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Tax season can be a stressful time for many Americans, but with a little knowledge and preparation, you can navigate it with confidence. Here are some practical tips to help you avoid common pitfalls and maximize your tax savings.

• Avoid Simple Mistakes: The IRS reports that simple miscalculations are among the most common issues on tax returns. Double-check your math and ensure you've entered all information correctly, especially regarding filing status, Social Security numbers, and bank account details.
• Don't Miss Investment Income: Remember to report all investment income, including dividends and capital gains. Failing to do so can result in penalties and fees from the IRS. Keep track of any 1099 forms you receive from investment firms and ensure they're accurately reflected in your tax return.
• Understand Capital Gains: Be mindful of your investment holding periods, as they determine your tax rates. Short-term gains are taxed as ordinary income, while long-term gains may qualify for lower tax rates. High earners may also be subject to additional Medicare surtax on investment income.
• Maintain Good Recordkeeping: Keep detailed records of your investment transactions, including purchase prices and sale proceeds. This information is crucial for accurately calculating gains and losses, which can impact your tax liability.
• Utilize Tax-Loss Harvesting: Consider offsetting realized gains with losses through tax-loss harvesting. This strategy can help reduce your tax bill by maximizing deductions on investment losses.
• Beware of Wash Sales: Avoid engaging in wash sales, which occur when you sell an investment at a loss and repurchase a substantially identical asset within 30 days. This can invalidate your loss for tax purposes and complicate your tax reporting.
• Take Advantage of Tax Breaks: Don't overlook available tax credits and deductions, such as the Child Tax Credit or charitable contributions. These can significantly reduce your tax liability or taxable income, providing valuable savings.
• Mind Deadlines: Be aware of tax deadlines for various deductions and contributions. Missing deadlines could result in missed opportunities for savings or penalties for late filings.

In conclusion, while tax season may seem daunting, taking proactive steps to understand your tax obligations and opportunities can lead to significant savings. Whether you're filing your taxes independently or with the help of a professional, attention to detail and awareness of potential pitfalls are key. By staying informed and organized, you can navigate tax time with confidence and optimize your financial outcomes. Remember, every dollar saved in taxes is a dollar that can contribute to your future financial security.

Learn more at info@marksullivanconsulting.com or schedule a FREE 30-minute consultation with Mark Sullivan HERE

About the author

Mark W. Sullivan, EA founded Sullivan Consulting in 1998 in St. Louis, MO and relocated to Scottsdale, AZ in 2020. He specializes in federal tax controversy representation, appeals and consulting on behalf of individuals, businesses, law, and accounting firms nationwide. In addition, he has served as the consulting and expert witness in numerous civil and criminal cases in multiple federal district courts.

Mark has an unlimited Enrolled Agents license and is admitted to practice before the Internal Revenue Service based on his extensive experience as a Revenue Officer in New York, NY, St. Louis, MO and Washington, D.C..

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IRS Orders Immediate Stop To New Employee Retention Credit Claims (IRS Newswire, 9/14/23)

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Copyright 2024 Per Diem Plus, LLC. Per Diem Plus proprietary software is the trademark of Per Diem Plus, LLC.®

Disclaimer: This article is for information purposes only and cannot be cited as precedent or relied upon in a tax dispute before the IRS.

Tax Saving Tips For Owner Operators & Family-Run Trucking Businesses

The following excerpt, "Paying your kids", is from "Making The IRS Work In Your Favor" presented by Mark W. Sullivan, EA at the 2018 CMC LIVE  hosted by Kevin Rutherford and Let's Truck.

Paying Your Kids

Trucking like any small business is often a family affair. My son started working in my accounting practice after school when he was 10 - shredding paper, stamping and stuffing envelopes. Whether you are a solo owner operator or run a trucking company, it is not uncommon to put your kids to work helping in the business.  Here is what you need to know to take advantage of a great tax saving opportunity.

Paying your kids to work in the business

First and foremost: Your children must be bona fide employees

• Their work must be ordinary and necessary
• Pay must be for services actually performed
• Services appropriate for your business
• Any real work for your business can qualify
  • Examples: answering phones, helping with your website, stuffing envelopes, or cleaning the office

• IRS has accepted that a seven-year-old child may be an employee

What does the IRS require for you to claim a child as an employee?

• Keep track of the hours your child works
• Have a written employment agreement specifying his or her job duties and hours

WARNING:

• No business deductions for personal services, such as babysitting or mowing your lawn at home
• Money you pay for yard work performed on business property could be deductible as a business expense

There are different rules for Sole-Proprietor / Partnerships and S-Corporations

Sole Proprietorship / Partnerships

Children under 21 wages subject to income tax withholding, but not :

• Social Security
• Medicare
• FUTA

Corporations

Children under 21 are subject to:

• Income tax withholding
• Social Security
• Medicare
• FUTA

Tax savings opportunity

In 2018 the standard deduction for SINGLE filers raised from $6,350 to $12,000.

• A child could earn up to $12,000 tax free

 

Example: Employment Tax on Wages of $12,000
	Sole-Proprietor	Corporation
FICA / Medicare / FUTA 16.8%	$0.00	$2,016

Reference Material:

Refer to: https://www.irs.gov/businesses/small-businesses-self-employed/family-help

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About

Per Diem Plus is a proprietary mobile software application that was designed by truckers and built by tax pros. It is the only IRS-compliant mobile app that automatically tracks each qualifying day of travel in the USA & Canada and replaces ELD backups (logbooks) to substantiate away-from-home travel.

About the Author

Mark is tax counsel for Per Diem Plus. With nearly two decades of experience advising trucking companies on per diem issues, Mark was responsible for defining the Per Diem Plus software logic rules that automatically calculates trucker per diem in accordance with IRS regulations. He also previously served as the consulting per diem tax expert for Omnitracs.

In addition to his time working with Per Diem Plus, Mark works in private practice as an Enrolled Agent at Mark Sullivan Consulting, PLLC specializing in federal tax controversy representation and consulting. He also served as the consulting and expert witness for the Federal Defenders Office and private defense counsel in financial crimes cases in multiple federal district courts. Contact Mark W. Sullivan, EA

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Disclaimer

This article includes general tax information, and therefore may not be relied upon as legal authority. This means that the information cannot be used to support a legal argument in a court case. Please consult with a licensed tax professional.