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Message
Favorite/go-to tax deductions/loopholes? 1099/self-employed
Posted on 8/1/21 at 2:31 pm
Posted on 8/1/21 at 2:31 pm
Planning ahead here for EOY 2021. As the title states, what are your favorite tax deductions and/or relatively unknown deductions? 1099 contractors/self employed. I'll keep a running list below.
- Standard itemized business deductions
- HSA contributions
- SEP/Traditional IRA contributions
- SOlo 401k
- Bonus depreciation of equipment/vehicles 6,000+ ibs GVWR
- Professional certifications
- CPA fees
- Home office
- Equipment (laptops, machines, etc)
- Employee salary
- Sponsorships/donations
- Employer portion of payroll taxes
- Cell phone
- Internet
- Mileage reimbursement to employee
- Daycare
For Real Estate Investments:
- Accelerated depreciation of real estate investments
- Property Management
- Taxes
- Insurance
- Interest
- Maintenance
- Standard itemized business deductions
- HSA contributions
- SEP/Traditional IRA contributions
- SOlo 401k
- Bonus depreciation of equipment/vehicles 6,000+ ibs GVWR
- Professional certifications
- CPA fees
- Home office
- Equipment (laptops, machines, etc)
- Employee salary
- Sponsorships/donations
- Employer portion of payroll taxes
- Cell phone
- Internet
- Mileage reimbursement to employee
- Daycare
For Real Estate Investments:
- Accelerated depreciation of real estate investments
- Property Management
- Taxes
- Insurance
- Interest
- Maintenance
This post was edited on 8/1/21 at 10:25 pm
10
Posted on 8/1/21 at 9:09 pm to StealthCalais11
No, I don’t own crypto.
Posted on 8/1/21 at 9:18 pm to StealthCalais11
No need to concentrate on tax deductions---most are simply postponement of taxes. Do you think tax rates will be less, for example, in the future when you sell that property you took accelerated depreciation on??? You have to recapture the depreciation you took up to the sale price and pay the ordinary rate then.
Concentrate on CASH profits, pay your taxes and go on.
We take 179 and the like but I rarely plan around it for the reason it is really just "save now","pay latter".
Concentrate on CASH profits, pay your taxes and go on.
We take 179 and the like but I rarely plan around it for the reason it is really just "save now","pay latter".
Posted on 8/1/21 at 9:27 pm to StealthCalais11
well, i am a w2 employee for my corporation so i am self employed
so some deduction are (these apply to w2 or k1 side of company) :
solo401k
professional certifications, etc
CPA fees
home office
equipment (laptops, machines, etc)
employee salary
sponsorships/donations
employer portion of payroll taxes
cell phone
internet
mileage reimbursement to employee
daycare
you already covered vehicles and real estate. but on RE you left out PM, taxes, insurance, interest, maintenance, etc.
so some deduction are (these apply to w2 or k1 side of company) :
solo401k
professional certifications, etc
CPA fees
home office
equipment (laptops, machines, etc)
employee salary
sponsorships/donations
employer portion of payroll taxes
cell phone
internet
mileage reimbursement to employee
daycare
you already covered vehicles and real estate. but on RE you left out PM, taxes, insurance, interest, maintenance, etc.
This post was edited on 8/1/21 at 9:42 pm
Posted on 8/1/21 at 9:35 pm to I B Freeman
quote:
You have to recapture the depreciation you took up to the sale price and pay the ordinary rate then.
not with 1031
get back to your chinese trinket business on reddit
Posted on 8/1/21 at 9:39 pm to StealthCalais11
Yep, my TBM940 write off
Posted on 8/1/21 at 9:40 pm to I B Freeman
quote:
Do you think tax rates will be less, for example, in the future when you sell that property you took accelerated depreciation on??? You have to recapture the depreciation you took up to the sale price and pay the ordinary rate then.
Never selling or 1031’ing in perpetuity. My heirs can reap the benefits of step-up basis.
Posted on 8/1/21 at 9:43 pm to StealthCalais11
quote:
Never selling or 1031’ing in perpetuity.
Posted on 8/1/21 at 9:45 pm to Fat Bastard
Thanks for the input Fat Bastard. I left out the general points you mentioned, as I was gearing mainly towards little known/borderline exploitative deduction loopholes.
I have a follow up meeting with my CPA September 1 to discuss a Q4 game plan, as I have a significant tax burden to mitigate.
I have a follow up meeting with my CPA September 1 to discuss a Q4 game plan, as I have a significant tax burden to mitigate.
This post was edited on 8/1/21 at 9:48 pm
Posted on 8/1/21 at 9:50 pm to StealthCalais11
quote:
Thanks for the input Fat Bastard. I left out the general points you mentioned, as I was gearing mainly towards little known/borderline exploitative deduction loopholes.
gotcha
quote:
I have a follow up meeting with my CPA September 1 to discuss a Q4 game plan, as I have a significant tax burden to mitigate.
understood. yes. a good CPA is worth it. Mine is fabulous. good luck!
maybe you can pull a grant cardone and buy a jet for deduction purposes. beats going to the government.
This post was edited on 8/1/21 at 9:54 pm
Posted on 8/1/21 at 10:00 pm to Fat Bastard
quote:
understood. yes. a good CPA is worth it. Mine is fabulous. good luck!
I made it a point to employ the firm that represents the richest individuals and families in my area
quote:
maybe you can pull a grant cardone and buy a jet for deduction purposes. beats going to the government.
I have a client that literally just did this exact thing, and another that bought a yacht for the same purpose. It’s mind boggling what income level some people are at.
Posted on 8/2/21 at 10:25 am to Fat Bastard
You are wrong. If you ever fail to use the 1031 your gains are taxed.
Posted on 8/2/21 at 10:35 am to Fat Bastard
If yours is telling you that using accelerated depreciation is anything other than a postponement of tax obligations then he is not a good CPA.
This year you can take $1.5 million in 179 depreciation on equipment, for example. That means if we take it on 7 year property we will have much lower taxes this year but higher taxes for the next 6 years than we would have had other wise. If I know Biden is going to do away with the 25% exemption of S corporations I damn sure am not going to take that accelerated depreciation this year. I am going to want that depreciation after the rates go up. Same in a C. If he going to raise taxes 1/1/22 I want depreciation to use in 22 not 21.
It is not a windfall is all I am saying. Run your business not just for profits but for cash----don't let the cash from your profits be eaten up by capital purchases just to play games with the tax laws.
This year you can take $1.5 million in 179 depreciation on equipment, for example. That means if we take it on 7 year property we will have much lower taxes this year but higher taxes for the next 6 years than we would have had other wise. If I know Biden is going to do away with the 25% exemption of S corporations I damn sure am not going to take that accelerated depreciation this year. I am going to want that depreciation after the rates go up. Same in a C. If he going to raise taxes 1/1/22 I want depreciation to use in 22 not 21.
It is not a windfall is all I am saying. Run your business not just for profits but for cash----don't let the cash from your profits be eaten up by capital purchases just to play games with the tax laws.
This post was edited on 8/2/21 at 10:44 am
Posted on 8/2/21 at 10:42 am to StealthCalais11
One more thing---don't be a dumb arse fat bastard and make a real estate purchase just to forego taxes on gains.
Paying too much for any assets is not good.
I guarantee you any decent tax guy is going to tell you if the democrats are successful in raising the capital gains rates to the regular income tax rates that you should take any 1031 gains you can generate before it happens. Real estate is not very liquid. If you had a $1 million built in gain on a speculative building today and you had to sell it before 1/1/2022 to avoid the doubling of taxes on the gains I suspect you would do that and ignore the 1031 altogether.
Paying too much for any assets is not good.
I guarantee you any decent tax guy is going to tell you if the democrats are successful in raising the capital gains rates to the regular income tax rates that you should take any 1031 gains you can generate before it happens. Real estate is not very liquid. If you had a $1 million built in gain on a speculative building today and you had to sell it before 1/1/2022 to avoid the doubling of taxes on the gains I suspect you would do that and ignore the 1031 altogether.
Posted on 8/2/21 at 11:05 am to StealthCalais11
1) Employer paid portion of health care insurance.
2) We are looking into a profit sharing plan as well. Instead of yearly bonuses we'll put additional funds into employee 401k and possibly HSA. As an LLC I'd much rather do that than to let the money rollover into the next year and get hit paying taxes on money I didn't personally receive.
2) We are looking into a profit sharing plan as well. Instead of yearly bonuses we'll put additional funds into employee 401k and possibly HSA. As an LLC I'd much rather do that than to let the money rollover into the next year and get hit paying taxes on money I didn't personally receive.
Posted on 8/2/21 at 11:40 am to StealthCalais11
quote:
Never selling or 1031’ing in perpetuity. My heirs can reap the benefits of step-up basis.
So I was at a conference last week, and went to a couple of sessions that focused on the Democrats future tax plans.
If they get their way... 1031 is going to be severely limited.
But the craziest thing is this concept of a forced deemed realization. Mainly this would impact trusts and decedents. But basically, at the time of death, there would be a deemed sale of all of your assets. This would be income tax, not estate tax. Your heirs would then get step up basis going forward.
In a trust model, this would happen every so many years. Say every 21 years, although there are proposals for as few as every 9 years. This would completely turn around estate planning.
Posted on 8/2/21 at 11:45 am to StealthCalais11
You need to learn the difference between timing and permanent deductions. Timing is nice, but permanent is awesome.
A timing deduction is one that allows a deduction earlier than "normal", but ultimately doesn't change the amount of the deduction. Bonus depreciation is the easiest example of this.
We are in an interesting time... as it's very likely tax rates are going up for 2022. You may actually want to consider pushing some expenses off to 2022, and accelerating some revenue into 2021, so that your earnings are taxed at a lower rate in 2021. This is not normal, and is a one-year thing that may happen, but something to consider.
A timing deduction is one that allows a deduction earlier than "normal", but ultimately doesn't change the amount of the deduction. Bonus depreciation is the easiest example of this.
We are in an interesting time... as it's very likely tax rates are going up for 2022. You may actually want to consider pushing some expenses off to 2022, and accelerating some revenue into 2021, so that your earnings are taxed at a lower rate in 2021. This is not normal, and is a one-year thing that may happen, but something to consider.
Posted on 8/2/21 at 11:50 am to LSUFanHouston
quote:
So I was at a conference last week, and went to a couple of sessions that focused on the Democrats future tax plans.
How was the CMI conference? Whatever it's actually called.
Posted on 8/2/21 at 12:32 pm to Mingo Was His NameO
quote:
How was the CMI conference? Whatever it's actually called.
I was at ENGAGE
It was good... hopefully wasn't a super spreader event! Some of the sessions were outstanding... others need new speakers.
Posted on 8/2/21 at 12:35 pm to LSUFanHouston
quote:
I was at ENGAGE
It was good... hopefully wasn't a super spreader event! Some of the sessions were outstanding... others need new speakers.
Ahh, IPT was in Austin last week as well
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