Gaurav Sharma CPA, CFP

06/21/2022

Tax Advantages for the Self-Employed 👇

There are some great advantages to being self-employed. Being self-employed allows for plenty of opportunities to minimize your taxable income by turning expenses you would have even if you weren't self-employed into tax-deductible business expenses.

1. Home office. This deduction is not the simplest one to pull-off. Fortunately, it is largely on the honor system; however, you should be prepared to defend it in the case of an audit. It is a deduction that is commonly attacked by the IRS because the requirements are difficult for many to maintain.

👉 Basically, any square footage that is used both regularly and exclusively for your business is tax deductible. This would include that portion of your home's rent / mortgage, property taxes, insurance, utilities and home maintenance. So if your office is 20% of your home's square footage, you could deduct 20% of all of those expenses.

2. Health insurance premiums. While this is technically a personal deduction, it is only available to the self-employed. In a nutshell, if you’re self-employed and not eligible to enroll in your spouse's health plan, you can deduct your premiums from your income. This would include health, dental and long-term care insurance.

This also applies to premiums paid for your spouse and dependants.

3. Automobile. This is a nice deduction that can really add up. You have 2 options available:
Mileage method: In this case, you would simply keep track of the number of miles you drive for business related purposes. Then simply multiply the number of miles by the mileage rate provided by the IRS.
Actual Expense method: You will have to determine the percentage of your mileage that was spent on business and then multiply that percentage by the total expenses related to your automobile. This would include, gas, repairs, oil changes, and more.

Which method is best? The one that gives you the greatest deduction is best. In general, if you have an inexpensive car or a car that is paid off, then the mileage method is best. Otherwise, the actual expense method is usually the best.

4. Entertainment and meals. This expense is only deductible at 50%, but includes things like tickets to sporting events and the cost of a round of golf. You must be with a client or business partner and discuss some business, but this deduction can be used frequently with a little planning.

5. Self-Employed retirement plans. Contributions to self-employed retirement plans are tax deductible. This include retirement vehicles such as SEP-IRAs, solo 401(k)s, Keogh plans, and SIMPLE IRAs. In 2021, you could contribute up to 20% of your net income plus $19,500 to a solo 401(k). Based on the maximum allowable net income, that totals over $58,000 of contributions!

It really pays to be self-employed when it comes to retirement deductions. Be sure you're taking full advantage of your opportunities!

12/09/2021

Tax-Loss Harvesting !

Here is your Tax "loophole" tip for the day.
Tax-Loss Harvesting.….. Save some money on taxes this year. If you are invested in the
stock market chances are you have a lot of
appreciated stocks with the market up 25%
YD. Let's say you have gains you want to
realize of $1000 in Apple stock in your
brokerage account. If you were to sell it you
would owe taxes on your profit. However,
let's say you were late to the trend and are
also down $1000 in Tesla stock. You could
sell your Tesla stock at a $1k loss to offset
your $1k earnings from Apple and owe $0 in taxes. You could then re-buy shares of Apple and have a new tax basis and you could buy shares of a company similar to Tesla (Rivian?) however, you can not rebuy Tesla if sold for a loss within 30 days, this is what is known as a wash sale. Hope this helps and saves you some money in capital gains tax.

05/09/2021

03/17/2021

https://www.irs.gov/newsroom/tax-day-for-individuals-extended-to-may-17-treasury-irs-extend-filing-and-payment-deadline

IR-2021-59, March 17, 2021 — The Treasury Department and Internal Revenue Service announced today that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021.

01/14/2021

Are you looking for tax preparation services - Contact me Now !

01/09/2021

It's National Law Enforcement Appreciation Day (L.E.A.D.)! Law Enforcement Officers of every rank and file have chosen a profession that puts their life on the line every day. On this day, we offer our respect and gratitude. Thank you to all those out there policing our communities and continuing to keep us safe in CT & nationwide.

01/06/2021

Successful people are cheerful, optimistic, and forward thinking. If you think you don't have anything to smile about, smile anyway. Positive thoughts drive out negative thoughts !

01/04/2021

A customer asked me how much it cost to DJ their event....

I answered him: $ 1500
He said: “So expensive for this job?”
I asked: How much do you think it would cost you?
He answers me: “$ 800 maximum... That's a pretty simple job right?!"
- For $ 800 I invite you to do it yourself.
- “But.... I don't know how to.”
- For $800 I'll teach you how to. So besides saving you $700, you'll get the knowledge for the next time you want
- It seemed right to him and he agreed.
- But to get started you need tools: Music library, computer, turntables, a mixer, speakers, wires, etc...
- “But I don't have all these equipment and I can't buy all of these for one job.”
- Well then for another $300 more I'll rent my stuff to you so you can do it.
- “Okay,” he says.
- Okay! Tuesday I'm waiting for you to start doing this work
- “But I can't on Tuesday I only have time today.”
- I'm sorry, but I'm only available Tuesday to teach you and lend you my stuff. Other days are busy with other customers events.
- “Okay! That means I'm going to have to sacrifice my Tuesday, give up my tasks.”
- I forgot, to do your job yourself, you also have to pay for the nonproductive factors.
- “That is? What is that?"
- Bureaucratic, record pool fees, tax, security, insurance, fuel etc.
- “Oh no!... But to accomplish these tasks, I'm going to spend more money and waste a lot of time!”
- “Do you have them? You can do it for me?"
- Okay!
- I'll provide you all the gear and production you need. Truck loading is done Monday evening or Tuesday morning you'll have to come by 6am to load the truck. Don't forget to be on time to avoid traffic
- “At 6am??? Nope! Too early for me! I used to getting up later..
- “You know, I've been thinking. Y’all better get the job done. I'd rather pay you the $1500. If I had to do it myself it wouldn't be perfect and it would cost me a lot more.”

——————
When you pay for a job, especially handcrafted skills, you pay not only for the equipment used, but also:

- Knowledge
- Experience
- Study
- Tools
- Services
- Time
- Punctuality
- Accountability
- Professionalism
- Accuracy
- Guarantee
- Sacrifices
- Safety and security
- Payment of tax obligations

No one can denigrate other people's work by judging prices.
Only by knowing all the elements necessary for the production of a certain work can you estimate the actual cost.

I did not write this dialogue, but am sharing it to support my fellow entertainers and entrepreneurs.

***PLEASE REPOST AND EDUCATE YOUR CLIENTS SO THEY SEE YOUR VALUE***

01/04/2021

If you received a PPP loan, you may not know that it’s forgivable, but not deductible.

Call my office with any questions you might have.