Blog Archives - Page 4 of 13 - Merrimack Tax Associates

Are the Wages Paid to a Family Member Tax Deductible?

Written by Paul Belfiore on January 13, 2023. Posted in Blog, Taxes.

Amherst, NH Family-Owned Business Looks to Hire Teenaged Family Members

Family-owned businesses have many tax advantages when employing family members. Money paid to family members reduces the net income of the business, thereby reducing the overall tax burden. In addition, insurance costs and other benefits offered to the employed family members can also be deducted from the business’ profits as an expense. When a parent is the sole proprietor and the business is not incorporated when children under the age of 18 are employed, neither the business nor the employed minor are required to pay FICA taxes. Having a family member on payroll, whether a minor child or spouse, can significantly reduce the amount of taxes owed at the end of the year.

How Will Cash App Payments Affect Your Taxes?

Written by Paul Belfiore on December 30, 2022. Posted in Blog, Taxes.

Brookline, NH Taxpayer Has Questions

With the prevalence of money exchanged on Venmo, PayPal, and other cash apps, the IRS has stated that it will be cracking down on those receiving cash app money exceeding $600 in the calendar year. The threshold for receiving third-party payments is $600. When the amount exceeds this, the recipient is required to file a 1099-K. In past years Form 1099-K was only required for gross income from cash apps exceeding $20,000 or more than 200 separate transactions during the calendar year. This change will affect many sellers who receive payment through these cash apps.

What Effect Do Stock Losses Have on Your Taxes?

Written by Paul Belfiore on December 15, 2022. Posted in Blog, Taxes.

Nashua, NH Taxpayer Has Questions

Capital losses from the sale of stock, mutual funds, and other investments can help to reduce your tax bill. If you had any capital gains over the year, this loss will first be used to offset the taxes paid on these gains. For those years where you are still at a capital loss, this deduction can reduce taxes on other income, including salary and interest. This excess deduction is capped at $3,000 per year. Any more than that amount can be carried over into subsequent years as a future tax deduction.

Which Charitable Contributions are Not Taxable?

Written by Paul Belfiore on November 25, 2022. Posted in Blog, Taxes.

Nashua, NH Resident Looks for Advice

Any charitable donation that offers you something in return as the donating person is not tax-deductible. This includes money spent on charitable fundraisers where there is a prize, such as a raffle or drawing, is not tax-deductible. Similarly, a donation that is to purchase a product for your own use, such as cookies, wrapping paper, or another item is not considered a charitable deduction. When itemizing charitable deductions on your taxes, keep in mind that these donations cannot be from which you have receive an item yourself, including a chance to win something.

How is the Home Office Deduction Calculated?

Written by Paul Belfiore on November 11, 2022. Posted in Blog, Taxes.

Self-Employed Brookline, NH Resident Has Questions

When claiming the home office deduction on your taxes you can use the simple or regular method for calculating your deduction. To determine which is the best calculation, you will want to determine which of the two will offer you the larger deduction. With the simplified method, you would complete a Simplified Method Worksheet, supplied by the IRS. This will require you to indicate the square footage of your business space in the home among other factors to determine the deduction amount. The regular deduction method uses Form 8829 and factors in mortgage interest, real estate taxes, insurance, and utilities to determine the deduction amount.

Can a Business Deduct Charitable Contributions on Their Taxes?

Written by Paul Belfiore on October 28, 2022. Posted in Blog, Taxes.

Goffstown, NH Business Owner Looks for Clarification

Only businesses classified as corporations can deduct charitable donations on their business tax return. These contributions to charity cannot be more than 60% of the adjusted gross income. Business owners for other types, including sole proprietorships and partnerships, can deduct charitable contributions on their own personal tax return.

How to Reduce Taxes from the Sale of Property

Written by Paul Belfiore on October 13, 2022. Posted in Blog, Taxes.

Hudson, NH Resident Looks to Lessen Future Tax Burden

Profit from the sale of a home will fall under capital gains and be taxed accordingly. If your property has increased in value significantly since the time of purchase, you may be hit with a large and unexpected tax burden. The difference of what was paid for the home initially and the selling price, less closing costs, real estate commissions, and other fees is considered capital gains. If you have lived in the residence for at least two of the past five years you can exempt $250,000 and $500,000 for married couples filing jointly. Any profit exceeding this amount can be subjected to the capital gains tax.

How Does Filing for Bankruptcy Affect Tax Debt?

Written by Paul Belfiore on September 16, 2022. Posted in Blog, Taxes.

Milford, NH Resident Weighs His Options

Filing for bankruptcy is a difficult decision, and one that should not be taken lightly. While under federal bankruptcy law this will stop creditors from chasing you, tax debt is treated differently being considered nondischargeable priority debt. With exceptions, bankruptcy will not eliminate this type of debt and it is given priority over other claims. If you have a tax lien against your property, filing for bankruptcy will not remove the lien and the IRS will still have a claim to your property until the debt is paid.

Can Business Meals Be Used as a Tax Deduction?

Written by Paul Belfiore on August 26, 2022. Posted in Blog, Taxes.

Amherst, NH Business Owner Has Questions

In 2018 the Tax Cuts and Jobs Act eliminated the ability for businesses to deduct entertainment and recreation expenses. However, the Business Meal Tax Deduction was not eliminated with this change. To qualify for this deduction the meal expense may not be lavish or extravagant, as subjectively determined. The taxpayer or an employee of the taxpayer must be present at the meal and the food and drink must be provided to a business associate.

Is My Child’s Summer Camp and Daycare Tax-Deductible?

Written by Paul Belfiore on August 11, 2022. Posted in Blog, Taxes.

Milford, NH Resident Seeks Answers

Summer camp and daycare is tax deductible for children under age 13 or if the child is a disabled dependent. The tax credit may cover up to $3,000 in qualifying expenses for one child or up to $6,000 for two or more children. This includes money paid to a daycare center, babysitter, summer camp, or other provider offering childcare. Covered under the Child and Dependent Care Credit, this was created for working parents to offset the price for childcare. However, parents who are full-time students and those that are unemployed and actively looking for work may also qualify for this deduction