Tax Write-Offs You May Not Know About

Save on your taxes—hire your kid, replace your old office copier, or take your staff out for brunch.

Not a tax expert, right? Ron Hodgeman, Esq., with WTP Advisors in White Plains, and CPA Tony Montalto with Marks Paneth & Shron, LLP, in Tarrytown are. So we asked them for tax advice, free of charge.

Defer Paying Your Taxes
According to Ron Hodgeman, using a “1031 exchange” or “like-kind” exchange to put off paying taxes on assets or real estate you’ve sold is a no-brainer. “If your banker called and gave you the option of not making any mortgage payments for several years interest-free, you would probably jump at the opportunity. A like-kind exchange is very similar—the IRS is giving you the option of paying your taxes later.” Best of all, he says, “anyone selling business assets or investment property can qualify for the tax savings.” Plus, any kind of business asset, from aircraft and fleet vehicles to machinery and equipment, qualifies. Even collectibles, such as paintings, sculptures, rare wines, coins, and stamps, can qualify—if they’ve been held for investment or business purposes.

- Advertisement -

HIRE YOUR KID
Nepotism pays. “Sole proprietors can, in certain situations, shield themselves from some self-employment taxes by hiring their school-age children, often during summers and vacation periods,” Tony Montalto says. For example, let’s assume you are in the 28-percent federal tax bracket. Employ your teen for, say, $20/hour, for 40 hours a week over her summer break—in total, she’d earn $9,600. According to Montalto, you get the deduction of $9,600 as a wage expense, your child can invest $5,000 of the $9,600 she earned in an IRA, and the remaining $4,600 “she can keep and it wouldn’t be taxable, either, because it’s less than the standard deduction” of $5,700. If you hire someone else for the same work, Montalto says, you would pay about $4,812 in total tax on that $9,600 of income.

Break Bread with Your Staff
Tax savings on employee meals and lodging expenses are often not fully realized because they’re improperly categorized. For example, although business meals are 50-percent deductible, if you take your employees out to dinner and conduct business, you can categorize it as an “off-site strategic-planning meeting,” which is 100-percent deductible. Montalto says other dining conditions allow a 100-percent deduction. Ask your accountant.

Our Westchester Home Builders Awards take place on April 4!

Our Diversity, Equity & Inclusion Forum is March 14!

Unveiled: A Boutique Bridal Brunch is February 25!

Our Best of Westchester Elimination Ballot is open through March 6!

Holiday flash sale ... subscribe and save 50%

Limited time offer. New subscribers only.