Corporate Home Office Deductions

If you have been claiming a home office deduction as a sole proprietor and are considering incorporating you business, be aware that you could lose the benefits of your home office deductions.  The IRS rules limit the home office deduction for shareholders of a corporation even if you rent the office to your corporation.

As an employee of the corporation, if the office is maintained for the convenience of the employer and is a requirement of employment because the corporation provides no office, then generally the home office deductions are claimed on Schedule A as a Miscellaneous Itemized Deduction subject to the 2% floor on Adjusted Gross Income.  For example, if your adjusted gross income is $200,000 and your home office deductions total $5,000 you would only be able to claim a $1,000 deduction for the amount that exceeds 2% of $200,000.  Even worse, if you are subject to the Alternative Minimum Tax, you would get no benefit since Miscellaneous Itemized Deductions are not allowed for purposes of the Alternative Minimum Tax.

As a planning technique, you can have the corporation adopt what is called an “Accountable Reimbursement Plan” that meets certain IRS qualifications.  Basically, it requires employees to submit expense reports and get reimbursed by the corporation on a dollar for dollar basis for IRS deductible business expenses, including home office deductions that meet the IRS requirements of a home office.  When an accountable plan is used, the employee does not have to pick up the reimbursements as income on their W-2 wage statements, and the employer gets to deduct the expenses as if they were the expenses of the employer.  Accordingly, the expenses are moved from the personal tax return to the corporation tax return as reimbursed employee business expenses rather than expenses of a corporate office rented from the shareholder.

So far this technique has not been challenged by the IRS and I recently successfully defended it on an IRS audit.  This is good news when it comes time for your tax return preparation.  If you have concerns about losing the benefits of your home office, please contact me for a consultation at 650-400-2539 or email me at peter.diaz@diazconsulting.com for more information.  Visit www.diazconsulting.com.

PETER B. DIAZ, CPA – TAX CONSULTING & FINANCIAL PLANNING IS DESIGNATED AS A TOP 10 BUSINESS BY PUBLISHERS OF THE PRIME BUYER’S REPORT

Press Release
For Immediate Release
Contact: Peter B. Diaz, CPA
Peter.diaz@diazconsulting.com
650-400-2539

PETER B. DIAZ, CPA – TAX CONSULTING & FINANCIAL PLANNING IS DESIGNATED AS A TOP 10 BUSINESS BY PUBLISHERS OF THE PRIME BUYER’S REPORT

Redwood City, CA

Peter B. Diaz, CPA – Tax Consulting & Financial Planning announced today it has been designated as a TOP 10 business by The Prime Buyer’s Report and so is officially designated “Prime Buyer’s Certified – TOP 10”.

The determination of Peter B. Diaz, CPA as a TOP 10 business was made based on a ten-point research process conducted by the independent publishers of The Prime Buyer’s Report. The process involved a thorough interview with Peter B. Diaz, CPA and phone calls to previous customers of Peter B. Diaz, CPA to determine their satisfaction. It also included Peter B. Diaz, CPA’s pledge to maintain the highest ethical standards regarding it’s pricing, customer communications, hiring practices, and more.

“I am proud to be recognized this way for the high quality of service and ethical business practices that have been the hallmark of my company since it was founded”, said Peter B. Diaz.
Peter B. Diaz, CPA is a full service Tax Consulting and Financial Consulting company assisting taxpayers and small businesses throughout the San Francisco Bay Area.

For full details on all research steps passed by Peter B. Diaz, CPA, and the ten-point “Best Business Practices Promise” it has pledged to maintain, visit www.primebuyersreport.com

Peter B. Diaz, CPA’s own website is at www.diazconsulting.com . Those interested in services can call (650) 400-2539 anytime 9am-5pm Monday-Friday.

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Peter B. Diaz, CPA Receives Best of Redwood City Award

Press Release
FOR IMMEDIATE RELEASE
Peter B. Diaz, CPA Receives Best of Redwood City Award
U.S. Local Business Association’s Award Plaque Honors the Achievement
WASHINGTON D.C., -- Peter B. Diaz, CPA has been selected for the Best of Redwood City Award in the Tax Return Preparation & Filing category by the U.S. Local Business Association (USLBA).
The USLBA "Best of Local Business" Award Program recognizes outstanding local businesses throughout the country. Each year, the USLBA identifies companies that they believe have achieved exceptional marketing success in their local community and business category. These are local companies that enhance the positive image of small business through service to their customers and community.
Various sources of information were gathered and analyzed to choose the winners in each category. The 2008 USLBA Award Program focused on quality, not quantity. Winners are determined based on the information gathered both internally by the USLBA and data provided by third parties.
About U.S. Local Business Association (USLBA)
U.S. Local Business Association (USLBA) is a Washington D.C. based organization funded by local businesses operating in towns, large and small, across America. The purpose of USLBA is to promote local business through public relations, marketing and advertising.
The USLBA was established to recognize the best of local businesses in their community. Our organization works exclusively with local business owners, trade groups, professional associations, chambers of commerce and other business advertising and marketing groups. Our mission is to be an advocate for small and medium size businesses and business entrepreneurs across America.
SOURCE: U.S. Local Business AssociationCONTACT:U.S. Local Business AssociationEmail: PublicRelations@USLBA.netURL: http://www.USLBA.net ###

visit http://www.diazconsulting.com to learn more about Peter B. Diaz, CPA

Kids Can Save You Taxes

YOUR KIDS CAN REDUCE YOUR TAXES AND GET RICH
(By Peter B. Diaz, CPA)

One often-overlooked tax benefit for business owners is putting their kids to work in their business.

If you are self-employed you can take advantage of this by paying your kids $4,000 each for performing services in your business. The business gets a tax deduction for the compensation and that saves taxes on the parent's tax return. Also, there is no Social Security or Medicare Taxes due on the wages you pay to your child.

The next step is to open a Roth IRA for the child and contribute the $4000 to the IRA. The child may not withdraw this money until age 59 1/2. The earnings and the amounts contributed grow tax-free and are generally never subject to tax when withdrawn. On the child’s tax return, the child gets no tax deduction for the IRA but the child may not pay tax on the $4000 if he or she is at a low enough level of income.

If you do this for 10 years, from age 8 to 18, and the IRA earns an 8% return each year, your child should have around $1.5 million at age 60 and that should grow to over $2 million by age 64.

If you plan to do this, consult with a professional tax advisor first and be sure your children are actually performing services for your business. Also, check that the work is not violating any child labor laws.

Peter Diaz is a Tax Advisor in Redwood City and has been practicing tax consulting for 23 Years. He can be reached at 650-400-2539 or through email at peter.diaz@diazconsulting.com. Visit his web site at www.diazconsulting.com .

The information contained herein is not intended as tax advice. To comply with requirements imposed by the IRS, any information contained in this communication cannot be used for the purpose of avoiding penalties under the Internal Revenue Code.