Tax Deductions for Professionals
Pay Less to the IRS
- Product Details
- start-up expenses
- medical expenses
- retirement plan contributions
- continuing education costs
- vehicles, meals, and travel, and
- home office expenses.
- About the Author
- Table of Contents
- How Tax Deductions Work
- The Value of a Tax Deduction
- What Professionals Can Deduct
- Professionals Who Lose Money
- Types of Business Entities
- Limiting Your Liability
- The Four Ways Business Entities Are Taxed
- Comparing Tax Treatments
- Should You Change Your Business Entity or Tax Treatment?
- Requirements for Deducting Operating Expenses
- Operating Expenses That Are Not Deductible
- Operating Expenses Paid With Paycheck Protection Program Loans
- Tax Reporting
- You Must Have a Pass-Through Business
- You Must Have Qualified Business Income
- You Must Have Taxable Income
- Deduction for Taxable Income Up to $164,900 ($329,800 if Married)
- Deduction for Income Above $164,900 ($329,800 if Married)
- Taking the Pass-Through Deduction
- Strategies to Maximize the Pass-Through Deduction
- Deductible Local Transportation Expenses
- The Standard Mileage Rate
- The Actual Expense Method
- Reporting Transportation Expenses on Schedule C
- When Clients Reimburse You
- Professionals With Business Entities
- What Is Business Travel?
- What Travel Expenses Are Deductible
- How Much You Can Deduct
- Maximizing Your Business Travel Deductions
- Travel Expenses Reimbursed by Clients
- Qualifying for the Home Office Deduction
- Calculating the Home Office Deduction
- Simplified Home Office Deduction Method
- How to Deduct Home Office Expenses
- If You Rent Your Office
- If You Own Your Office
- If You Lease a Building to Your Practice
- What Is a Long-Term Asset?
- Special Rules for Deducting Inexpensive Property
- Deducting Long-Term Personal Property: Bonus Depreciation, Section 179, Regular Depreciation
- Bonus Depreciation
- Section 179 Expensing
- Deducting Repairs and Improvements
- Regular Depreciation
- Deducting Real Property
- Intangible Assets
- Tax Reporting and Record Keeping
- Leasing Long-Term Assets
- What Are Start-Up Expenses?
- Starting a New Practice
- Buying an Existing Practice
- Expanding an Existing Practice
- When Does a Professional Practice Begin?
- How to Deduct Start-Up Expenses
- Organizational Expenses
- The Affordable Care Act (ACA)
- The Personal Deduction for Medical Expenses
- Self-Employed Health Insurance Deduction
- Deducting Health Insurance as an Employee Fringe Benefit
- Tax Credits for Employee Health Insurance
- Sick and Family Leave Tax Credits for the Self-Employed
- Adopting a Health Reimbursement Arrangement
- Health Savings Accounts
- What Is Inventory?
- Deducting Inventory Costs
- Advertising
- Business Bad Debts
- Casualty Losses
- Charitable Contributions
- Clothing
- Disabled Access Tax Credit
- License Fees, Dues, and Subscriptions
- Education Expenses
- Entertainment and Meals
- Gifts
- Insurance for Your Practice
- Interest on Business Loans
- Legal and Professional Services
- Taxes
- Employees Versus Independent Contractors
- Tax Deductions and Credits for Employee Pay and Benefits
- Reimbursing Employees
- Employing Your Family
- Tax Deductions When You Hire Independent Contractors
- Automatic Employee Status
- Paying Yourself
- Employee Fringe Benefits
- Shareholder Loans
- Your Practice Pays
- Using Personal Funds to Pay for Business Expenses
- Your Client Reimburses You
- Accountable Plans
- Anatomy of an Audit
- Tax Shelters, Scams, and Schemes
- Recording Your Expenses
- Your Accounting System
- Documenting Your Deductions
- Accounting Methods
- Tax Years
- Sample Chapter
- accountants
- architects
- chiropractors
- consultants
- dentists
- doctors
- engineers
- lawyers
- marriage and family therapists
- optometrists
- pharmacists
- psychologists, and
- veterinarians
- tax treatment of the hugely popular Paycheck Protection Program (PPP) loans
- new rules for deducting net operating losses (see Chapter 1)
- new tax credits for self-employed professionals impacted by the COVID-19 pandemic (see Chapter 11)
- rules for deducting business-related meals (see Chapter 13)
- changes affecting charitable contributions by businesses (see Chapter 13)
- new tax credits for employers who retain their payrolls and provide sick leave and family leave (see Chapter 14), and
- how employers can deduct pandemic-related payments to employees (see Chapter 14).
Keep your taxes under control!
Architects, lawyers, dentists, chiropractors, doctors, and other licensed professionals are subject to special tax rules. With this book, learn how to pay less to the IRS at tax time by taking advantage of the many tax deductions available to professionals.
Find out how to deduct:
Tax Deductions for Professionals will also help you choose the best legal structure, with detailed information on limited liability companies, partnerships, and professional corporations.
“Thorough, straightforward and specific…contains all the information you need to take advantage of every money-saving opportunity.”—Architectural West
“Aimed at anyone who runs a professional practice, including doctors, dentists, lawyers, engineers, architects and even chiropractors—to say nothing of accountants.”—Accounting Today
Introduction
1. Tax Deduction Basics
2. Choice of Business Entity
3. Operating Expenses
4. The Pass-Through Tax Deduction
5. Car and Local Travel Expenses
6. Long-Distance Travel Expenses
7. The Home Office Deduction
8. Deductions for Outside Offices
9. Deducting Long-Term Assets
10. Start-Up Expenses
11. Medical Expenses
12. Inventory
13. More Deductions
14. Hiring Employees and Independent Contractors
15. Professionals Who Incorporate
16. How You Pay Business Expenses
17. IRS Audits
18. Record Keeping and Accounting
Index
Introduction
If you’re a professional, no one needs to tell you that taxes are one of your largest expenses. The best way to minimize your taxes and maximize your take-home income is to take advantage of every tax deduction available to you.
This book, the first of its kind, is about tax deductions for all types of professionals, including:
Specially tailored for the unique needs of professionals, it shows you how you can deduct all or most of your business expenses from your federal taxes—everything from advertising to vehicle depreciation. It can be used by professionals who work by themselves, or by those involved in a group practice&mdashl;whether you are a sole proprietor, or are involved in a professional corporation, a partnership, or an LLC.
Now more than ever you’ll need guidance when it comes to understanding your taxes. In 2017, Congress enacted the most sweeping changes to the tax code in over 30 years when it passed the Tax Cuts and Jobs Act (TCJA), which took effect in 2018. Now, in an effort to stave off economic devastation in the wake of the coronavirus (COVID-19) pandemic, Congress has revised the nation’s tax laws yet again, temporarily suspending many of the harshest provisions of the TCJA. We explain how these changes affect business deductions for professionals including:
Even if you work with an accountant or another tax professional, you need to learn about tax deductions. No tax professional will ever know as much about your business as you do. The information in this book will help you provide your tax professional with better records, ask better questions, obtain better advice—and, just as importantly, evaluate the advice you get from tax professionals, websites, and other sources.
If you do your taxes yourself (as more and more small business owners are doing), your need for knowledge is even greater. Not even the most sophisticated tax preparation program can decide which tax deductions you should take or tell you whether you’ve overlooked a valuable deduction. This book can be your legal companion, providing practical advice and information so that you can rest assured that you are not paying more to the IRS than you need to.
We hope you enjoyed this sample chapter. The complete book is available for sale here at Nolo.com.
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