Self-employment taxes are substantial, and most people want to minimize them. Self-employed taxpayers often avoid self-employment taxes by operating as an S corporation. The distributions from the S corporation are not subject to self-employment tax. But Social Security and Medicare tax must be paid on the shareholders’ employee compensation (which must be reasonable based on...Continue reading
Q&A: Home-Office Deduction for Orthodontist Question: Bob, an orthodontist, wants to claim a home-office deduction. His employees and contractors do the billing and accounting for his practice. Bob and his wife (who is an employee) do payroll once a month in the home office. Bob’s primary use of the home office is preparing treatment plans...Continue reading
In Chief Counsel Advice (CCA) 202151005, the IRS opined on this issue. But before we get to what the IRS said, understand that the CCA’s conclusions cannot be cited as precedent or authority by others, such as you or your tax professional. Even so, we always consider what the CCA says as semi-useful information, so here’s some...Continue reading
Question: Can you deduct a home office if you also have a non-home office? Answer: Yes! As the tax reduction specialists for the self-employed we navigate through the home office deduction issues regularly. We know what the IRS looks for and what you will not get away with. SO let's make sure your tax reduction...Continue reading
What Are Self-Employment Taxes? Do I Pay Them? Self-employment taxes are to individual business owners what payroll taxes are to employers and employees. They fund Social Security and Medicare. All individuals with self-employment income must pay self-employment taxes, regardless of their age. When business owners reach retirement age, they’ll be able to collect Social Security...Continue reading
Question from a Cleveland small business owner: How do I pay my daughter? I will hire my 15-year-old daughter to work in my single-member LLC business, and I expect to pay her about $12,000 this year. Do I pay her through payroll checks and file a W-2? W-2 Payment is Important When Paying Your Daughter...Continue reading