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Are you missing out on key tax deductions by mixing personal and business expenses?

In this episode, Mike Jesowshek discusses the importance of setting up an accountable plan for businesses, especially S and C corporations. He breaks down how accountable plans allow business owners to reimburse themselves for personal expenses with a business use, ensuring that the reimbursements are not taxable. Mike emphasizes key requirements for an accountable plan, such as having a business connection, proper substantiation, and timely payments, while also highlighting common deductible expenses like home office, automobile use, and travel.

Find out how an accountable plan can help you save on taxes while staying compliant with the IRS!

[00:00 - 05:21] Introduction to Accountable Plans

• Mike introduces the concept of an accountable plan and its importance for business owners.
• He explains how separating business and personal expenses is crucial to avoid IRS scrutiny.
• He also mentions that even if personal payments are made for business items, they can be reimbursed with a plan.

[05:22 - 10:37] Key Requirements of an Accountable Plan

• Mike outlines the four main requirements: business connection, substantiation, avoiding excess payments, and timely payments.
• He discusses examples of business-related expenses that can be reimbursed, such as home office use and automobile expenses.
• Turning reimbursements into taxable income can cause risks if not handled properly.

[10:38 - 13:49] Setting Up an Accountable Plan

• Mike walks through the process of setting up a written reimbursement policy (accountable plan).
• Businesses need to create a reimbursement tracker to document expenses.
• Taxelm’s templates and tools can help businesses implement these plans correctly.

[13:50 - 17:43] Common Expenses for Reimbursement

• Mike highlights the most common reimbursable expenses: home office, automobile, cell phone, internet, and travel.
• Business owners should take advantage of available deductions to reduce taxable income.

Direct Quotes:

"The IRS looks at that as being sloppy. So the first key to understand is to always have a separate business bank account and credit card that you run all of your business activity through." - Mike Jesowshek, CPA

- "If you don't have an accountable plan put in place, it will be taxable to us, and that's why it's so important." - Mike Jesowshek, CPA

"The IRS gives us incentives as business owners—home office deductions, automobile deductions—but it's your responsibility to understand and implement them correctly." - Mike Jesowshek, CPA

Check out this episode’s blog post: How Do I Reimburse Myself From the Business? When Does An Accountable Plan Come Into Play?

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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast

Join TaxElm: https://taxelm.com/

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Podcast Website: https://www.TaxSavingsPodcast.com

Facebook Group: https://www.facebook.com/groups/taxsavings/

YouTube: www.TaxSavingsTV.com

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How could the upcoming election shape the future tax landscape for LLCs, and what strategies can business owners consider now to stay ahead?

In this episode, Mike Jesowshek explores how the upcoming 2024 presidential election could impact LLCs, particularly small business owners. He provides a non-partisan analysis of both the Harris and Trump campaign proposals regarding corporate tax rates, capital gains, and other tax policies. Highlighting potential implications for tax planning and compliance, Mike emphasizes the importance of understanding these policies and the flexibility required to adapt to changes that may or may not pass. This episode offers LLC owners insights into proactive strategies to minimize tax liabilities in light of potential policy shifts.

[00:00 - 01:18] Corporate Tax Rate Proposals

• Mike Introduces the episode focus: exploring potential election impacts on LLCs.
• He clarifies a non-partisan approach, stating the episode’s objective is to inform business owners, not take sides.
• Mike discusses Harris’s proposal to increase the corporate tax rate to 28% versus Trump’s proposal to lower it to 20% or 15% for U.S.-based production companies.

[03:23 - 05:22] Harris Campaign on Real Estate and Trump’s Tariff Proposal

• Harris proposes limiting depreciation and interest for large real estate investors and increasing startup cost deductions to $50,000.
• Evaluating these deductions’ impact on real estate and startup expenses.
• Trump’s campaign discusses imposing tariffs on imports, particularly 60% for imports from China.

[05:22 - 08:48] Capital Gains and Investment Taxes

• Harris aims to raise the capital gains tax for incomes over $1 million and increase the net investment income tax.
• Planning for potential tax adjustments in high-income brackets.
• Harris proposes exempting tips from taxes; Trump proposes exempting overtime pay from taxation.

[07:00 - 11:42] Personal Tax Adjustments

• Harris’s campaign suggests expanding the child tax credit and health insurance credits; Trump aims to make prior tax cuts permanent.
• There are opportunities for individual tax savings depending on outcomes.
• Mike discusses expiring TCJA provisions, like the reduced highest tax rate, doubled standard deduction, and QBI deduction, set to end by 2025.

[11:42 - 16:36] Planning Opportunities Regardless of Outcome

• Mike stresses tax planning adaptability regardless of the election outcome.

Direct Quotes:

"Policy changes can catch many businesses off guard, often leading to missed opportunities or unexpected challenges." - Mike Jesowshek, CPA

"No matter what happens in this election, there’s always room for tax planning." - Mike Jesowshek, CPA

"While a candidate might say one thing, it doesn’t necessarily mean it will actually come true." - Mike Jesowshek, CPA

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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast

Join TaxElm: https://taxelm.com/

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Podcast Website: https://www.TaxSavingsPodcast.com

Facebook Group: https://www.facebook.com/groups/taxsavings/

YouTube: www.TaxSavingsTV.com

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Do you know how to unlock the power of tax-free retirement savings using a Mega Backdoor Roth?

In this episode, Mike Jesowshek provides a beginner's guide to building a Mega Backdoor Roth IRA in 2024. He explains the differences between traditional and Roth IRAs, then details how to maximize retirement savings using the Mega Backdoor Roth strategy. Mike breaks down the steps for contributing beyond standard limits, focusing on how business owners can utilize solo 401(k) plans. He also discusses the long-term benefits of tax-free growth and withdrawals, addressing common concerns and mistakes along the way.

Discover the strategies to potentially grow your account to a million dollars in just a few years!

[00:00 - 05:21] Introduction and Basics of Roth IRAs

• Roth IRAs allow tax-free growth and withdrawals in retirement.
• Traditional vs. Roth: Traditional IRAs offer tax deductions upfront, while Roth IRAs grow tax-free with withdrawals in retirement.
• Max contributions for 2024: $7,000 ($8,000 for those over 50).

[05:22 - 11:18] Backdoor and Mega Backdoor Roth Explained

• The backdoor Roth strategy involves making non-deductible contributions to a traditional IRA and then converting it to a Roth IRA.
• Mega Backdoor Roth allows much larger contributions using 401(k) plans.
• Benefits of Mega Backdoor Roth include higher contribution limits, tax-free growth, and tax-free withdrawals.
• This strategy is beneficial for anyone with access to a 401(k) plan, even those in lower tax brackets.

[11:19 - 14:08] Strategy Steps and Example

• Max out employee contributions, then after-tax contributions, and convert to a Roth the next day.
• A business owner can contribute up to $76,000 per year and, with a 12% return, accumulate over $1 million in just 7.5 years.
• The earlier you start, the greater the potential for tax-free growth.

Direct Quotes:

"The beauty behind a Roth is that you take the pain today, but it grows tax-free, and your withdrawals in retirement are tax-free." - Mike Jesowshek, CPA

"The Mega Backdoor Roth strategy allows you to supercharge your retirement savings with higher contribution limits and long-term tax advantages." - Mike Jesowshek, CPA

"Imagine putting away $76,000 per year into a Roth and seeing it grow tax-free — that’s mind-blowing." - Mike Jesowshek, CPA

Check out this episode’s blog post: https://www.taxsavingspodcast.com/blog/guide-to-building-a-mega-backdoor-roth

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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast

Join TaxElm: https://taxelm.com/

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Podcast Website: https://www.TaxSavingsPodcast.com

Facebook Group: https://www.facebook.com/groups/taxsavings/

YouTube: www.TaxSavingsTV.com