Many taxpayers who earn freelance or contractor income are surprised when they see the self-employment tax on their return. After learning that self-employment tax is roughly 15.3%, a common question quickly follows: “Is there another way to calculate it?” In some cases, taxpayers have heard about something called an “optional method” for determining self-employment tax. [...]
Small business owners often pay business expenses personally—fuel, travel, office supplies, or equipment—and later reimburse themselves from the business. But whether those reimbursements are tax-free or taxable income depends on whether the business follows the IRS rules for an accountable plan. When properly structured, an accountable plan allows employees—including owner-employees of S corporations—to receive reimbursements [...]
Many employees assume that everything they receive from an employer is taxable compensation. While wages and bonuses are clearly taxable, the Internal Revenue Code provides several exceptions. One of the most practical and commonly misunderstood is the rule governing fringe benefits, especially “de minimis” fringe benefits under Internal Revenue Code §132. These benefits are small [...]
Many investors and startup founders are surprised to learn that the Internal Revenue Code contains a powerful tax incentive that can allow certain business owners to exclude up to 100% of capital gains from federal income tax. This rule, found in Internal Revenue Code §1202, applies to Qualified Small Business Stock (QSBS) and is one [...]
Natural disasters, fires, floods, hurricanes, and theft can cause devastating financial losses. Many taxpayers assume the federal tax code automatically allows them to deduct those losses. However, the Tax Cuts and Jobs Act (TCJA) significantly limited casualty loss deductions for individuals. Understanding when a casualty loss is deductible—and when it is not—is critical for taxpayers [...]
In recent years, political debates about tariffs have intensified. Supporters sometimes describe tariffs as a way to “equalize” trade or force foreign countries to pay more, while critics argue that tariffs ultimately fall on American consumers and businesses. But what does the law actually say? And are there really “tariff equalization payments” that benefit Americans [...]
Many taxpayers assume that if they arrange for income to be paid to someone else—such as a spouse, child, or business entity—they can avoid paying tax on that income themselves. However, federal tax law contains a long-standing principle known as the Assignment of Income Doctrine, which prevents taxpayers from shifting taxable income to another person [...]
Many taxpayers assume that if they receive money back—such as a refunded deduction, reimbursed expense, or recovery from a lawsuit—it must automatically be taxable income. In reality, U.S. tax law follows a doctrine known as the Tax Benefit Rule, which determines whether a later recovery must be included in income. Understanding this rule is important [...]
Divorce is already emotionally and financially complex. One of the most misunderstood tax consequences of divorce today is the treatment of alimony (spousal maintenance) after the 2017 Tax Cuts and Jobs Act (“TCJA”). Although many taxpayers still assume alimony is deductible to the payor and taxable to the recipient, that is no longer true for [...]
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