This episode of Tax Tuesday with Toby and Eliot is brimming with strategies to supercharge your financial savvy. From unlocking the mysteries of deductions and depreciation to turning real estate activities into a tax-saving powerhouse, we dissect the fine print of the tax code and transform it into actionable advice. The episode covers various topics including handling missed 1099 deadlines, gifting to clients and its tax implications, maximizing deductions, the benefits of cost segregation studies, combining short and long-term rentals for tax advantages, and the intricacies of aircraft depreciation for a flight instructing business. Remember, knowledge is power, especially when it comes to dealing with Uncle Sam. Submit your tax question to taxtuesday@andersonadvisors.
Highlights/Topics:
- Do I have to get a 1099 to every sub who worked on a single family home we are rehabbing? Do I have to send a 1099 to them? And if we do have to get 1099s to parties, I'm assuming we have to get a W-9 from them first? - the duty to send a 1099 is when you pay $600 or more to a contractor.
- Hi, I am new to setting up a business for real estate investing. My taxes will be startup and training fees. At what percent can I expect there to be write-offs to the business? – If it's a business expense, you'll be able to deduct 100% of that expense.
- I hadn't claimed depreciation in earlier years, thinking that I wouldn't have to have my basis reduced in the future sale. Is there a way to claim those earlier years that it hadn't been taken, or did my 27 years just begin when I started taking it? - form 3115 can catch all that depreciation back up.
- Is it too late to do a tax seg on a previously purchased rental property for tax year 2023? And what would be the advantages of doing it for 2023 versus 2024? - It can be done all the way up to the time your return is due the next year with extension.
- How can I use real estate profits to pay for kids’ college without paying taxes? - If it's in an entity, an LLC, just pay them directly from that business.
- Are gifts to clients, vendors, employees, and members tax deductible,” “If yes, what is the threshold that we can spend on gifts? - it's such a horrible rule. People really don't believe me when I say it's a $25 limit, and yet that's what it is.
- My tax preparer died a few years ago." "I have not been able to find someone to help me with my taxes. Can I file 2023 before I file 2021 and 2022? Or do I have to file their tax returns in order? - There's no rule out there that you have to do this return or that return.
- Can you aggregate short-term rentals and long-term rentals together in your portfolio to meet material participation requirements for REPS? - as they are, no, they're two different things. A short-term rental is a different type of business. It's actually not a rental activity, it's just a trade or business.
- Our LLC installed a $84,000 solar system on a rental property in 2023. Can we take the 30% energy tax credit and deduct the entire 59,976 basis? 84,000 minus 50% of the 30% in 2023 using bonus depreciation. - Quick answer, yes. I did check, $25,200 is correct at 30%
- Started a small flight instructing business in 2023 and purchased a plane in 1223 Finance. What depreciation options are there, and what would be the best approach if the income stream will not begin until 6/24? - It'd be a 2023 asset, and you can do the bonus depreciation we've talked about.
Resources:
Request a Free Cost Segregation Study
https://andersonadvisors.com/CSA/
Tax and Asset Protection Events
https://andersonadvisors.com/real-estate-asset-protection-workshop-training/?utm_source=aba&utm_medium=podcast&utm_content=are-gifts-to-clients-and-employees-tax-deductible
Anderson Advisors
https://andersonadvisors.com/
Toby Mathis YouTube
https://www.youtube.com/@TobyMathis
Toby Mathis TikTok
https://www.tiktok.com/@tobymathisesq
Clint Coons YouTube
https://www.youtube.com/@ClintCoons
