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I think ur making this overly complicated. just run all ur construction supplies through ur landscaping biz as expenses? my buddy does this with his roofing and rental businesses and hasn't had any issues for years. the IRS doesn't have time to audit everyone. or just pay cash for the building supplies and dont even report them.
This is extremely risky advice that could lead to serious consequences. The IRS has specific rules about capitalization vs. expenses, and deliberately mischaracterizing capital improvements as immediate expenses is tax fraud. If audited, you'd face back taxes, penalties, and potentially criminal charges. The "my buddy does it" approach is how people end up with massive tax problems. The IRS may not audit everyone, but when they do audit someone incorrectly deducting capital expenses, it's a very straightforward case for them to win.
I appreciate the input, but I specifically mentioned I'm not trying to evade taxes. I want to do this legally. I'm frustrated by the rules, but I'm not looking to break them - just understand them better and find legal strategies within the system.
A lot of good advice here already, but one thing I'd add - consider setting up a cost segregation study when you build your condos. I did this for a small apartment building I constructed last year, and it allowed me to accelerate depreciation on about 25% of the building cost. Components like cabinets, some electrical systems, and appliances can be depreciated over 5-7 years instead of 27.5 years. Landscaping improvements often qualify for 15-year depreciation. This can make a huge difference in your early-year cash flow. Also, have you looked into opportunity zone investments? If you have capital gains from other investments, you might be able to defer and potentially reduce those by investing in certain qualifying zones. Some areas that need development offer additional tax incentives too. For your immediate situation with the flip house, make sure your accountant is treating it as investment property with costs applied to basis rather than as direct business expenses. Different accounting methods here can make a big difference.
Has anyone considered using an HSA to pay for those premiums? I thought that might be a tax-advantaged way to handle this situation.
That's actually a common misconception. HSA funds generally can't be used to pay for health insurance premiums in most situations. There are a few exceptions (like COBRA or while receiving unemployment), but regular health insurance premiums aren't eligible HSA expenses even though other medical costs are.
Have u looked into whether ur eligible for the marketplace premium subsidies? Some ppl think if their employer offers insurance they can't get subsidies, but thats only true if the employer offers AFFORDABLE family coverage. If the cost for family coverage exceeds 9.12% of ur household income, it's considered "unaffordable" and ur family (not u) could be eligible for subsidies on a marketplace plan.
I actually hadn't considered that angle! My employer's family coverage is definitely over that 9.12% threshold of our household income. That's really helpful information - I'm going to check out the marketplace options with this in mind. Thanks for bringing this up!
We're a small business selling in about 15 states, and we use a mix of automation and manual processes. For the 5 states where we have the most sales, we use Avalara to calculate and file automatically. For the other states where we have minimal sales, we do quarterly manual calculations and filings. This hybrid approach saves us money while still providing automation where it matters most. We set thresholds - any state where we do more than $50K in annual sales gets moved to the automated system.
Smart approach! Do you ever worry about missing economic nexus triggers in those manually-tracked states though? Some states have really low thresholds now.
That's actually a valid concern. We do a quarterly check against all state thresholds as part of our process. We track transaction counts and revenue by state in our ERP system, so I've built a simple dashboard that flags when we're approaching a threshold. The states with the lowest thresholds (like $100K in sales or 200 transactions) are the ones we put on Avalara immediately just to be safe. The manual states are typically those with higher thresholds or where we have just a handful of customers.
Anyone using any of the free resources? The Streamlined Sales Tax Governing Board website has some decent tools, and the Federation of Tax Administrators maintains a database of state tax rates. I cant afford the fancy software yet and im just collecting in 4 states.
The free resources are ok for basic rate lookup but they don't address the local jurisdictions or special district taxes. And they definitely don't help with filing or tracking deadlines. Maybe check out TaxJar's free trial? They have a basic tier that's not too expensive.
For learning consolidated tax accounting, I'd highly recommend getting your hands on some actual consolidated workpapers from prior years if possible. Theory only gets you so far, and seeing how your predecessors handled similar situations is invaluable. Also, check out the Tax Analysts Federal Tax Navigator - it has some excellent practical examples of consolidated return workpapers with explanations. The AICPA also offers some case studies on consolidated tax accounting that were helpful when I was learning.
Would you say it's better to focus on understanding the big picture of how entities relate to each other first, or to get into the details of tracking specific transactions? I'm also struggling with this area.
Start with the big picture of entity relationships and the overall consolidation workflow. Understanding the hierarchy and how information flows between entities gives you the framework needed to then tackle specific transactions. Once you have that foundation, you can focus on specific areas like tracking inter-company transactions, which is often the most complicated part. But without understanding the entity structure first, the transaction details won't make sense in context.
I learned by screwing up repeatedly lol. Seriously though, for the bonus issue specifically, have you tried talking to the payroll department? They usually have detailed records of when bonuses were calculated vs when they were actually disbursed. In my experience, the IRS isn't expecting perfection in documentation, they just want a reasonable audit trail. If you can show the methodology and provide samples rather than every transaction, that's often sufficient.
Agreed! Working with payroll saved me during our last audit. They had reports that linked each employee's bonus accrual to the actual payment date, which was exactly what the IRS wanted to verify.
Romeo Barrett
Does anyone know if the income limits for contributing to a Roth IRA are also changing for 2024? With the contribution limit going up to $7,000, I'm wondering if the income thresholds are increasing too.
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Marina Hendrix
ā¢Yes! The income phase-out range for Roth IRA contributions is increasing for 2024. For single filers, the phase-out range is $146,000 to $161,000 (up from $138,000-$153,000 in 2023). For married filing jointly, it's $230,000-$240,000 (up from $218,000-$228,000). So if you were just above the limit last year, you might be eligible for at least partial Roth contributions in 2024!
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Romeo Barrett
ā¢That's awesome news! I was just barely phased out last year with an income of $154k, so it sounds like I can make at least partial direct Roth contributions this year. Thanks for the info!
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Justin Trejo
Do these new limits apply to 403(b) plans too? My university job offers a 403(b) instead of a 401(k) and I'm never sure if the rules are the same.
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Alejandro Castro
ā¢Yes, the $23,000 contribution limit for 2024 applies to 403(b) plans as well! The elective deferral limits are the same for 401(k)s, 403(b)s, most 457 plans, and the federal government's Thrift Savings Plan. The $7,500 catch-up contribution for those 50+ also applies to your 403(b). Additionally, 403(b) plans sometimes have a special catch-up provision for employees with 15+ years of service at the same eligible employer, which can allow for additional contributions beyond the standard limits.
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