the capital loss deduction.
$3,000 is really not much.
Got to welcome our third little blessing, Jacob Patrick Dougherty, into the world last night.
Zone defense is now in full effect😆
Do y’all think he got his good looks from daddy or momma?
If you support the 49ers, we can still be friends
If you support the Swifties (Chiefs), we can still be friends
But if you leave me for TurboTax, then come back and ask me to “double check” your return to make sure you did it correctly, you are dead to me
Had a chat with a new client that recently purchased a vehicle that cost them nearly $100k because “I’ll deduct it on my taxes”.
They are currently in the 12% marginal tax bracket🤦🏻♂️
Needless to say they weren’t thrilled when I broke down the tax savings for them.
A recent tax court case decision denied a large deduction an S-Corp owner took implementing the 14 day Augusta Rule on their personal home.
The case is Sinopoli v. Commissioner.
Here’s the details and what they did wrong.
Several tax proposals just been brought before Congress and one of them is to make 100% bonus depreciation permanent.
This would be huge!
Some experts believe making 100% bonus depreciation permanent could create up to 73,000 full time jobs and could help increase overall GDP.
Lol they were upset because they sent me their stuff April 7th and got extended.
Then blamed me for not telling them I prepare taxes in the order I receive the info lol (how else am I supposed to do this?)
All this while I’m on vacation…
Y’all please stop getting these LLCs to get a business line of credit and think you don’t have to pay it back.
“BuT tHe lInE oF cReDiT iS iN tHe LlCs nAmE sO I’M nOt ReSpOnsIbLe”.
Wrong! And a recent court case just shed light on this, so take note.
Jacobwitz vs Commissioner:
Client: Here is all of my tax info.
Me: Ok, thank you. I’ll begin working but I can’t guarantee I’ll be done by the deadline.
Client: Not even by next Monday? Isn’t that plenty of time? That’s almost an entire week ahead of the deadline.
Me: 🖕🏻
Did you know…
Filing an extension does NOT increase your chance of being audited❓
In fact, many professionals believe it DECREASES your chance for audit🤯
So, for everyone out there freaking out because their tax pro wants to file an extension…. Trust me… it’s OK💯
I wish every person who makes below $100k per year knew that they could use up to $25k of passive losses from rental real estate they actively participate in to offset their W-2 income.
It’s the ultimate middle class wealth hack!
Me: *says something about tax
Them: But, are you a licensed CPA?
Me: I’m a licensed Enrolled Agent.
Them: You’re not a CPA so you don’t know what you’re talking about.
Me: I’m guessing you don’t know what an Enrolled Agent is🤦🏻♂️
The IRS sent out a reminder today for taxpayers to be very careful when choosing a tax preparer this season.
You are responsible for the information on your tax return, regardless of who prepares it so exercise your due diligence!
Ok, I’ll open myself up to getting roasted by
#taxtwitter
I have about 3 clients that are ghosting me for payment of 2022 tax prep.
Foolishly I sent in their returns to avoid late filing penalties only for them to ignore my emails asking for payment😅
Dudes have $38 withheld from their jobs all year, got no kids and still expects a $15,000 refund during tax time
Like no bro, you actually owe them an extra $17
The Section 121 Exclusion allows taxpayers to sell their primary residence and exclude up to $250k in gains ($500k if MFJ).
But did you know these numbers haven’t changed since 1997?
$250k in 1997 would be worth $475k today.
$500k would be $950k today🤯
Update Section 121!
The tax code most favors:
1. Business Owners
2. Real Estate Investors
There are tons of tax breaks for both of these groups, but here are 5 of the most common strategies used to pay less in tax.
I’m sure we’ve all heard the strategy about hiring your children to pay them a wage from your business to save on taxes.
Although this can be a great strategy, there is risk involved and some unlucky taxpayers have gotten this deduction tossed out before.
Let’s take a look:
IRC § 162 is an important section of the code as it allows business owners and RE investors to deduct ordinary and necessary expenses in the pursuit of profit.
What has been argued as ordinary and necessary has been interesting over the years.
Let’s look at some court cases.
I’ve been reviewing lots of different tax court cases lately and I’ve noticed the most commonly denied deductions are:
- Vehicle expenses
- Business meals
- Travel expenses
Did you know the IRS has strict documentation rules regarding these deductions?
Good morning to everyone except those that avoid making an additional $1,000 because it will put them in a higher tax bracket🤦🏻♂️
Not sure who need to hear this but moving into the next tax bracket does not mean all of your income is taxed at that new rate.
A thread:
August 2nd is a celebration in our household!
Today marks 3 years since we first got married.
Happy Anniversary honey! Time flies when you’re having fun 😆
Me: Your home office is pretty high as it’s nearly 40% of your entire living space. Are you sure these are the dimensions?
Them: Oh, can you please lower it to a smaller percentage? Let’s say 10%. That should be good, right?
Me: 🤦🏻♂️
If you are making $70k per year, you shouldn’t be financing a $70k car.
Heck, you shouldn’t even be financing a $50k car.
When you start to make good money, avoid that temptation to prove it.
FYI - Your bonus isn’t taxed more than your normal salary!
Federal law requires your employer to withhold an automatic 22% of your bonus.
If the withholding was too much, the additional taxes withheld can be claimed as a refund when you file your tax return.
A tax strategy that never gets old:
1. Married couple; one spouse has a high earning W-2 or cashflow from business
2. They invest in Real Estate and other spouse qualifies for REPS and manages properties
3. Utilize depreciation to generate non passive losses for tax savings
Did y’all know on June 12th 1967, nearly 3 years after the July 2nd 1964 Civil Rights Act, it became illegal to criminalize interracial marriages?
Loving vs. Virginia (the backstory is wild)
Happy Loving Day to beautiful wife🥰
I’m a family man first.
Society will tell you how expensive children are (and they are lol) but no amount of money can replace the amount of love these little blessings have.
Can’t wait until our newest member of the family can join us!
I once read the average person will spend 12 years working to pay their lifetime tax bill.
That didn’t sit right with me.
That’s why I started this page, to teach people how to keep more money by saving on taxes.
Here’s 7 things you should know about how our tax system works🧵
Wife and I are considering selling our home, which has about $150k in equity which we could capture tax free.
$150k tax free would be huge for us!
But we can’t decide whether to sell and walk with the gains tax free or turn it into a rental.
Decisions, decisions.
Had a client get upset because I put their long term rentals on a Schedule E.
Their reasoning…. Last year they put it on Schedule C so I was able to deduct the loss against my W-2.
🤦🏻♂️
It's honestly pretty crappy that teachers can only deduct up to $300 of out of pocket expenses they pay for their classroom when some spend well over $1,000 throughout the year on their room and students.
It's almost like they want the teachers to not care.
Well, my wife’s water broke and we are getting admitted to the hospital.
Just to let y’all know, if she is born tomorrow on July 4th, her name is going to be…
Lovey Emma “Miss ‘Merica” Dougherty 😆
Using bonus depreciation to offset your income is great.
Paying it all back when you sell as depreciation recapture is not so great.
If you aren’t careful, your recapture tax may be greater than your original savings.
Here what you need to know:
Needless to say this was pretty stressful and for them to not even walk back any of their comments for a silly mistake that was theirs…
I’m considering just refunding them their money and firing them
What say you
#taxtwitter
?
Say it with me…
“In 2024, we are not going to just spend money because it’s a ‘write off’”
We will spend wisely and only use the excuse of a “write off” for things we actually need and help our business grow!
A common mistake I see when business owners hire their spouse is believing every meal they eat together and “talk business” over makes it deductible.
“But Grant, we really were talking about business though”.
Ok, let’s look at old court cases to see how this would go down.
Here is how much in taxes a single individual (no dependents) will pay on $100,000 of the following types of income in 2022.
-W-2
-Self employment/Small Business
-Passive (rental, interest, short term capital gain, etc)
-Long Term Capital gains
(Assuming no state income tax)
The IRS has ordered an immediate stop to processing new Employee Retention Credit claims.
They are currently working with the Justice Department to pursue criminal charges on hundreds of cases for fraud.
Choose your preparer wisely!
Just had the pleasure of finishing up a return that had approximately 25 rental units (8 of them newly acquired).
Nearly $400,000 of rental income wiped out by accelerated depreciation with cost segregation.
This saved them around $100,000 in federal taxes.
Woah!!
Not sure who needs to hear this, but generally you can’t do a 1031 exchange on a fix and flip property.
Section 1031 specifies that property held primarily for resale does not qualify.
Only properties held for investment or used in a trade or business qualify.
The IRS just announced that 20,000 Employee Retention Credit disallowance letters are being mailed out to taxpayers notifying them of disallowed claims.
Them: I just sent you my P/L for my S-Corp. I’d like to meet this week to finish everything. I’d really like to not have to get an extension.
Me: Too late😆
Why is it so important to tax plan before the end of the year?
Because finding out you potentially have a $10,000 tax liability 6 months before it’s due is way better than finding out on April 15th🥲
Tax planning gives you much needed transparency.
A lot of people ask, “Why should I donate my money? I’m not even itemizing.”🤔
When you are blessed, you should go out and share your blessings with others💯
There’s no better exercise for the soul than helping lift someone else up💪🏻
Getting the tax deduction is just a plus💰
I get remarks like this online all the time
But rarely ever do I hear this said in person
They are never this courageous in real life
But J, one thing about me is I don’t play about mine and I promise you I’ll put the fear of God in you should we ever get the chance to meet
The IRS hasn’t officially announced it yet, but here are the projected inflation adjustments for investment accounts in 2024:
401(k) - $23,000
Solo 401(k) and SEP IRA - $68,000
Traditional and Roth IRAs - $7,000
HSA - $4,150 (Single)/$8,300 (Family)
Me: What’s the tax entity of your business?
Them: “Oh, I’m an LLC.”🚩🚩🚩🚩
If you want to impress your tax pro, tell them your correct tax entity classification, not that you have legal protection.
✅Sole Proprietorship
✅Partnership
✅S-Corporation
✅C-Corporation
Our government received around $4.9 trillion in revenue in 2022 while spending nearly $6.13 trillion and being nearly $33.8 trillion in debt
This is like a household that makes $34k a year but spends $43k annually and has $236k of credit card debt
Ridiculous!
Nothing says “I don’t know what I’m talking about” like telling a tax person they will be out of a job if they abolish the IRS.
In fact, it only reminds me of why I have a job in the first place… because you don’t know what you’re talking about🤣
🚨Breaking Tax News🚨
The IRS announced a delay in the Form 1099-K reporting threshold for third-party platform payments for 2023.
Plans to raise the limit to $5,000 in 2024!
Why do you have me listed as single when I should be head of household?
If you recall, I own 2 homes and am the head owner of both of those homes so please change my filing status and let me know once completed.
🤦🏻♂️
Hey influencers,
When that fashion brand or jewelry designer sends you a “free gift” for you to promote, remember that it’s actually not free.
Any item that you receive from a brand in exchange for a review must be claimed as income using their fair market value.
We are more than halfway through 2023, which means it’s time to start preparing for the tax sunset occurring at the end of 2025.
What is the tax sunset?
It is the ending of nearly all of the temporary tax provisions the 2017 TCJA had implemented.
Here’s a few things watch for:
The IRS would rather find a sketchy tax preparer and audit the returns they file rather than select random individuals to audit.
This is why being wise when choosing your tax preparer is so important!
No one:
Absolutely no one:
Me when I pass a new construction:
“I wonder if they are going to bonus depreciate that building with a cost segregation analysis”.
Explaining to non-tax people that rental income isn’t subject to FICA so profiting $100k of rental income is taxed far less than $100k of business income is draining.
Talking about “ThEy NeEd a BeTtEr AcCoUnTaNt iF tHeY PaY tHaT mUch tax”.
You completely missed the point, huh?
One big drawback to S-Corps that is often not talked about is basis limitations.
Electing your business to be taxed as an S-Corp may not be a strategic idea if your business is operating at a tax loss because of these limitations.
Why?
Hey
@IRSnews
Teachers put in a lot of time, work, and money to only get a $250 deduction on their taxes‼️
Teachers don’t get enough credit (pun intended 😆) for helping craft our future leaders and problem solvers.
That $250 limit should be increased📈
Anyone else agree❓
For everyone out there that got PPP, ERC, EIDL, or any other Covid emergency relief funding…… hope you were doing everything by the books and not cutting corners.
Things are about to get hot in the kitchen.