Index

Numerics

  • 90 percent rule, safe harbor method vs., 170–171
  • 401(k) plans, 53–54
  • 403(b) plans, 54

A

  • accessibility, of funds, 56
  • accordion file, 109
  • accounting
    • managing with FreshBooks, 241
    • managing with QuickBooks, 241
    • methods of, 139–140
  • accounting system
    • about, 104
    • documenting expenses and income, 105
    • employment (payroll) tax, 106–107
    • income tax, 106–107
    • reducing taxes, 107–108
    • sales tax, 106–107
    • separating business and personal finances, 104–105
  • accrual method of accounting, 140
  • accuracy, double-checking for, 215
  • ACS (automated collection system), 211
  • adjusted gross income (AGI), 120, 126
  • adjustments to income
    • about, 125–126
    • Line 23: Educator expenses, 126
    • Line 24: Certain business expenses of reservists, performing artists, and fee-basis government officials, 126–127
    • Line 25: Health savings account deduction, 127
    • Line 27: Deductible part of self-employment tax, 128
    • Line 28: Self-employed SEP, SIMPLE, and qualified plans, 128–129
    • Line 29: Self-employed health insurance deduction, 129
    • Line 32: IRA deduction, 129–130
    • Line 33: Student loan interest deduction, 130–131
    • Line 34: Tuition and fees, 131
  • advertising, on IRS Form 1040 Schedule C, 143
  • Affordable Care Act (a.k.a. Obamacare), 15, 40–41
  • AGI (adjusted gross income), 120, 126
  • allowances, on IRS Form 1040 Schedule C, 141
  • alternative minimum tax (AMT), 20
  • amending tax returns, 209–210
  • American Institute of Certified Public Accountants, 228
  • American Opportunity Credit, 131, 133–134
  • AMT (alternative minimum tax), 20
  • apps
    • Electronic Merchant Systems' EMSplus, 240
    • Expensify, 239–240
    • FreshBooks, 241
    • MileIQ, 240
    • PayPal, 240
    • Payroll, 241
    • QuickBooks, 241
    • recommended, 239–242
    • Square, 240
    • Stripe, 240
    • TurboTax Self-Employed, 242
  • assessment notices
    • about, 189
    • income verification, 190
    • IRS Form CP515, “Request for Your Tax Return,” 190–191
    • IRS Form CP518, “You Didn't Respond Regarding Your Tax Return,” 190–191
    • IRS Form CP2000, “Notice of Proposed Adjustment for Underpayment/Overpayment,” 190
    • IRS Form CP2501, 190
  • asset allocation, retirement accounts and, 61–62
  • assets
    • giving away, 91–94
    • leaving to a spouse, 94–95
    • protecting, 9
  • at-risk rules, on IRS Form 1040 Schedule C, 153–155
  • attorneys, 201
  • audits
    • about, 197–198
    • correspondence, 198
    • field, 200
    • office, 199–200
    • preparing for, 201–202
    • random statistical, 200–201
    • reducing chances of, 212–215
    • risks of, 26, 166–167
    • statute of limitations on, 203
    • types, 198–201
    • winning, 202–203
  • auto costs, as an employee benefit, 43
  • automated collection system (ACS), 211
  • automobiles, depreciation deduction for, 14
  • awards, on Schedule 1, 125

B

  • backup withholding notice, 192
  • balance due notice, 206
  • balanced funds, 66
  • bartering, 124
  • BBB (Better Business Bureau), 234
  • benefits, employee
    • about, 37–38
    • auto costs, 43
    • deductible for corporation owners, 44
    • dependent care, 43
    • dues, 43
    • educational expense reimbursement, 43
    • group term life insurance, 43
    • health insurance plans, 38–42
    • long-term care insurance, 43
    • meals, 43
    • programs on IRS Form 1040 Schedule C, 149
    • retirement plans, 38
    • travel and hotels, 43
  • Better Business Bureau (BBB), 234
  • bond funds, 67–70
  • bond returns, estimating, 71–72
  • bootstrapping, 77
  • brokerage commission, ETFs and, 60
  • brokers, for negotiating leases, 80
  • business entities
    • choosing, 252
    • incorporation, 26–32
    • limited liability companies (LLCs), 35–37
    • partnerships, 34–35
    • S corporations, 32–34
    • sole proprietorships, 25–26
    • types of, 8, 24–37
  • business expenses
    • about, 108
    • documenting, 105
    • temporary waivers of, 69
    • tracking with apps/software, 239–240
  • business finances, separating from personal finances, 104–105
  • business income (loss)
    • about, 121–122
    • declaring all, 212
    • documenting, 105
    • double-counted, 204
    • exempt, 204
    • incorrect, 204
    • repeated, 166–167
    • taxable, 16–17
  • business property, buying, 82–86
  • buying
    • business property, 82–86
    • cash-value life insurance, 95–97
    • health insurance, 41
    • software, 220–221

C

  • C corporations, 26–32, 33
  • canceled debt, 124
  • capital gain (or loss), 122
  • capitalization (cap), 62–63
  • car expenses
    • about, 109
    • on IRS Form 1040 Schedule C, 143–146
  • cash accounting basis, 11
  • cash basis, 107
  • cash method of accounting, 139
  • cash-value life insurance, 95–97
  • certified public accountant (CPA), 197, 201, 227–228, 230
  • CFA (Chartered Financial Analyst), 55
  • charitable contributions/expenses, 247–248
  • charitable lead trust, 99
  • charitable remainder trust, 98–99
  • charitable trusts, 98–99
  • Chartered Financial Analyst (CFA), 55
  • Cheat Sheet (website), 4
  • cheating, 213–214
  • child care expenses, 133
  • choosing
    • business entities, 252
    • investments for retirement accounts, 54–70
    • stock funds, 62–65
  • Clifford, Denis (attorney)
    • Plan Your Estate, 100
  • collection due process hearing, 212
  • collections, 254
  • commercial leases, 85–86
  • commissions, on IRS Form 1040 Schedule C, 146
  • commuting expenses, 145
  • compounding returns, 73–74
  • consumer debt, 247
  • continuity of life, 31
  • contract labor, on IRS Form 1040 Schedule C, 146
  • contributing to health savings accounts, 244
  • co-payments, for health insurance plans, 39–40
  • corporate taxes, 12, 20–21, 29–31
  • correspondence audits, 198
  • cost of goods sold, on IRS Form 1040 Schedule C, 141–142
  • costs. See also accounting system
    • about, 103
    • for bonds, 67
    • controlling with home office, 77
    • ETFs and, 60
    • of funds, 55
    • minimizing for funds, 57–58
  • CPA (certified public accountant), 197, 201, 227–228, 230
  • credit card expenses, 107
  • credit quality, for bonds, 67
  • Crumney trust, 94
  • custodian, 56

D

  • data processing errors, 205
  • date, misunderstood, 204
  • declaring all income, 212
  • deductibles, for health insurance plans, 39–40
  • deductions
    • interest, 14–15
    • itemizing, 115, 120–121, 213, 245–246
    • meal and entertainment, 15
    • missing, 10
    • for pass-through entities, 13–14
  • Delaware, incorporating in, 32
  • delinquent tax return notice, 194–195
  • dependent care
    • as an employee benefit, 43
    • expenses for, 133
  • depletion, on IRS Form 1040 Schedule C, 146
  • depreciation
    • for automobiles, 14
    • for cars, 145
    • for home office, 163–165
    • on IRS Form 1040 Schedule C, 147–148
    • percentages for, 148
  • depreciation recapture, 168
  • discipline, home office and, 78
  • diversification
    • ETFs and, 60
    • of funds, 55
  • dividends, return of principal as, 69
  • Dodge & Cox Balanced, 66
  • Dodge & Cox Income, 69
  • Dodge & Cox International, 65
  • Dodge & Cox Stock, 64
  • double-counted income, 204
  • DoubleLine Total Return, 69
  • dues, as an employee benefit, 43
  • durable power of attorney, 92
  • duration, 67

E

  • EA (enrolled agent), 197, 201, 227, 230
  • earnings, reducing, 213
  • education credits, 133–134
  • educational expense reimbursement, as an employee benefit, 43
  • educator expenses, 126
  • EFTPS (Electronic Federal Tax Payment System), 21–22
  • EIN (employer identification number), 136–137
  • Electronic Federal Tax Payment System (EFTPS), 21–22
  • Electronic Merchant Systems' EMSplus, 240
  • employee benefits
    • about, 37–38
    • auto costs, 43
    • deductible for corporation owners, 44
    • dependent care, 43
    • dues, 43
    • educational expense reimbursement, 43
    • group term life insurance, 43
    • health insurance plans, 38–42
    • long-term care insurance, 43
    • meals, 43
    • programs on IRS Form 1040 Schedule C, 149
    • retirement plans, 38
    • travel and hotels, 43
  • employer identification number (EIN), 136–137
  • employment (payroll) taxes, 21–22, 106–107
  • enrolled agent (EA), 197, 201, 227, 230
  • entities
    • choosing, 252
    • incorporation, 26–32
    • limited liability companies (LLCs), 35–37
    • partnerships, 34–35
    • S corporations, 32–34
    • sole proprietorships, 25–26
    • types of, 8, 24–37
  • equipment, expensing, 14
  • Eric's Picks icon, 3
  • eSmartTax (website), 222
  • estate planning/taxes
    • about, 87
    • determining tax concerns, 88–91
    • minimizing, 88
    • rates for, 89
    • reducing expected taxes, 91–100
    • for small businesses, 89–91
    • sole proprietorships and issues with, 26
  • estimated quarterly tax payments, 9–10
  • estimating investment returns, 71–73
  • ETFs (exchange-traded funds), 55, 59–60, 65–66
  • evaluating leases as a real estate investor, 83–86
  • exchange-traded funds (ETFs), 55, 59–60, 65–66
  • exempt income, 204
  • expenses. See also specific types
    • about, 108
    • documenting, 105
    • temporary waivers of, 69
    • tracking with apps/software, 239–240
  • Expensify app, 239–240
  • expensing equipment, 14
  • experience, of fund management, 57–58

F

  • farm income (or loss), 123–124
  • federal estate tax exemption, 88
  • federal tax lien notice, 192–193
  • fee-basis government officials, business expenses of, 126–127
  • fees
    • for bonds, 67
    • education, 131
    • on IRS Form 1040 Schedule C, 146
    • on Schedule 1, 125
    • for tax advisors, 233
  • Fidelity, 54
  • Fidelity Freedom Funds and Fidelity Puritan, 66
  • Fidelity Low-Priced Stock, 64
  • field audits, 200
  • FIFO (first in, first out) method, 142
  • financial safety, of funds, 56
  • financials, tracking, 9
  • finding tax advisors, 229–230
  • first in, first out (FIFO) method, 142
  • flat-rate method, 144
  • flexible spending account, 42
  • foreign tax credit, 132–133
  • Form 668(F), 192–193
  • Form 706, “United States Estate (and Generation-Skipping Transfer) Tax Return,” 95
  • Form 709, “United States Gift (and Generation-Skipping Transfer) Tax Return,” 94
  • Form 940, “Employer's Annual Federal Unemployment (FUTA) Tax Return,” 106, 174
  • Form 941, “Employer's Quarterly Federal Tax Return,” 22, 106, 174
  • Form 944, “Employer's Annual Federal Income Tax Return,” 22, 106, 174
  • Form 1040
    • about, 113
    • adjustments to income, 125–131
    • income lines, 115–121
    • itemizing deductions, 115
    • Line 1: Wages, salaries, tips, etc., 116–117
    • Line 2a: Tax-exempt interest, 117
    • Line 2b: Taxable Interest, 117–118
    • Line 7: Adjusted gross income, 120
    • Line 8: Standard deduction or itemized deductions (from Schedule A), 120–121
    • Lines 3a and 3b: Ordinary dividends and qualified dividends, 118
    • Lines 4a and 4b: Total pensions and annuities, 118–119
    • Lines 5a and 5b: Social Security benefits, 119–120
    • “new and improved,” 113–114
    • nonrefundable credits, 132–134
    • Schedule 1: Additional Income and Adjustments to Income, 121–125
  • Form 1040, Schedule 1: Additional Income and Adjustments to Income
    • Line 12: Business income (or loss), 121–122
    • Line 13: Capital gain (or loss), 122
    • Line 14: Other gains (or losses), 123
    • Line 17: Rental real estate, royalties, partnerships, S corporations, trusts, etc., 123
    • Line 18: Farm income (or loss), 123–124
    • Line 19: Unemployment compensation, 124
    • Line 21: Other income, 124–125
  • Form 1040, Schedule 4, “Other Taxes,” 125
  • Form 1040, Schedule A, 42
  • Form 1040, Schedule C, “Profit or Loss From Business”
    • about, 37, 104, 135, 136
    • basic information, 136–140
    • Line 1: Gross receipts or sales, 141
    • Line 2: Returns and allowances, 141
    • Line 4: Cost of goods sold, 141–142
    • Line 6: Other income, 142–143
    • Line 8: Advertising, 143
    • Line 9: Car and truck expenses, 143–146
    • Line 10: Commissions and fees, 146
    • Line 11: Contract labor, 146
    • Line 12: Depletion, 146
    • Line 13: Depreciation, 147–148
    • Line 14: Employee benefit programs, 149
    • Line 15: Insurance (other than health), 149
    • Line 16a: Mortgage interest, 149
    • Line 16b: Other interest, 149
    • Line 17: Legal and professional services, 149–150
    • Line 18: Office expense, 150
    • Line 19: Pension and profit-sharing plans, 150
    • Line 21: Repairs and maintenance, 151
    • Line 22: Supplies, 151
    • Line 23: Taxes and licenses, 151
    • Line 25: Utilities, 152
    • Line 26: Wages, 152
    • Line 27: Other expenses, 152–153
    • Line 30: Form 8829, 153
    • Lines 20a and b: Rent or lease, 150–151
    • Lines 24a and b: Travel and meals, 152
    • Lines 32a and b: At-risk rules, 153–155
    • Part I: Income, 141–143
    • Part II: Expenses, 143–155
  • Form 1040, Schedule C-EZ, “Net Profit from Business (Sole Proprietorship),” 135–136
  • Form 1040, Schedule E, “Supplemental Income and Loss,” 35, 36, 123
  • Form 1040, Schedule F, “Profit or Loss from Farming,” 123–124
  • Form 1040, Schedule SE, “Self-Employment Tax”
    • about, 125, 176–177
    • long version, 177–180
    • short version, 177–181
  • Form 1040-ES, “Estimated Tax for Individuals”
    • about, 10, 106, 170
    • completing, 171–173
    • filing, 171–173
    • safe harbor method vs. 90 percent rule, 170–171
  • Form 1040X, “Amended U.S. Individual Income Tax Return,” 209
  • Form 1065, “U.S. Return of Partnership Income,” 35
  • Form 1099, 205
  • Form 1099-DIV, 118
  • Form 1099-INT, 117
  • Form 1099-MISC, 125, 146, 149
  • Form 1099-OID, 117
  • Form 1116, “Foreign Tax Credit (Individual, Estate, or Trust),” 132, 245
  • Form 1120, “U.S. Corporation Income Tax Return,” 26–27
  • Form 1120S - “U.S. Income Tax Return for an S Corporation,” 33, 34
  • Form 2106, “Employee Business Expenses,” 127, 144, 147
  • Form 2210, “Underpayment of Estimated Tax by Individuals, Estates, and Trusts,” 205
  • Form 2441, “Child and Dependent Care Expenses,” 133
  • Form 2553, “Election by a Small Business Corporation,” 33
  • Form 4506, “Request for Copy of Transcript of Tax Form,” 111
  • Form 4562, “Depreciation and Amortization,” 136, 147, 154
  • Form 4797, “Sales of Business Property,” 123
  • Form 4822, “Statement of Annual Estimated Personal ad Family Expenses,” 199
  • Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return,” 173
  • Form 6198, “At-Risk Limitations,” 153
  • Form 6251, “Alternative Minimum Tax-Individuals,” 20
  • Form 8606, 130
  • Form 8829, “Expenses for Business Use of Your Home,” 149, 152, 153, 157–166
  • Form 8832, 37
  • Form 8863, “Education Credits (American Opportunity and Lifetime Learning Credits),” 133
  • Form 8880, “Credit for Qualified Retirement Savings Contributions,” 134
  • Form 8881, “Credit for Small Employer Pension Plan Startup Costs,” 51
  • Form 8889, “Health Savings Accounts (HSAs)”
    • about, 127, 181
    • completing, 183
    • how health savings accounts work, 181–182
  • Form 8941, “Credit for Small Employer Health Insurance Premiums,” 39
  • Form 9465, “Installment Agreement Request,” 210
  • Form CP49, 189
  • Form CP515, “Request for Your Tax Return,” 190–191
  • Form CP518, “You Didn't Respond Regarding Your Tax Return,” 190–191
  • Form CP2000, “Notice of Proposed Adjustment for Underpayment/Overpayment,” 190
  • Form I-9, “Employment Eligibility Verification,” 176
  • Form SSA-1099, 119–120
  • Form W-4, for employee withholding, 174
  • 401(k) plans, 53–54
  • 403(b) plans, 54
  • Free File, 222
  • FreshBooks, 241
  • funding retirement accounts, 244
  • funds
    • balanced, 66
    • bond, 67–70

G

  • general partners (GPs), 34–35
  • generation-skipping transfer tax, 93
  • gifting, 93, 94
  • GPs (general partners), 34–35
  • Griswold, Robert (author)
    • Real Estate Investing For Dummies, 86
  • gross receipts, on IRS Form 1040 Schedule C, 141
  • group term life insurance, as an employee benefit, 43
  • growth stocks, value stocks vs., 63
  • guaranteed renewability, for health insurance plans, 40

H

  • Harbor Capital Appreciation, 64
  • Harbor International, 65
  • Health Care and Education Reconciliation Act (2010), 40–41
  • health insurance agents, 41
  • health insurance mandate, 15
  • health insurance plans, as an employee benefit, 38–42
  • health savings account (HSA), 42, 127, 181–182, 244
  • healthcare provider choice, for health insurance plans, 39
  • healthcare reimbursement account, 42
  • HealthEquity, 182
  • hiring tax preparers, 223
  • hobby loss, 24, 155
  • home expenses, 109
  • home office
    • about, 11, 76, 157–160
    • controlling costs, 77
    • cost comparisons, 79
    • disadvantages of, 166–168
    • IRS Form 8829, “Expenses for Business Use of Your Home,” 160–166
    • local ordinances, 76–77
    • separating work and personal life, 78
  • hotels, as an employee benefit, 43
  • household employment taxes, 175–176
  • H&R Block tax preparation and filing software, 242
  • HSA (health savings account), 42, 127, 181–182, 244

I

  • icons, explained, 3
  • ID number, incorrect, 204
  • income (loss). See also adjustments to income
    • about, 121–122
    • declaring all, 212
    • documenting, 105
    • double-counted, 204
    • exempt, 204
    • incorrect, 204
    • repeated, 166–167
    • taxable, 16–17
  • income tax, paying, 106–107
  • income verification notices, 190
  • incorporation, 26–32
  • index funds, 59
  • individual 401(k), 53
  • individual tax rates, 12–13
  • inheritance tax, 89–91
  • insurance (other than health), on IRS Form 1040 Schedule C, 149
  • interest
    • on additional tax, 194
    • deductions for, 14–15
    • on IRS Form 1040 Schedule C, 149
  • intermediate-term bond funds, 69
  • Internal Revenue Service (IRS), 106, 113, 116, 124, 136, 174, 195–196, 203–209, 219, 221–222
  • international stock funds, 64–65
  • Internet tax resources
    • about, 221
    • Internal Revenue Service (IRS), 221–222
    • research sites, 223
    • tax preparation sites, 222
    • TaxTopics.net, 222
  • interviewing tax advisors, 230–235
  • intestate, 92
  • Investigate icon, 3
  • investigatory expenses, 154
  • Investing For Dummies (Tyson), 117, 253
  • investment minimums, for funds, 56
  • investments
    • selecting for retirement accounts, 54–70
    • in wealth-building assets, 243–244
  • IRA deduction, 129–130
  • IRS (Internal Revenue Service), 106, 113, 116, 124, 136, 174, 195–196, 209, 219, 221–222
  • IRS Form 668(F), 192–193
  • IRS Form 706, “United States Estate (and Generation-Skipping Transfer) Tax Return,” 95
  • IRS Form 709, “United States Gift (and Generation-Skipping Transfer) Tax Return,” 94
  • IRS Form 940, “Employer's Annual Federal Unemployment (FUTA) Tax Return,” 106, 174
  • IRS Form 941, “Employer's Quarterly Federal Tax Return,” 22, 106, 174
  • IRS Form 944, “Employer's Annual Federal Income Tax Return,” 22, 106, 174
  • IRS Form 1040
    • about, 113
    • adjustments to income, 125–131
    • income lines, 115–121
    • itemizing deductions, 115
    • Line 1: Wages, salaries, tips, etc., 116–117
    • Line 2a: Tax-exempt interest, 117
    • Line 2b: Taxable Interest, 117–118
    • Line 7: Adjusted gross income, 120
    • Line 8: Standard deduction or itemized deductions (from Schedule A), 120–121
    • Lines 3a and 3b: Ordinary dividends and qualified dividends, 118
    • Lines 4a and 4b: Total pensions and annuities, 118–119
    • Lines 5a and 5b: Social Security benefits, 119–120
    • “new and improved,” 113–114
    • nonrefundable credits, 132–134
    • Schedule 1: Additional Income and Adjustments to Income, 121–125
  • IRS Form 1040, Schedule 1: Additional Income and Adjustments to Income
    • Line 12: Business income (or loss), 121–122
    • Line 13: Capital gain (or loss), 122
    • Line 14: Other gains (or losses), 123
    • Line 17: Rental real estate, royalties, partnerships, S corporations, trusts, etc., 123
    • Line 18: Farm income (or loss), 123–124
    • Line 19: Unemployment compensation, 124
    • Line 21: Other income, 124–125
  • IRS Form 1040, Schedule 4, “Other Taxes,” 125
  • IRS Form 1040, Schedule A, 42
  • IRS Form 1040, Schedule C, “Profit or Loss From Business”
    • about, 37, 104, 135, 136
    • basic information, 136–140
    • Line 1: Gross receipts or sales, 141
    • Line 2: Returns and allowances, 141
    • Line 4: Cost of goods sold, 141–142
    • Line 6: Other income, 142–143
    • Line 8: Advertising, 143
    • Line 9: Car and truck expenses, 143–146
    • Line 10: Commissions and fees, 146
    • Line 11: Contract labor, 146
    • Line 12: Depletion, 146
    • Line 13: Depreciation, 147–148
    • Line 14: Employee benefit programs, 149
    • Line 15: Insurance (other than health), 149
    • Line 16a: Mortgage interest, 149
    • Line 16b: Other interest, 149
    • Line 17: Legal and professional services, 149–150
    • Line 18: Office expense, 150
    • Line 19: Pension and profit-sharing plans, 150
    • Line 21: Repairs and maintenance, 151
    • Line 22: Supplies, 151
    • Line 23: Taxes and licenses, 151
    • Line 25: Utilities, 152
    • Line 26: Wages, 152
    • Line 27: Other expenses, 152–153
    • Line 30: Form 8829, 153
    • Lines 20a and b: Rent or lease, 150–151
    • Lines 24a and b: Travel and meals, 152
    • Lines 32a and b: At-risk rules, 153–155
    • Part I: Income, 141–143
    • Part II: Expenses, 143–155
  • IRS Form 1040, Schedule C-EZ, “Net Profit from Business (Sole Proprietorship),” 135–136
  • IRS Form 1040, Schedule E, “Supplemental Income and Loss,” 35, 36, 123
  • IRS Form 1040, Schedule F, “Profit or Loss from Farming,” 123–124
  • IRS Form 1040, Schedule SE, “Self-Employment Tax”
    • about, 125, 176–177
    • long version, 177–180
    • short version, 177–181
  • IRS Form 1040-ES, “Estimated Tax for Individuals”
    • about, 10, 106, 170
    • completing, 171–173
    • filing, 171–173
    • safe harbor method vs. 90 percent rule, 170–171
  • IRS Form 1040X, “Amended U.S. Individual Income Tax Return,” 209
  • IRS Form 1065, “U.S. Return of Partnership Income,” 35
  • IRS Form 1099, 205
  • IRS Form 1099-DIV, 118
  • IRS Form 1099-INT, 117
  • IRS Form 1099-MISC, 125, 146, 149
  • IRS Form 1099-OID, 117
  • IRS Form 1116, “Foreign Tax Credit (Individual, Estate, or Trust),” 132, 245
  • IRS Form 1120, “U.S. Corporation Income Tax Return,” 26–27
  • IRS Form 1120S - “U.S. Income Tax Return for an S Corporation,” 33, 34
  • IRS Form 2106, “Employee Business Expenses,” 127, 144, 147
  • IRS Form 2210, “Underpayment of Estimated Tax by Individuals, Estates, and Trusts,” 205
  • IRS Form 2441, “Child and Dependent Care Expenses,” 133
  • IRS Form 2553, “Election by a Small Business Corporation,” 33
  • IRS Form 4506, “Request for Copy of Transcript of Tax Form,” 111
  • IRS Form 4562, “Depreciation and Amortization,” 136, 147, 154
  • IRS Form 4797, “Sales of Business Property,” 123
  • IRS Form 4822, “Statement of Annual Estimated Personal ad Family Expenses,” 199
  • IRS Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return,” 173
  • IRS Form 6198, “At-Risk Limitations,” 153
  • IRS Form 6251, “Alternative Minimum Tax-Individuals,” 20
  • IRS Form 8606, 130
  • IRS Form 8829, “Expenses for Business Use of Your Home,” 149, 152, 153, 157–166
  • IRS Form 8832, 37
  • IRS Form 8863, “Education Credits (American Opportunity and Lifetime Learning Credits),” 133
  • IRS Form 8880, “Credit for Qualified Retirement Savings Contributions,” 134
  • IRS Form 8881, “Credit for Small Employer Pension Plan Startup Costs,” 51
  • IRS Form 8889, “Health Savings Accounts (HSAs)”
    • about, 127, 181
    • completing, 183
    • how health savings accounts work, 181–182
  • IRS Form 8941, “Credit for Small Employer Health Insurance Premiums,” 39
  • IRS Form 9465, “Installment Agreement Request,” 210
  • IRS Form CP49, 189
  • IRS Form CP515, “Request for Your Tax Return,” 190–191
  • IRS Form CP518, “You Didn't Respond Regarding Your Tax Return,” 190–191
  • IRS Form CP2000, “Notice of Proposed Adjustment for Underpayment/Overpayment,” 190
  • IRS Form I-9, “Employment Eligibility Verification,” 176
  • IRS Form SSA-1099, 119–120
  • IRS Form W-4, for employee withholding, 174
  • IRS Notice 904, 199
  • IRS Publication 15-A, “Employer's Supplemental Tax Guide,” 146
  • IRS Publication 15-B, “Employer's Tax Guide to Fringe Benefits,” 43
  • IRS Publication 17, “Your Federal Income Tax,” 120, 219
  • IRS Publication 334, “Tax Guide for Small Business,” 146, 219
  • IRS Publication 463, “Travel, Entertainment, Gift, and Car Expenses,” 144, 150
  • IRS Publication 534, “Depreciating Property Placed in Service before 1987,” 148, 164
  • IRS Publication 535, “Business Expenses,” 129, 146
  • IRS Publication 583, “Starting a Business and Keeping Records,” 219
  • IRS Publication 594, “The IRS Collection Process,” 254
  • IRS Publication 946, “How to Depreciate Property,” 148, 164
  • IRS Publication 1450, “Certificate of Release of Federal Tax Lien,” 193
  • IRS Publication 1779, “Independent Contractor or Employee Brochure,” 146
  • IRS publications, 219–220.See also specific publications
  • iShares, 66
  • issuer type, for bonds, 67
  • itemized deductions, 115, 120–121, 213, 245–246

J

  • J. K. Lasser's Your Income Tax (Lasser), 254
  • joint tenants with a right of survivorship, 98

L

  • Lasser, J.K. (author)
    • J. K. Lasser's Your Income Tax, 254
  • last in, first out (LIFO) method, 142
  • lease abstract, 85–86
  • lease estoppel, 86
  • leases
    • commercial, 85–86
    • defined, 79
    • evaluating as a real estate investor, 83–86
    • on IRS Form 1040 Schedule C, 150–151
    • negotiating, 80–81
    • transferability of, 84–85
  • leasing business space, 79–81
  • legal services, on IRS Form 1040 Schedule C, 149–150
  • levy source information, 211
  • liability exposure, for sole proprietorships, 25
  • liability insurance, 29, 234
  • liability protection, for corporations, 28–29
  • licenses, on IRS Form 1040 Schedule C, 151
  • licensing, for tax preparers, 226–227
  • life insurance, on Schedule 1, 125
  • Lifetime Learning Credit, 131, 133–134
  • LIFO (last in, first out) method, 142
  • limited liability companies (LLCs), 33, 35–37
  • limited partners (LPs), 35
  • Litman Gregory Masters International, 65
  • living trusts, 97–98
  • living will, 92
  • LLCs (limited liability companies), 33, 35–37
  • local ordinances, 76–77
  • longer-maturity bonds, 68
  • long-term bond funds, 70
  • long-term care insurance, as an employee benefit, 43
  • long-term care premiums, 129
  • loss. See income (loss)
  • lower-credit-quality bonds, 68
  • LPs (limited partners), 35

M

  • maintenance, on IRS Form 1040 Schedule C, 151
  • managing
    • accounting with FreshBooks, 241
    • accounting with QuickBooks, 241
    • transactions with apps/software, 240
  • manila file folder system, 109
  • marginal tax rate, 17–18
  • market timing, ETFs and, 60
  • marketplace, 39–40
  • “Married Filing Jointly,” 248–249
  • “Married Filing Separately,” 248–249
  • material participation, 140
  • McCain, John (Senator), 15
  • meal and entertainment deductions, 15
  • meals
    • as an employee benefit, 43
    • on IRS Form 1040 Schedule C, 15, 152
  • medical power of attorney, 92
  • Medicare tax, 176
  • MileIQ, 240
  • minimizing
    • estate taxes, 88
    • fund costs, 57–58
    • operating expenses, 58
  • misapplied payments, 204
  • mortgage debt, 247
  • mortgage interest, on IRS Form 1040 Schedule C, 149
  • moving expenses, 128
  • municipal bonds, 16
  • mutual funds, for retirement accounts, 54–58

N

  • nanny tax, 175–176
  • National Association of Enrolled Agents, 227
  • National Conference of State Legislatures (NCSL), 22
  • National Governor's Association (NGA), 22
  • National Taxpayer Advocate, 207
  • NCSL (National Conference of State Legislatures), 22
  • negotiating leases, 80–81
  • net operating losses (NOLs), 15, 154–155, 209
  • Nevada, incorporating in, 32
  • NGA (National Governor's Association), 22
  • 90 percent rule, safe harbor method vs., 170–171
  • no-load funds, 58
  • NOLs (net operating losses), 15, 154–155, 209
  • non-assessment notices, 193–196
  • nonprofit organization, 403(b) plans for, 54
  • nonrecourse loan, 125
  • nonrefundable credits
    • about, 132
    • Line 48: Foreign tax credit, 132–133
    • Line 49: Credit for child and dependent care expenses, 133
    • Line 50: Education credits, 133–134
    • Line 51: Retirement savings contributions credit, 134
  • Notice 904, 199
  • notices
    • about, 187, 189
    • additional tax due, 194
    • assessment, 189–193
    • backup withholding, 192
    • balance due, 206
    • components of, 188–189
    • delinquent tax return, 194–195
    • federal tax lien, 192–193
    • income verification, 190
    • IRS Form CP515, “Request for Your Tax Return,” 190–191
    • IRS Form CP518, “You Didn't Respond Regarding Your Tax Return,” 190–191
    • IRS Form CP2000, “Notice of Proposed Adjustment for Underpayment/Overpayment,” 190
    • IRS Form CP2501, 190
    • non-assessment, 193–196

O

  • Oakmark International and Global, 65
  • Obama, Barack (President), 40
  • Obamacare, 15, 40–41
  • office audits, 199–200
  • office expense, on IRS Form 1040 Schedule C, 150
  • office leases, 81
  • operating expenses, minimizing, 58
  • operating loss, 154–155
  • overseas employment, 245
  • owners, sole proprietorships and numbers of, 26

P

  • partially corrected errors, 205
  • partnerships, 34–35, 123
  • pass-through entities
    • about, 30
    • deduction for, 13–14
    • S corporations, 32–34
  • Patient Protection and Affordable Care Act (2010), 39, 40–41
  • payable-on-death (POD), 98
  • PayPal, 240
  • Payroll (software), 241
  • payroll, resources for, 253
  • payroll (employment) taxes, 21–22, 106–107
  • pension plans, on IRS Form 1040 Schedule C, 150
  • performance, role of risk in evaluating, 57
  • performing artists, business expenses of, 126–127
  • Personal Finance For Dummies (Tyson), 50, 105, 252
  • personal finances, separating from business finances, 104–105
  • personal life, separating from work life, 78
  • phone scams, 195–196
  • Plan Your Estate (Clifford), 100
  • POD (payable-on-death), 98
  • power of attorney, 92
  • preparing
    • for audits, 201–202
    • taxes with H&R Block tax preparation and filing software, 242
    • taxes with TurboTax Self-Employed, 242
    • your own return, 218–219
  • price fluctuations, ETFs and, 60
  • privacy, home office and, 78
  • private activity bonds, 117
  • prizes, on Schedule 1, 125
  • probate, 97–98
  • Problem Resolution Program, 207
  • processing sales with apps/software, 240
  • professional management, of funds, 55–56
  • professional services, on IRS Form 1040 Schedule C, 149–150
  • profits, taxes on, 26
  • profit-sharing plans, on IRS Form 1040 Schedule C, 150
  • Publication 15-A, “Employer's Supplemental Tax Guide,” 146
  • Publication 15-B, “Employer's Tax Guide to Fringe Benefits,” 43
  • Publication 17, “Your Federal Income Tax,” 120, 219
  • Publication 334, “Tax Guide for Small Business,” 146, 219
  • Publication 463, “Travel, Entertainment, Gift, and Car Expenses,” 144, 150
  • Publication 534, “Depreciating Property Placed in Service before 1987,” 148, 164
  • Publication 535, “Business Expenses,” 129, 146
  • Publication 583, “Starting a Business and Keeping Records,” 219
  • Publication 594, “The IRS Collection Process,” 254
  • Publication 946, “How to Depreciate Property,” 148, 164
  • Publication 1450, “Certificate of Release of Federal Tax Lien,” 193
  • Publication 1779, “Independent Contractor or Employee Brochure,” 146
  • publications, 219–220.See also specific publications

Q

  • qualified dividends, 118
  • qualified plans, as adjustments to income, 128–129
  • QuickBooks, 110, 241, 252
  • Quicken, 110, 252

R

  • random statistical audits, 200–201
  • real estate
    • about, 10–11, 75
    • buying business property, 82–86
    • leasing space, 79–81
    • working from home, 76–79
  • Real Estate Investing For Dummies (Tyson and Griswold), 80, 86
  • real estate returns, estimating, 72–73
  • record-keeping systems, setting up, 109–110
  • reducing
    • estate taxes, 91–100
    • taxes, 107–108, 243–249
  • Remember icon, 3
  • rent, on IRS Form 1040 Schedule C, 150–151
  • rental real estate, on Schedule 1, Line 17, 123
  • rent-versus-buy analysis, 83
  • repairs, on IRS Form 1040 Schedule C, 151
  • replacing lost business records, 111
  • research websites, 223
  • reservists, business expenses of, 126–127
  • resources, recommended, 251–255
  • retail businesses, leasing, 80–81
  • retirement accounts
    • about, 8–9, 10, 45–46
    • as an employee benefit, 38
    • asset allocation and, 61–62
    • balanced funds, 66
    • bond funds, 67–70
    • exchange-traded funds (ETFs), 59–60, 65–66
    • 401(k) plans, 53–54
    • 403(b) plans, 54
    • funding, 244
    • guidelines for saving, 49–50
    • index funds, 59
    • individual 401(k), 53
    • maximizing value of, 51
    • mutual funds for, 54–58
    • ongoing tax breaks, 47
    • options for, 50–54
    • penalties for early withdrawals, 48–49
    • return expectations for, 70–74
    • selecting investments for, 54–70
    • SEP-IRAs, 52
    • SIMPLE plans, 52–53
    • stock funds, 62–65
    • tax credits for lower-income earners, 47–48
    • upfront tax breaks, 46–47
  • retirement savings contributions credit, 134
  • returns
    • compounding, 73–74
    • on IRS Form 1040 Schedule C, 141
  • revenues, 103.See also accounting system
  • risks
    • ETFs and, 60
    • role of in evaluating performance, 57

S

  • S corporations, 32–34, 123
  • safe harbor method, 90 percent rule vs., 170–171
  • sales
    • on IRS Form 1040 Schedule C, 141
    • processing with apps/software, 240
  • sales taxes, 22, 106–107
  • SALT (state and local taxes), 79
  • Saver's Tax Credit, 47–48
  • saving tax records, 110
  • savings incentive match plans for employees. See SIMPLE plans
  • Schedule H, 175–176
  • Schell, Jim (author)
    • Small Business For Dummies, 251
  • secret lien, 192
  • section 179 rules, 14, 148
  • selecting
    • business entities, 252
    • investments for retirement accounts, 54–70
    • stock funds, 62–65
  • self-employed SEP, as adjustments to income, 128–129
  • self-employment
    • cutting corners if self-employed, 214
    • expenses for, 248
    • health insurance deduction, 129
    • income reported on Schedule C, 121
    • Line 1: Wages, salaries, tips, etc. (Form 1040), 117
  • self-employment taxes
    • about, 22
    • deductible part of, 128
    • deducting, 180
    • minimums for, 176
  • SEP-IRAs, 52
  • setup
    • record-keeping systems, 109–110
    • trusts, 97–99
  • short-term bond funds, 69
  • sideline businesses, 24
  • Siegel, Jeremy (professor), 71
  • SIMPLE plans
    • about, 52–53, 150
    • as adjustments to income, 128–129
    • withdrawing from, 48
  • Small Business For Dummies (Tyson and Schell), 77, 251
  • small business taxes, 7–8.See also specific topics
  • Social Security
    • benefits, 119–120
    • incorrect number, 204
    • tax for, 176
    • website, 119
  • software
    • buying, 220–221
    • Electronic Merchant Systems' EMSplus, 240
    • for estate planning, 100
    • Expensify, 239–240
    • FreshBooks, 241
    • H&R Block tax preparation and filing software, 242
    • MileIQ, 240
    • PayPal, 240
    • Payroll, 241
    • QuickBooks, 241
    • recommended, 239–242
    • Square, 240
    • Stripe, 240
    • TurboTax Self-Employed, 242
  • sole proprietorships, 25–26
  • spending, 9
  • spouse, leaving assets to a, 94–95
  • Square, 240
  • standard deduction, 120–121
  • standard mileage rate, 144–145
  • start-up expenses, 154
  • state and local taxes (SALT), 79
  • state differences, in tax records, 111
  • state income taxes, 18–19
  • State Street Global Advisor SPDRs, 66
  • statute of limitations, on audits, 203
  • statutory lien, 192–193
  • stepped-up basis, 93
  • stock funds
    • international, 64–65
    • selecting, 62–65
    • U.S., 64
  • stock returns, estimating, 72
  • Streamlined Sales Tax Governing Board, 22
  • Stripe, 240
  • student loan interest deduction, 130–131
  • subchapter S corporations, 32–34
  • supplemental income, 123
  • supplies, on IRS Form 1040 Schedule C, 151

T

  • T. Rowe Price, 54
  • T. Rowe Price Balanced, 66
  • T. Rowe Price Spectrum Growth, 65
  • TAO (Taxpayer Assistance Order), 209
  • tax advisors
    • for estate planning, 99–100
    • filing when not necessary, 191
    • finding, 229–230
    • for incorporation, 31
    • interviewing, 230–235
    • using effectively, 11
  • tax attorneys, 228–229
  • tax benefit rule, 210
  • tax brackets/rates, Federal, 17–18
  • tax Court, 203
  • Tax Cuts and Jobs Act (2017), 12, 17, 20–21, 24, 79, 88, 114, 128, 152, 167
  • tax mistakes, common, 9–11
  • tax planning year-round, 8–11
  • tax preparers/professionals
    • about, 215, 225
    • finding tax advisors, 229–230
    • hiring, 223
    • interviewing tax advisors, 230–235
    • types, 225–229
    • websites, 222
  • tax protesters, 214
  • tax rate, marginal, 17–18
  • tax records
    • about, 108
    • “complete and accurate” return, 108–109
    • replacing lost, 111
    • saving, 110
    • setting up a record-keeping system, 109–110
    • state differences for, 111
  • Tax Reform Act (1986), 12
  • tax returns
    • amending, 209–210
    • lost, 204
    • preparing your own, 218–219
  • tax withholding
    • about, 9–10, 173
    • defined, 170
    • for employees, 174
    • Form W-4 for employee withholding, 174
    • household employment taxes: Schedule H, 175–176
  • tax write-offs, 24
  • taxability, for bonds, 67
  • taxable estate, 89
  • taxable income, 16–17
  • taxes. See also specific types
    • corporate, 29–31
    • employment (payroll), 21–22
    • on IRS Form 1040 Schedule C, 151
    • preparing with H&R Block tax preparation and filing software, 242
    • preparing with TurboTax Self-Employed, 242
    • on profits, 26
    • reducing, 107–108, 243–249
    • sales, 22
    • self-employment, 22
    • state income, 18–19
    • total, 16–17
    • unable to make payment of, 210–212
    • withholding, 9–10
  • taxpayer advocate, 192, 207–209
  • Taxpayer Assistance Order (TAO), 209
  • Taxpayer Bill of Rights, 202
  • tax-preparation software, 220–221
  • tax-reduction strategies and rules
    • about, 217–218
    • benefits of preparing your own return, 218–219
    • buying software, 220–221
    • hiring tax preparers, 223
    • Internet tax resources, 221–223
    • using IRS publications, 219–220
  • TaxTopics.net, 222
  • term life insurance, 95
  • territorial tax structure, 12
  • TIGTA (Treasury Inspector General for Tax Administration), 195
  • Tip icon, 3
  • total taxes, 16–17
  • tracking
    • expenses with apps/software, 239–240
    • tax information, 109–110
  • transactions, managing with apps/software, 240
  • transferability, of leases, 84–85
  • travel
    • as an employee benefit, 43
    • on IRS Form 1040 Schedule C, 152
    • to a second job, 145
    • to a temporary job site, 145–146
  • Treasury Inspector General for Tax Administration (TIGTA), 195
  • triple-net lease, 81
  • truck expenses, on IRS Form 1040 Schedule C, 143–146
  • Trump, Donald (President), 15
  • trusts
    • on Schedule 1, Line 17, 123
    • setting up, 97–99
  • “The Truth About Frivolous Tax Arguments,” 214
  • tuition, 131
  • TurboTax, 221, 255
  • TurboTax Self-Employed, 242
  • Tyson, Eric (author)
    • Investing For Dummies, 117, 253
    • Personal Finance For Dummies, 50, 105, 252
    • Real Estate Investing For Dummies, 80, 86
    • Small Business For Dummies, 77, 251
    • website, 57

U

  • UMB Bank, 182
  • unemployment compensation, 124
  • unenrolled preparers, 226–227
  • U.S. Citizenship and Immigration Services (website), 176
  • U.S. Department of Labor (website), 106
  • U.S. stock funds, 64
  • U.S. Tax Code On-Line, 223
  • utilities, on IRS Form 1040 Schedule C, 152

V

  • value stocks, growth stocks vs., 63
  • Vanguard, 54, 59, 66
  • Vanguard Dividend Appreciation Index Fund, 64
  • Vanguard Global Equity, 65
  • Vanguard LifeStrategy Funds, Star, Wellesley Income, and Wellington, 66
  • Vanguard Long-Term Investment-Grade fund, 70
  • Vanguard Short-Term Investment-Grade fund, 69
  • Vanguard Total Bond Market Index, 69
  • viatical settlements, 125
  • voluntary disclosure, 195

W

  • W-2, 117
  • wages, on IRS Form 1040 Schedule C, 152
  • Warning icon, 3
  • wealth-building assets, investing in, 243–244
  • websites
    • American Institute of Certified Public Accountants, 228
    • Cheat Sheet, 4
    • depreciation tables, 148
    • Dodge & Cox Balanced, 66
    • Dodge & Cox Income, 69
    • Dodge & Cox International, 65
    • Dodge & Cox Stock, 64
    • DoubleLine Total Return, 69
    • Electronic Federal Tax Payment System (EFTPS), 22
    • EMSplus, 240
    • eSmartTax, 222
    • Expensify, 239
    • Fidelity, 54
    • Fidelity Freedom Funds and Fidelity Puritan, 66
    • Fidelity Low-Priced Stock, 64
    • FreshBooks, 241
    • Harbor Capital Appreciation, 64
    • Harbor International, 65
    • H&R Block tax preparation and filing software, 242
    • Internal Revenue Service (IRS), 106, 113, 116, 124, 136, 174, 209, 219, 221–222
    • IRS Form 706, “United States Estate (and Generation-Skipping Transfer) Tax Return,” 95
    • IRS Form 709, “United States Gift (and Generation-Skipping Transfer) Tax Return,” 94
    • IRS Form 1040 Schedule C-EZ, “Net Profit from Business (Sole Proprietorship),” 135
    • IRS Form 1040 Schedule E, “Supplemental Income and Loss,” 35
    • IRS Form 1040 Schedule F, “Profit or Loss from Farming,” 123
    • IRS Form 1040-ES, “Estimated Tax for Individuals,” 170
    • IRS Form 1116, “Foreign Tax Credit (Individual, Estate, or Trust),” 132
    • IRS Form 1120S - “U.S. Income Tax Return for an S Corporation,” 33
    • IRS Form 2441, “Child and Dependent Care Expenses,” 133
    • IRS Form 4506, “Request for Copy of Transcript of Tax Form,” 111
    • IRS Form 4562, “Depreciation and Amortization,” 147
    • IRS Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return,” 173
    • IRS Form 6198, “At-Risk Limitations,” 153
    • IRS Form 8829, “Expenses for Business Use of Your Home,” 158
    • IRS Form 8880, “Credit for Qualified Retirement Savings Contributions,” 134
    • IRS Form 8881, “Credit for Small Employer Pension Plan Startup Costs,” 51
    • IRS Form 8889, “Health Savings Accounts (HSAs),” 181
    • IRS Form 9465, “Installment Agreement Request,” 210
    • IRS Form I-9, “Employment Eligibility Verification,” 176
    • IRS Publication 17, 120
    • IRS Publication 463 (“Travel, Entertainment, Gift, and Car Expenses”), 150
    • IRS rules and regulations, 254
    • iShares, 66
    • Litman Gregory Masters International, 65
    • MileIQ, 240
    • National Association of Enrolled Agents, 227
    • Oakmark International and Global, 65
    • PayPal, 240
    • Payroll, 241
    • QuickBooks, 241
    • Social Security, 119
    • Square, 240
    • State Street Global Advisor SPDRs, 66
    • state tax authorities, 21
    • Streamlined Sales Tax Governing Board, 22
    • Stripe, 240
    • T. Rowe Price, 54
    • T. Rowe Price Balanced, 66
    • T. Rowe Price Spectrum Growth, 65
    • Taxpayer Bill of Rights, 202
    • TaxTopics.net, 222
    • “The Truth About Frivolous Tax Arguments,” 214
    • TurboTax, 255
    • TurboTax Self-Employed, 242
    • Tyson, Eric (author), 57
    • U.S. Citizenship and Immigration Services, 176
    • U.S. Department of Labor, 106
    • U.S. Tax Code On-Line, 223
    • Vanguard, 54, 59, 66
    • Vanguard Dividend Appreciation Index Fund, 64
    • Vanguard Global Equity, 65
    • Vanguard LifeStrategy Funds, Star, Wellesley Income, and Wellington, 66
    • Vanguard Long-Term Investment-Grade fund, 70
    • Vanguard Short-Term Investment-Grade fund, 69
    • Vanguard Total Bond Market Index, 69
    • WisdomTree, 66
    • Wolters Kluwer Tax & Accounting, 223
  • will, 92
  • WillMaker Plus, 100
  • WisdomTree, 66
  • withholding
    • about, 9–10, 173
    • defined, 170
    • for employees, 174
    • Form W-4 for employee withholding, 174
    • household employment taxes: Schedule H, 175–176
  • Wolters Kluwer Tax & Accounting, 223
  • work life, separating from personal life, 78
  • working overseas, 245
  • Wyoming, incorporating in, 32

Y

  • year-round tax planning, 8–11
  • years to maturity, for bonds, 67
  • yield-chasing, 68–69

Z

  • zero coupon bonds, 117
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