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What is a disregarded Entity?

A disregarded entity refers to a business entity with one owner that is not recognized for tax purposes as an entity separate from its owner.  A single-member LLC ( “SMLLC”), for example, is considered to be a disregarded entity.  For federal and state tax purposes, the sole member of a SMLLC disregards the separate legal status of the SMLLC otherwise [...]

How the IRS knows you didn’t report income

Unreported income is huge deal to the IRS. The agency recently estimated that the U.S. loses hundreds of billions per year in taxes due to unreported income. Considering the amount of lost revenue, it’s not surprising that the IRS has a process for determining unreported income.

When it suspects a taxpayer is failing to report a significant amount of income, it [...]

ESPP’s tax impact explained

Buying company stock at a discount

Many large companies offer Employee Stock Purchase Plans (ESPP) that let you buy your employer’s stock at a discount. These plans are offered as an employment incentive, giving you an opportunity to share in the growth potential of your company’s stock (and by implication, work hard to keep the stock price moving ahead).

Usually, you make [...]

Could Obamacare spell a tax surprise for you?

One of the features of the Patient Protection and Affordable Care Act (PPACA, also called Obamacare) passed in 2010 is the application of subsidies for those who need help paying insurance premiums. For those who need to purchase health insurance on an exchange, subsidies can help reduce the amount paid for premiums.

Subsidies are based on income, however, and that means [...]

Affordable Care Act’s Tax Effects

The Obama administration’s Affordable Care Act — including its penalty provision — is in effect for the first time this year and will be reconciled through a person’s tax return.

For most taxpayers, this will simply mean checking a box on a tax return indicating they had insurance for the full year. But millions of others will have to grapple with [...]

Is Social Security taxable?

It all depends on your income and filing status. If you file taxes as an individual and your combined income — that’s your adjusted gross income plus one half of your annual Social Security benefit — is less than $25,000, you won’t pay federal income taxes on your benefits.

But once you get past that $25,000 mark, that’s when you start seeing taxes. [...]

Things that make you go hmmm?

Things that make you go hmmm?
1. What can I deduct on my tax return?
Depends on your situation, but some examples: mortgage interest, property taxes, business related unreimbursed expenses, uniforms, dues, etc…

2. Can I contribute to an IRA or a ROTH IRA?
Yes you can and depends on income level. $5,500 is the lmit

3. Will I fall under AMT in 2014?
Yes you [...]

Things that make you go hmmm?

Things that make you go hmmm?

1. What can I deduct on my tax return?
2. Can I contribute to an IRA or a ROTH IRA?
3. Will I fall under AMT in 2014?
4. Is it a good idea to take early with drawls from a 401k?

Stay tuned for answers… [...]

Trak Patel’s Top 10 Tax Preparation Tips

Top 10 Tax Preparation Tips

Keep good records of miles driven for business
Keep all your receipts for key expenses
Take advantage of IRA contributions and build a nest egg
Take advantage of college savings plans (e.g. 529)
Watch those home office deductions carefully
Make sure you have medical insurance or pay tax penalty
Make estimated tax payments to minimize penalties and interest charges
Did you buy a [...]