Tax Tips for Legally Married Same-Sex Couples

Under a joint IRS and U.S. Department of the Treasury ruling issued in 2013, same-sex couples, legally married in jurisdictions that recognize their marriages, are treated as married for federal tax purposes, including income and gift and estate taxes. The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage.

In addition, the ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA and claiming the earned income tax credit or child tax credit. Continue reading

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The Simplified Option for Home Office Deduction

If you’re one of the more than 3.4 million taxpayers who claimed deductions for business use of a home (commonly referred to as the home office deduction)–but haven’t taken advantage of it because you thought it was too complicated–then you might be interested in the simplified option.

Available since tax year 2013, the optional home office deduction is capped at $1,500 per year and is based on $5 a square foot for up to 300 square feet of office space.

Currently, taxpayers claiming the home office deduction are generally required to fill out a 43-line form (Form 8829, Expenses for Business Use of Your Home) often with complex calculations of allocated expenses, depreciation, and carryovers of unused deductions. Taxpayers claiming the optional deduction complete a significantly simplified form requiring taxpayers to complete a short worksheet in the tax instructions, and then enter the result on the tax return. There is a special calculation for daycare providers.

Self-employed individuals claim the home office deduction on Form 1040, Schedule C, Line 30; farmers claim it on Schedule F, Line 32 and eligible employees claim it on Schedule A, Line 21.

Though homeowners using the new option cannot depreciate the portion of their home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions need not be allocated between personal and business use, as is required under the regular method. Business expenses unrelated to the home, such as advertising, supplies, and wages paid to employees are still fully deductible.

Current restrictions on the home office deduction, such as the requirement that a home office must be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the new option.

Regardless of the method used to compute the deduction, business expenses in excess of the gross income limitations are not deductible. Deductible expenses for business use of a home include the business portion of real estate taxes, mortgage interest, rent, casualty losses, utilities, insurance, depreciation, maintenance, and repairs. In general, expenses for the parts of the home not used for business are not deductible.Deductions for business storage are deductible when the dwelling unit is the sole fixed location of the business or for regular use of a residence for the provision of daycare services; exclusive use isn’t required in these cases.

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Small Business Tax Tips: Payroll Expenses

Federal law requires most employers to withhold federal taxes from their employees’ wages. Whether you’re a small business owner who’s just starting out or one who has been in business a while and is ready to hire an employee or two, here are five things you should know about withholding, reporting, and paying employment taxes.
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How to Keep Your QuickBooks Data Safe

Your QuickBooks company file contains some of the most sensitive information on your computer. You may have customers’ credit card numbers and employees’ Social Security numbers. An intruder who captured all that data could create tremendous problems for you and a lot of other people.

That’s probably the worst-case scenario. But other situations could also spell disaster for your business, which involves losing your company data through fraud, hacking, or simple technical failures.

The importance of protecting your QuickBooks company file, especially your customer and payroll information, cannot be overstated. Whether someone steals it or it’s inaccessible for another reason, it’s gone. Keeping your business going after such a loss would be very difficult – maybe even impossible. The tips below should help prevent that from happening. Continue reading