WCG Bizcast: Recent Episodes
WCG Inc.
WCG Inc. (formerly the Watson CPA Group) is a progressive tax and consultation firm in Colorado Springs providing nationwide advice to taxpayers and business owners.
Jason Watson, CPA, Joseph Bassett, EA, and Megan Oeltjenbruns, CPA, run through the common tax deductions that a CRNA can use as a 1099 contractor. What can be a business deduction and the rules that apply to getting that deduction.
Related Blog Posts: https://wcginc.com/kb/home-office-deduction/ https://wcginc.com/kb/tax-free-rental-of-your-home/ https://wcginc.com/kb/automobiles-and-llcs-s-corps/ https://wcginc.com/business-services/s-corp-salary/
Visit WCG today at: https://wcginc.com/
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Jason Watson, CPA, Joseph Bassett, EA, and Megan Oeltjenbruns, CPA, continue their discussion on the CRNA industry. How doing business differs depending on the state you have your business registered in and where you do your business. The impact a state could have on your income taxes and payroll processing too.
Visit WCG today at: https://wcginc.com/
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Jason Watson, CPA, Joseph Bassett, EA, and Megan Oeltjenbruns, CPA, discuss who a CRNA is and their industry. They break down the differences between a CRNA being a 1099 contractor or a W-2 employee and which gives a CRNA more money and more deductions.
Related Blog Post: https://wcginc.com/business-formation-services/s-corp-election/
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Jason Watson, CPA, Joseph Bassett, EA, and Megan Oeltjenbruns, CPA, talk about the type of business entity a CRNA should be set up as and why some states are easier than others to set up your business. The benefits of the S-Election.Why you could be wearing two hats now and how the election factors into your income.
Related Blog Post: https://wcginc.com/kb/basic-business-entities/
Visit WCG today at: https://wcginc.com/
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Jason Watson, CPA, Jason Schneider, CPA, and Megan Oeltjenbruns, CPA, wrap up our series of bizcasts discussing WCG and what we have to offer those looking to join our team. They discuss the type of client engagements we are seeking as a firm.
Visit WCG today at: https://wcginc.com/
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Jason Watson, CPA, Jason Schneider, CPA, and Megan Oeltjenbruns, CPA, discuss the culture at WCG for prospective employees looking for a new work family.
Visit WCG today at: https://wcginc.com/
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Jason Watson, CPA, Jason Schneider, CPA, and Megan Oeltjenbruns, CPA, discuss the challenges of our firm faces, internally and systemically, and why we are excited about them.
Visit WCG today at: https://wcginc.com/
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Jason Watson, CPA, Jason Schneider, CPA, and Megan Oeltjenbruns, CPA, discuss what it takes to be successful at WCG and the positions that we are seeking to fill.
Visit WCG today at: https://wcginc.com/
Find us Online! ► Facebook: https://www.facebook.com/WCGIncCPA/ ► LinkedIn: https://www.linkedin.com/company/wcginc ► Twitter: https://twitter.com/wcginccpa ► Instagram: https://www.instagram.com/wcginccpa/
Jason Watson, CPA, Jason Schneider, CPA and Megan Oeltjenbruns, CPA, discuss life at WCG. The leadership WCG is looking for and how two of our newest leaders have adapted to the merging of two CPA firms in the last year.
Visit WCG today at: https://wcginc.com/
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00;00;14;09 [Jason]: Jason Watson with WCG Incorporated here in Colorado
Springs, we're a local tax and accounting firm. Joined by Rachael
Weber and Joseph Bassett, both tax professionals for us. We're
also hosted by Axe and the Oak here in Colorado Springs, they've
been gracious enough to open up early for us, part of our Bourbon
and Business
00;00;31;29 series, podcasts and videos. We just got done wrapping up a video
and podcast on some of the bigger deductions that we see, cars,
that's always a big one for most small
00;00;42;29 business owners, meals and travel. We're going to talk this time or,
this time around about home office and then all the other like
goofier ones, if you will.
00;00;54;25 So, you know, tell me the rules, Rachael, on the home office
deduction.
00;01;00;04 [Rachael]: It's got to be used regularly and exclusively
00;01;03;27 [Jason]: Okay.
00;01;04;26 [Rachael]: In your home.
00;01;05;13 [Jason]: Okay, regular and exclusive and have a business.
00;01;09;01 [Rachael]: A Business purpose.
00;01;09;14 [Jason]: That's probably true for every deduction on a plan, right?
00;01;12;18 [Rachael]: Yeah.
00;01;12;27 [Jason]: For a business deduction to be a legitimate business
deduction it has to have a business purpose. So, use regularly and
exclusively. So, can you break those words down for me? What's
"regular" mean?
00;01;23;15 [Rachael]: "Regular" means you would be checking your emails,
invoicing your customers, doing administrative work. Okay. Meeting
with clients, holding your inventory. It could mean a whole host of
00;01;37;27 [Jason]: Right.
00;01;38;03 [Rachael]: of things. You're just doing that on a regular basis, not
once a month
00;01;42;26 [Jason]: Right.
00;01;43;14 [Rachael]: but on a regular basis.
00;01;44;21 [Jason]: Yeah. And one of the words that the IRS will also use too is
"continuous", right? This is regular and continuous, it's, it's, got a
life, you know, it's got a cycle.
00;01;53;28 [Jason]: So yeah, absolutely, regular is a big deal. We have folks
that have a rental, one rental, you know, they have a W-2 job, they
have all those things and they're trying to say, I have a home office
to manage my rental. It's just never going to happen. Now, if we
have 10 rentals, 6 rentals, that's all you do is manage your
00;02;11;02 rentals. We have some people that have 3 or 4 VRBOs or Airbnb,
short term rentals and that is all they do.
00;02;18;24 [Rachael]: Time consuming.
00;02;18;29 [Jason]: Their working that stuff 100% so yeah, so that's regular.
How about exclusive Joe? Joseph? What's exclusive?
00;02;24;27 [Joseph]: So, let's say you have an extra room in the bedroom
that's you want to use for your home office and it also can't be your
theater room. So you know, that's gotta be exclusively used for
business.
00;02;33;20 [Jason]: What if you're a videographer and the theater is your
business? I'm teasing you.
00;02;38;03 [Joseph]: Well, you have an argument there. Or, or
00;02;38;24 [Jason]: No, but you can't mix the use, yeah
00;02;41;07 [Joseph]: Right, unless you run a daycare out of your
00;02;42;13 [Jason]: Right.
00;02;42;21 [Joseph]: House as well.
00;02;43;05 [Jason]: Yeah, and daycare has its own special rules and this is not
the podcast for that because
00;02;47;27 [Joseph]: Right.
00;02;48;01 [Jason]: I don't know those rules by a memory. I look them up once
in awhile when I have to, but that's it. But right, those are some of
the shared use stuff can be daycare. Other than that, it's regular
and exclusive with a business purpose. So, tell me some of the
bank, the benefits of having a home office
00;03;05;25 deduction or home office reimbursement.
00;03;08;10 [Rachael]: Reimbursement? Is that part of your mortgage interest?
00;03;13;15 [Jason]: Okay.
00;03;13;23 [Rachael]: Your real estate taxes,
00;03;15;05 [Jason]: Okay.
00;03;15;19 [Rachael]: Utilities.
00;03;16;21 [Jason]: Okay.
00;03;17;09 [Rachael]: Could become a small deduction.
00;03;19;21 [Jason]: Okay.
00;03;21;11 [Rachael]: For you, a business deduction.
00;03;21;18 [Jason]: Yeah absolutely. And what are some of those expenses
that aren't otherwise available to be deducted? And mortgage
insurance, we say yes, right?
00;03;27;29 [Rachael]: Mm-hmm
00;03;28;14 [Jason]: Schedule A property taxes, we say yes, but how about the
other ones?
00;03;31;04 [Rachael]: Utilities, insurance
00;03;33;19 [Jason]: HOA dues.
00;03;34;21 [Rachael]: Yeah. Mm-hmm.
00;03;35;24 [Joseph]: Repairs. Okay, so suddenly those become deductible and
in a world where otherwise it wouldn't be.
00;03;40;11 [Rachael]: Right.
00;03;40;21 [Joseph]: Yeah.
00;03;41;01 [Jason]: Okay, and how do we calculate that home office
deduction?
00;03;45;17 [Rachael]: Well we do it by square footage.
00;03;48;07 [Jason]: Yeah, that is probably the most common, is square
footage. You could do it at room by room, the IRS allow that, they
actually mentioned that in Publication, what? 587, or whatever it is.
But I've never seen anybody do room by room.
00;04;00;15 [Rachael]: No.
00;04;00;20 [Jason]: It's always, usually, I shouldn't say always, but usually it's
square footage, yeah. So what's the basic calculation? It's the
home office space divided by
00;04;09;24 [Joseph]: Total space of the house.
00;04;10;26 [Jason]: Yeah, the total space of the house. What if you use your
garage, then what do you do?
00;04;15;08 [Joseph]: You include it.
00;04;16;12 [Jason]: Include it where?
00;04;17;08 [Joseph]: In both.
00;04;18;01 [Jason]: In both numerator and denominator? Yeah, exactly. So if
we're going to take the benefit of the garage and it's not otherwise
in the denominator then we have to add it in.
00;04;29;26 [Rachael]: Mm-hmm.
00;04;30;02 [Jason]: Yeah, exactly. So, that's home office. What's this 50 mile
rule thing? Who wants to talk about that?
00;04;38;14 [Joseph]: Right, so the 50 mile rule's, you know, kind of a safe
harbor if you will, that if you know, your home office is within 50
miles of your tax home then you can, you know, deduct expenses
associated with
00;04;50;29 commuting from the tax home to the home office.
00;04;54;17 [Jason]: Yeah, exactly. It's, they want, "they" being the IRS and the
tax court, they want your home office to be, there's no written rule
on this, it's more of a contrived rule.
00;05;06;23 But your home office needs to be within 50 miles of your tax home.
Your tax home is where you earn your revenue. So, the great
example, in one of the tax court cases, is a surgeon had a home in
Pennsylvania.
00;05;23;05 He drove to New York, I believe, and it was 130 miles away. He was
attempting to deduct all those commuting expenses and because
he was like, well, I got a home office. So then my commute is from
my bedroom to the basement. And then when I hop in the car, it's
all business miles, and of course the
00;05;43;06 IRS and tax court said "No." They said it's too far from your tax
home, basically. So they dis, disallowed all those expenses as
deductible expenses and
00;05;54;27 consider them commuting expenses, which is normally a personal
expense.
00;05;59;03 [Rachael]: Mm-hmm.
00;05;59;12 [Jason]: Non deductible. So, that's this 50 mile rule. What, you
know, talk to me about the audit rate risk for home offices and
00;06;09;25 [Rachael]: [Inaudible]
00;06;10;00 [Jason]: and, you've, and you've been doing taxes for a little bit of
time.
00;06;14;07 [Rachael]: Just a little while.
00;06;14;13 [Jason]: So tell me a little bit about the history.
00;06;16;12 [Rachael]: It's kind of high. Yeah and it's, it's almost like they can
walk in and assume you're doing something wrong because they're,
they're not easy rules. And you know, maybe the square footage
isn't complete or they can say, Hey, what's with the day bed and
your home office?
00;06;31;02 [Jason]: Right.
00;06;31;13 [Rachael]: Or, and it's not just the deductions that you're getting,
your utilities, your small amount of additional square footage, but
it's that commuting miles
00;06;42;07 [Jason]: Right.
00;06;42;15 [Rachael]: That are, it's going to be pricey
00;06;43;26 [Jason]: Yeah.
00;06;44;04 [Rachael]: If its not done right.
00;06;45;07 [Jason]: Yeah, absolutely. So, home offices, 20 years ago were not
very common, so it was a high audit rate risk.
00;06;53;19 [Rachael]: Mm-hmm.
00;06;54;11 [Jason]: Today telecommuters and all that stuff is a lot higher. But
now we're back to not being seen very often because if you're a
W-2 individual working out of your home office for a company out of
California,
00;07;07;05 you would have to deduct that on Form 2106.
00;07;10;19 [Rachael]: Mm-hmm.
00;07;11;04 [Jason]: And those expenses, those deductions are no longer
allowed. So, home office is almost been shrunk down to just for
business owners.
00;07;18;02 [Rachael]: Yeah.
00;07;18;29 [Jason]: So, how are we going to do that? Joseph, talk to, talk to us
about how we're going to do the home office from an S Corp
perspective.
00;07;28;20 [Joseph]: So, we'll use an accountable plan for the home office for
the S Corp and one of the reasons why we do that, so you know S
Corp's are cash basis, you know, and
00;07;38;07 [Jason]: Typically.
00;07;38;23 [Joseph]: Typically, typically.
00;07;39;14 [Jason]: Yes, small businesses enjoy using cash as their method of
00;07;43;18 [Joseph]: Right. Accounting, it's simple. Depending on their gross
receipts.
00;07;45;18 [Jason]: Yeah.
00;07;45;27 [Joseph]: And we just, we have you record it, you know, for like, like
Rachael said, your interest, taxes, insurance, and then you get
reimbursed by the S Corp for your business use percentage of
00;07;58;00 [Jason]: Okay.
00;07;58;06 [Joseph]: Business expenses.
00;07;59;18 [Jason]: So, just to back up for a viewers and listeners, an
accountable plan is the method used to reimburse people,
employees for business use of their personal assets.
00;08;13;03 [Jason]: Car, cell phone, home, are probably the biggest ones,
right?
00;08;16;05 [Joseph]: Mm-hmm.
00;08;16;19 [Jason]: So, and we forgot to put cell phone down on our big list of
deductions, but we can talk about that in a second. So, the benefit
to that is we're getting reimbursed by our business. That expense is
kind of tucked away on the S Corp tax return, using
00;08;35;29 an S Corp in your
00;08;36;29 [Joseph]: Mm-hmm.
00;08;37;28 [Jason]: example as occupancy expense. Not that you can't defend
it, not that we're doing anything wrong, but it certainly is not as high
of an audit rate as filing Form 8829.
00;08;49;29 [Rachael]: Mm-hmm.
00;08;50;06 [Jason]: Which is clearly the Office In Home worksheet.
00;08;53;12 [Joseph]: Right.
00;08;53;20 [Jason]: That gets tucked on or tacked onto your Schedule C, if you
were to have a business only on your 1040. So, that just shrinks
dramatically, the audit rate risk, from home office perspective.
00;09;07;06 [Joseph]: And too, S Corp's already face a lower audit rate
themselves.
00;09;10;14 [Jason]: Yes, 0.4% given I think 2017 data
00;09;14;28 [Joseph]: Mm-hmm, 2017, yeah.
00;09;15;02 [Jason]: Is the latest that we have now. So the IRS takes forever to
compile
00;09;19;03 [Joseph]: Yeah.
00;09;19;11 [Jason]: This stuff. I mean, I guess it makes a little bit of sense
because audits take time
00;09;23;07 [Rachael]: Mm-hmm.
00;09;23;18 [Jason]: to generate and to do. But I still like to think we can live in
a real time world. You know what I mean? Like we should know like
right now how many audits are happening. So, alright, let's talk
about commuting expenses. You know, you get up in the morning,
you drive to WCG Inc, you know, is
00;09;45;22 that an expense you can deduct?
00;09;47;09 [Rachael]: No, it's not.
00;09;48;01 [Jason]: Okay. Are you bummed out about that?
00;09;49;20 [Rachael]: Yes, I am.
00;09;50;08 [Jason]: Yeah, okay, we should write our Senators and our
Congress people. So, okay, so commute expenses? No. Even if
you travel far, let's say you moved to Denver and you drove every
day down in the Colorado Springs, it doesn't matter, right?
00;10;03;18 [Rachael]: Still personal, yeah.
00;10;03;27 [Jason]: Right, so there's no like, Hey, we recognize that you're
traveling really far, we'll give you that deduction. There's nothing
like that. So, commuting expenses, parking, tolls, all that associated
with going to
00;10;16;18 your tax home if you will, are not going to be deductible. So, great,
Country Club Dues, Rachel?
00;10;23;14 [Rachael]: No, can't do it.
00;10;24;15 [Jason]: No! Wow! Just hammered, boom.
00;10;28;06 [Rachael]: Sad, yeah.
00;10;29;14 [Jason]: Talk to me a little more about that. So we have someone
who has a membership somewhere, but they do entertain, shouldn't
say that
00;10;35;07 [Rachael]: Nope. Yeah.
00;10;35;11 [Joseph]: Yeah, discuss business.
00;10;36;08 [Jason]: They do discuss business at their country club.
00;10;40;17 [Rachael]: Mm-hmm.
00;10;40;20 [Jason]: How does that work?
00;10;41;29 [Rachael]: Those expenses for the country club dues are going to
be personal.
00;10;46;19 [Jason]: Right.
00;10;46;25 [Rachael]: It's great that they're generating business
00;10;48;29 [Jason]: Yes.
00;10;49;07 [Rachael]: At the country club
00;10;50;14 [Jason]: Okay.
00;10;50;20 [Rachael]: but the dues are not deductible.
00;10;52;01 [Jason]: All right, so this same member, buys a meal. The business
purpose is clear. They
00;10;59;20 [Rachael]: Yup.
00;10;59;23 [Jason]: Were there to discuss business and now this individual is
buying a meal that's going to get tacked on top of his or her dues.
How's that work?
00;11;07;16 [Rachael]: That meal portion is going to be 50%
00;11;10;14 [Jason]: Okay. Deductible as a business meal. Just, just like we've
always done.
00;11;13;06 [Rachael]: Mm-hmm.
00;11;13;09 [Jason]: With meals. Okay, great. Talk to me a little about
education. Can you run education expenses through your
business?
00;11;20;21 [Joseph]: It depends.
00;11;21;20 [Jason]: It depends, ah look just the classic accountant.
00;11;24;28 [Rachael]: Yeah, maybe.
00;11;26;00 [Jason]: Yeah.
00;11;26;14 [Joseph]: If those education expenses are to improve your current
field, then possibly. If they're to do something completely different,
you know so if I was going to go to school to become a doctor now,
which probably won't happen.
00;11;37;13 [Jason]: Yeah.
00;11;37;23 [Joseph]: But, those won't be deductible.
00;11;40;03 [Jason]: Right, so the rule is it has to improve your current work
skills. And you can even do, deducted a degree or even like, you
know, college courses, even if it leads to a degree, provided it's
improving your current
00;11;57;20 work skills. So, you're absolutely correct, the other half of that is if
you need it for certifications, like your continuing educations and all
that stuff. So, people who are CPAs have to go do all these, you
know, nauseating
00;12;10;15 [Rachael]: [All laugh]
00;12;11;02 [Jason]: Continuing Ed credits, you know, I'm sure we learned a lot
too, but you know, anyway, so, so that's education. How about your
children? Can you hire your children and consider them employees
and have the company
00;12;27;10 pay for the education? Who wants to take that one?
00;12;31;01 [Joseph]: I would say yes.
00;12;32;07 [Jason]: I'd say no. [Laughs]
00;12;34;09 [Joseph]: Like, the client advocacy in me would say Yes.
00;12;38;13 [Jason]: Yeah.
00;12;38;20 [Joseph]: Because of the, the relation though it will be disallowed.
00;12;41;15 [Jason]: Right? Yeah, I was giving you a hard time. So section 127
says if your child is 20 years or younger, they have attribution to
you as Mom and Dad being an owner of the company.
00;12;54;21 If you own 5% or more of the company, you can't deduct that
education.
00;13;00;01 [Jason]: But if your child legitimately works, and is 21 or older, so
we're talking junior or senior
00;13;08;24 [Rachael]: In college.
00;13;08;29 [Jason]: If you're on a six year plan, you're a sophomore, right?
Then the company can pay up to 5,250 a year, I think that's 2019
limit. So, that might get index every year, like everything else. So,
anyway that's education. How about client gifts? How do you
handle that?
00;13;23;16 [Rachael]: Oh, they're $25 cap.
00;13;27;08 [Jason]: Ahh $25?
00;13;27;14 [Rachael]: I know, its really, yep. Mm-hmm.
00;13;28;29 [Joseph]: Well they give you the $4 for gift wrapping, so
00;13;31;16 [Jason]: And they give you $4 per pen or something.
00;13;33;09 [Joseph]: Per pen, yeah.
00;13;33;11 [Rachael]: That's advertising, yes.
00;13;37;02 [Jason]: So, talk to me more about the $25 rule. Is that like all gifts
or, or is it just for gifts to specific people?
00;13;48;14 [Rachael]: It's gifts to a limited clientele. If you were handing gifts
out to the general public and it was a lower cost, then that would be
considered advertising.
00;14;00;07 [Jason]: Okay.
00;14;00;14 [Rachael]: And I think they give $4 for each advertising gift.
00;14;04;21 [Jason]: Yeah.
00;14;04;27 [Rachael]: Which I'm not quite sure what, you know, a pen or a
calendar or something like that.
00;14;08;26 [Jason]: Yeah, I don't know how much stuff like that costs either,
yeah.
00;14;12;12 [Rachael]: But your $75 wine basket is going to be a $25 business
gift.
00;14;17;29 [Jason]: Yeah, and as I've seen it, read it maybe in Journal of
Accountancy, other things like that, but that's an individual limit. So
if you don't donate, or if you don't provide that gift to an individual, if
you just do it to the business
00;14;33;01 [Rachael]: Mm-hmm.
00;14;33;10 [Jason]: There might be different rules
00;14;34;03 [Rachael]: Yes.
00;14;34;13 [Jason]: allowing you to take more deduction. So if you say, Dear
Bob, thanks for all the business
00;14;39;27 [Rachael]: versus staff at.
00;14;41;03 [Jason]: Yeah, exactly.
00;14;42;19 [Rachael]: Yeah.
00;14;43;06 [Jason]: yeah, exactly. So, and you can see why, you know, the
IRS is always worried about transfer of wealth without taxation.
00;14;50;02 [Rachael]: Mm-hmm.
00;14;50;12 [Jason]: Right? So if you, if you come in there with a bunch of client
gifts for one person it might look like a transfer of wealth. So, how
about professional attire? I am rocking the WCG.
00;15;00;18 [Joseph]: That's true, very nice.
00;15;00;29 [Jason]: On my shirt here. But tell me about professional attire.
People will constantly ask you
00;15;07;09 [Rachael]: Yep.
00;15;07;28 [Jason]: I have to look good in my business suit, I have to have my
nails and hair done, I have to rock, I have to rock this image.
00;15;15;25 [Rachael]: And they're all personal.
00;15;17;27 [Jason]: Yes, even though they're dead sexy, right? Even though
they're very good looking.
00;15;21;21 [Rachael]: And necessary
00;15;22;01 [Jason]: Yes.
00;15;22;14 [Rachael]: Absolutely necessary. Yeah. So there's a business
purpose behind it, but no tax deduction.
00;15;26;09 [Jason]: Right. So what's the rule?
00;15;28;07 [Joseph]: If it's not suitable for everyday wear
00;15;30;00 [Jason]: Yes.
00;15;30;11 [Joseph]: You can deduct it.
00;15;30;20 [Jason]: So, if it's, yeah, so if you can, if it's suitable for everyday
wear, easily convertible into everyday wear, then it's not deductible.
00;15;38;08 [Rachael]: Mm-hmm.
00;15;38;25 [Jason]: Right? Business suits are, you know, clearly something
you can convert to everyday use. We do have some, TV
personalities.
00;15;47;10 [Joseph]: Yes.
00;15;47;15 [Jason]: We do have some models, you know, and we can, we can
identify some of that attire as costumes, something that they
wouldn't, you know, be caught dead in. And that's true for some of
these models, for sure.
00;16;01;26 They wear stuff and they're like, I'm never wearing that in public. It
just, it looks good on a cover of a magazine, but that's about it.
00;16;08;15 [Jason]: Those are costumes, they're not suitable for everyday use.
Those are something that we can deduct. TV personalities, they'll
buy, you know, a thousand jackets and they'll give them away and
so those become marketing toys
00;16;20;19 [Rachael]: Yeah.
00;16;20;25 [Jason]: Or ploys or whatever, so absolutely. Let's talk about, per
diem and I'll just kind of talk about this real quick. Per diems a funny
thing. If you own 10% or more of a corporation and, and also there
might be some
00;16;38;21 attribution there, where if your brother or your sister or your Mom or
00;16;42;16 [Joseph]: Spouse.
00;16;43;12 [Jason]: Whatever, then you are assumed to have the same,
greater than 10%. If you are in that boat, you cannot take a per
diem reimbursement. So the scenario would be like this, I'm 100%
owner of a corporation. I pay myself $71 a day for every day that
I'm in San Francisco, because
00;17;02;15 that's the per diem rate. Let's say using 2018 numbers, I haven't
seen them, I haven't looked at per diem in a while cause we don't,
we don't see 2106 expenses anymore. But, that would not be
allowed. WCG Inc says, Rachel, we need you to go to, let's say
Cortez, we really
00;17;18;23 didn't like you very much. I'm teasing, Cortez is lovely. But, and we
say, Hey, we're going to give you $71 per per day that you're
00;17;27;08 there for meals, that would be acceptable.
00;17;30;11 [Rachael]: Mm-hmm.
00;17;30;13 [Jason]: Now that will not be revenue to you. You maybe only spend
$20, you know, whatever. You still get to take that $71 as tax free
income.
00;17;40;24 [Jason]: So, because you don't own 10% or more of WCG Inc.
That'll change, you know, you'll own, own it all and
00;17;49;07 [Rachael]: Eighty-five percent like you.
00;17;50;09 [Jason]: Joseph, I'll be working for you one day, it'll be awesome.
So, but that's per diem, per diem is a little tricky. There is the, the
meals and incidentals component. There is the lodging component.
The meals and incidentals component, as far as I know and read it,
is
00;18;06;24 available to Schedule C, Sole Prop, single member LLC types. The
minute you're a corporation or you act with a corporation through an
S Corp election that gets tossed out the window.
00;18;18;06 Lodging, regardless, is always going to be actual expenses. You
don't get the high, low seasonal rates and all that stuff that you see
in those per diem tables as a business owner. So, we ran through
home office, all kinds of good stuff there. We ran through all kinds
of other deductions that we get entertained with,
00;18;38;10 quite literally, cause some people are pretty clever, right?
00;18;41;22 [Rachael]: Mm-hmm.
00;18;41;29 [Jason]: With, with their deductions. The bottom line is, people ask
me all the time and they ask all of us all the time, how do I save on
taxes, right? And the first thing I say is, look, your job is to build
wealth, not save taxes.
00;18;56;12 We can save taxes along the way, that's great. But your job in life is
to build wealth. Now, if you still want to save taxes the trick is to
look at what cash you're already comfortable with leaving your
body.
00;19;10;24 [Jason]: So go through your checkbook and try to figure out if there
was one thing that you missed or maybe this expense really did
have a business connection to it and I forgot that it did, or to dig
deep. So, it's to look at the money that you're already willing to
spend and try
00;19;28;06 to find a business connection.
00;19;29;23 [Rachael]: Mm-hmm.
00;19;30;15 [Jason]: Now, I say find a business connection, like discover a
business connection
00;19;35;18 [Rachael]: Not create one.
00;19;35;27 [Jason]: Not fabricate a business connection. So anyway, those,
those are some of the other business deductions that we see a lot
of: commuting expenses, country club dues, education, client
00;19;47;20 gifts, professional attire, per diem, all that good stuff. We talked
about home office in this segment as well. We didn't talk about cell
phones. You know, cell phones, you know, folks will try to deduct
100%, right?
00;20;02;16 [Joseph]: Mm-hmm.
00;20;02;21 [Jason]: "I use it for my business," oh, I know you use it for your
business, I see that. But the minute you get a text saying, Hey
honey, you know, you're out of beer you should probably pick some
more up on the way home; and milk and eggs are low too. Now
your cell phone's no longer 100%.
00;20;17;04 [Rachael]: Mm-hmm.
00;20;18;17 [Jason]: So, you know our firm-wide soft ceiling is around 80%, if
you're a realtor, you're probably on the phone all the time. People
have kicked landlines to the curb but still your phone is going to
have a high personal use and I, I believe, we believe as a firm, 20%
is
00;20;37;00 about the minimum there, meaning 80% is for business.
00;20;40;26 [Jason]: Maybe you're a dentist, right? And you use your cell phone
occasionally, you do have an office phone and all those other
things, so maybe that's like 30% business use and 70% for
personal. So, commonly we see cell phones being paid for by the
business and they
00;20;58;19 truly are a mixed-use asset, so a mixed-use asset should be
00;21;03;06 [Joseph]: Paid by you personally
00;21;04;10 [Jason]: Exactly.
00;21;05;00 [Joseph]: And reimbursed to you on an accountable plan.
00;21;06;04 [Jason]: Yup. So, assets that you own personally should be paid for
personally. If there's a business connection or use of that asset
then get reimbursed. No different than you working for Google and
Google says, Hey, you know, drive down to the store, pick up some,
you know, some pencils and we'll
00;21;21;15 reimburse you. Well, you bring in a receipt and you're bringing in
your mileage log, and maybe you have to use your cell phone and
all that stuff, and they would cut you a check for the business use of
your personal stuff. So, anyway those are some of the common tax
deductions that we see here at WCG.
00;21;36;06 My name is Jason Watson with WCG. I'm alongside Rachel Weber
and Joseph Bassett. We're at the Axe and the Oak and this is a part
of our Bourbon and Business series of podcasts and videos and we
thank you for joining us and we'll
00;21;51;00 talk to you real soon.
In this episode of our Bourbon and Business series, Jason Watson, CPA, sits down with Rachael Weber and Joseph Bassett of WCG Inc (formerly Watson CPA Group) to chat about our favorite part of tax season - tax deductions! The three most popular being car, meals, and travel deductions for both personal and business use. Stay tuned for part 2 of Business Tax Deductions, where we delve into the "odds and ends" deductions like your home office and country club dues!
This material is based on content from our website and our book, Taxpayer’s Comprehensive Guide to LLCs and S Corps.
https://wcginc.com/kb/operating-agree...
https://wcginc.com/book
Thank you!
Warm Regards,
WCG Inc. (formerly Watson CPA Group)
2393 Flying Horse Club Drive
Colorado Springs, CO 80921
719-387-9800 phone
719-345-2100 text message
855-345-9700 fax
https://wcginc.com/
Facebook - https://wcginc.com/facebook
LinkedIn- https://wcginc.com/linkedin
Twitter - https://wcginc.com/twitter
YouTube - https://wcginc.com/youtube
Special Thanks to Axe and the Oak Distillery for hosting our Bourbon and Business series!
In this second segment on Business Financial Planning, Jason Watson, CPA, sits down with Bud Rainsberger of RWA Partners in Colorado Springs to continue their discussion about when, why, and how to sell your small business. Bud explains the importance of understanding your motivation for selling, and, he touches on the emotionality of the decision and how it can impact your personal and professional life going forward. Special thanks go to Axe and the Oak Distillery for graciously hosting our Bourbon and Business podcast series! This material is based on content from our website and our book, Taxpayer’s Comprehensive Guide to LLCs and S Corps.
This material is based on content from our website and our book, Taxpayer’s Comprehensive Guide to LLCs and S Corps.
https://wcginc.com/kb/operating-agree...
https://wcginc.com/book
Thank you!
Warm Regards,
WCG Inc. (formerly Watson CPA Group)
2393 Flying Horse Club Drive
Colorado Springs, CO 80921
719-387-9800 phone
719-345-2100 text message
855-345-9700 fax
https://wcginc.com/
Facebook - https://wcginc.com/facebook
LinkedIn- https://wcginc.com/linkedin
Twitter - https://wcginc.com/twitter
YouTube - https://wcginc.com/youtube
In this first segment about Business Financial Planning, Jason Watson, CPA, sits down with Bud Rainsberger of RWA Partners in Colorado Springs to discuss the importance of having a well-defined plan for your business investments. Topics covered include; when to sell or not sell your business, how much cash are you taking out of the business, and how personal interests can compete with business interests. Special thanks go to Axe and the Oak Distillery for graciously hosting our Bourbon and Business podcast series!
This material is based on content from our website and our book, Taxpayer’s Comprehensive Guide to LLCs and S Corps.
https://wcginc.com/kb/operating-agree...
https://wcginc.com/book
Thank you!
Warm Regards,
WCG Inc. (formerly Watson CPA Group)
2393 Flying Horse Club Drive
Colorado Springs, CO 80921
719-387-9800 phone
719-345-2100 text message
855-345-9700 fax
https://wcginc.com/
Facebook - https://wcginc.com/facebook
LinkedIn- https://wcginc.com/linkedin
Twitter - https://wcginc.com/twitter
YouTube - https://wcginc.com/youtube
In this Bourbon and Business podcast episode, Jason Watson, CPA, and Quentin Leighty, President of First National Bank in Monument, Colorado, discuss the controversial issue of Marijuana Banking. Quentin sheds light on the gray areas of banking regulations at the Federal and State level, and, offers insight about the recently passed SAFE Banking Act, which protects financial institutions in legalized states that want to offer banking services to MMJ businesses. Special Thanks to Axe and the Oak Distillery for hosting our Bourbon and Business series!
This material is based on content from our website and our book, Taxpayer’s Comprehensive Guide to LLCs and S Corps.
https://wcginc.com/kb/operating-agree...
https://wcginc.com/book
Thank you!
Warm Regards,
WCG Inc. (formerly Watson CPA Group)
2393 Flying Horse Club Drive
Colorado Springs, CO 80921
719-387-9800 phone
719-345-2100 text message
855-345-9700 fax
https://wcginc.com/
Facebook - https://wcginc.com/facebook
LinkedIn- https://wcginc.com/linkedin
Twitter - https://wcginc.com/twitter
YouTube - https://wcginc.com/youtube
In segment #2 of Business Banking, Jason Watson, CPA, and Quentin Leighty, President of First National Bank in Monument, Colorado, continue their discussion about how to qualify for small business loans. Topics in this episode cover basic business lending options including collateralization, business acquisition lending, IRA loans, and SBA loans. Special thanks to Axe and the Oak Distillery for hosting our Bourbon and Business podcast series!!
This material is based on content from our website and our book, Taxpayer’s Comprehensive Guide to LLCs and S Corps.
https://wcginc.com/kb/operating-agree...
https://wcginc.com/book
Thank you!
Warm Regards,
WCG Inc. (formerly Watson CPA Group)
2393 Flying Horse Club Drive
Colorado Springs, CO 80921
719-387-9800 phone
719-345-2100 text message
855-345-9700 fax
https://wcginc.com/
Facebook - https://wcginc.com/facebook
LinkedIn- https://wcginc.com/linkedin
Twitter - https://wcginc.com/twitter
YouTube - https://wcginc.com/youtube
In this first segment about Business Banking, Jason Watson, CPA sits down with Quentin Leighty, President of First National Bank in Monument, Colorado, to discuss the pros of small business owners utilizing community banking vs. going to the "big banks" to finance a business and the perks of relationship-based models for banking. Special thanks go to Axe and the Oak Distillery for graciously hosting our Bourbon and Business podcast series!
This material is based on content from our website and our book, Taxpayer’s Comprehensive Guide to LLCs and S Corps.
https://wcginc.com/kb/operating-agree...
https://wcginc.com/book
Thank you!
Warm Regards,
WCG Inc. (formerly Watson CPA Group)
2393 Flying Horse Club Drive
Colorado Springs, CO 80921
719-387-9800 phone
719-345-2100 text message
855-345-9700 fax
https://wcginc.com/
Facebook - https://wcginc.com/facebook
LinkedIn- https://wcginc.com/linkedin
Twitter - https://wcginc.com/twitter
YouTube - https://wcginc.com/youtube
Jason Watson, CPA, of WCG Inc. (formerly the Watson CPA Group) with Amanda Rowles and Joseph Bassett discuss WCG's tax preparation process including safely handling your tax documents through our secure client portal and checklists to ensure completeness. They also discuss the turn-around time and how WCG interfaces with the client for missing information or clarifications.
The episode concludes with tax return reviews, tax filing deadlines and tax return extensions.
This material is based on content from our website and our book, Taxpayer’s Comprehensive Guide to LLCs and S Corps.
https://wcginc.com/getting-started/
https://wcginc.com/personal-tax-prep/
https://wcginc.com/wp-content/documents/SendingDocs.pdf
https://wcginc.com/book
Thank you!
Warm Regards,
WCG Inc. (formerly Watson CPA Group)
2393 Flying Horse Club Drive
Colorado Springs, CO 80921
719-387-9800 phone
719-345-2100 text message
855-345-9700 fax
https://wcginc.com/
Facebook - https://wcginc.com/facebook
LinkedIn- https://wcginc.com/linkedin
Twitter - https://wcginc.com/twitter
YouTube - https://wcginc.com/youtube
Jason Watson, CPA, of WCG Inc. (formerly the Watson CPA Group) with Amanda Rowles and Joseph Bassett discuss the housekeeping of operating an S Corporation. Issues reviewed are tax planning including all household income sources ending in mock tax returns. They also discuss Periodic Business Reviews (PBRs) and WCG's model of unlimited business consultation.
They also review the tax filing deadlines for business returns (S Corps and Partnerships are March 15 whereas C Corporations are April 15). And! Just because pass-thru entities do not have an income tax obligation at the federal level, there might be state issues; that is discussed as well.
This material is based on content from our website and our book, Taxpayer’s Comprehensive Guide to LLCs and S Corps.
https://wcginc.com/business-services/periodic-business-review/
https://wcginc.com/corporate-tax-prep/
https://wcginc.com/tax-center/getting-started/
https://wcginc.com/book
Thank you!
Warm Regards,
WCG Inc. (formerly Watson CPA Group)
2393 Flying Horse Club Drive
Colorado Springs, CO 80921
719-387-9800 phone
719-345-2100 text message
855-345-9700 fax
https://wcginc.com/
Facebook - https://wcginc.com/facebook
LinkedIn- https://wcginc.com/linkedin
Twitter - https://wcginc.com/twitter
YouTube - https://wcginc.com/youtube
Jason Watson, CPA, of WCG Inc. (formerly the Watson CPA Group) with Amanda Rowles and Joseph Bassett review the S Corp benefits, reduction of self-employment taxes and the whole S Corp vs LLC discussion. But! The crux of this episode is how to retroactively file for a late S Corp election using Form 2553 and IRS Rev Proc 2013-30.
Then this episode discusses the timing of the late S Corp election and how it impacts tax return filing deadlines, extensions, late payroll events, and other pitfalls. Here is a spoiler alert- filing a S corporation election is a piece of cake and we are batting 100% in getting the successfully accepted by the IRS with huge tax savings.
This material is based on content from our website and our book, Taxpayer’s Comprehensive Guide to LLCs and S Corps.
https://wcginc.com/late-s-corp-election/
https://wcginc.com/wp-content/documents/SCorpQuestions.pdf
https://wcginc.com/s-corp-election/
https://wcginc.com/book
Thank you!
Warm Regards,
WCG Inc. (formerly Watson CPA Group)
2393 Flying Horse Club Drive
Colorado Springs, CO 80921
719-387-9800 phone
719-345-2100 text message
855-345-9700 fax
https://wcginc.com/
Facebook - https://wcginc.com/facebook
LinkedIn- https://wcginc.com/linkedin
Twitter - https://wcginc.com/twitter
YouTube - https://wcginc.com/youtube
Jason Watson, CPA, of WCG Inc. (formerly the Watson CPA Group) with Amanda Rowles and Joseph Bassett discuss the S Corp tax benefits versus the garden-variety LLC. The S Corp vs LLC discussion starts with general S Corp benefits, but does a deeper dive into reducing self-employment taxes and lowering audit rate risk.
They also review the Does It Make Sense questions such as-
Does your business earn over $30,000 net income after expenses? Say Yes.
Are you located in New York City or Tennessee where S corporation tax rates are egregious and suck up all the federal tax savings? New Hampshire? Say No. Although there might be exceptions where an S Corp makes sense NYC, TN and NH in order to maximize Section 199A deduction benefits.
Do you have other W-2 income that exceeds or comes close to exceeding the Social Security limits of $132,900 (2019)? Say No. If you say Yes, we need net business income to exceed $200,000 in #1 above so that the Medicare savings exceeds the “lost” Social Security tax paid by the S Corp.
Is this a going concern? In other words, is the business going to continue to earn the same income or more each year? Say Yes.
Do you have an LLC or some other entity in place that can be elected to be taxed as an S Corp? Say Yes. If you say No, we have options just not elegant ones such as shelf corporations.
Do you have other partners besides a spouse… business partners, that is? Say No. If you say Yes, are you currently splitting income based on ownership percentages or some formula? If you say Formula, then we’ll need to explore a multi-entity arrangement.
Does your entity own any appreciating assets such as real estate? Say No. We don’t put appreciating assets into an S corporation. Holding companies own real estate and operating companies elect S Corp status. Chinese Wall.
The episode concludes with how to file the S corporation election, Form 2553, etc.
This material is based on content from our website and our book, Taxpayer’s Comprehensive Guide to LLCs and S Corps.
https://wcginc.com/wp-content/documents/SCorpQuestions.pdf
https://wcginc.com/s-corp-election/
https://wcginc.com/book
Thank you!
Warm Regards,
WCG Inc. (formerly Watson CPA Group)
2393 Flying Horse Club Drive
Colorado Springs, CO 80921
719-387-9800 phone
719-345-2100 text message
855-345-9700 fax
https://wcginc.com/
Facebook - https://wcginc.com/facebook
LinkedIn- https://wcginc.com/linkedin
Twitter - https://wcginc.com/twitter
YouTube - https://wcginc.com/youtube
The Entity Formations and Considerations podcast by WCG Inc. (formerly the Watson CPA Group) explores basic business entity considerations such physical nexus, economic nexus, LLCs versus corporations, and how this impacts professionals such as attorneys, physicians, accountants, engineers, etc. plus adding other members such as a spouse or children. We also touch lightly on the benefits of an S Corp but we also have a full-blown podcast on that topic alone (stay tuned).
This podcast pulls from our book, Taxpayer's Comprehensive Guide to LLCs and S Corps, which is available on our website at-
https://wcginc.com/business-services/book/
Specific to this podcast, you can read Chapter 1 from our Knowledge Base articles as well-
https://wcginc.com/kb/category/taxpayers-guide-to-llcs-and-s-corps/chap-1-business-entities-llcs/
We hope you enjoy our podcast (it was our first one!). Please contact us with any additional questions or comments.
Warm Regards,
WCG Inc. (formerly Watson CPA Group)
2393 Flying Horse Club Drive
Colorado Springs, CO 80921
719-387-9800 phone
719-345-2100 text message
855-345-9700 fax
https://wcginc.com/
Facebook - https://wcginc.com/facebook
LinkedIn- https://wcginc.com/linkedin
Twitter - https://wcginc.com/twitter
YouTube - https://wcginc.com/youtube