Did you know that you can no longer write off miscellaneous itemized expenses? That’s because of the Tax Cuts and Jobs Act. Toby Mathis talks about how to take personal expenses that are not deductible and make them reimbursable business expenses that you don’t have to report as taxable income.
- Identify expenses that may not be deductible to you as an individual, but to a business; expenses that benefit a business that you incur personally as an employee
- How businesses are structured (sole proprietorship, partnership, corporation, etc.) and operate affects personal expenses for business
- Accountable Plan – Reimbursements and Expense Allowance Arrangement: Amounts paid are excluded from employee’s gross income, not reported as wages/compensation
- Keep a paper trail; document who, what, why, when, and where you’re writing off
- Four-part Test:
- Is there a business connection to the expense?
- Substantiation: Can you provide proof (i.e. a receipt) to the employer proof that you incurred the expense?
- No Excess Payments: It can reimburse you what you paid. But, can it give you extra money?
- Timeliness: Do you let the employer know of expenses every 90 days, for the employer to reimburse you within 120 days?
- Examples of expenses that you might get reimbursed on include travel to and from the hotel and business meals
- Employee Home Office – Four ways for a home office deduction, if you:
- Are an employee doing administrative activities at home, it qualifies as a principal place for business.
- Have a cash register for your business, or transacting business and collecting money in your home.
- Have a physical place where you meet patients, clients, customers, or whatever.
- Have a detached structure that is not part of or attached to the dwelling unit.
Full Episode Transcript:
Hi guys. Toby Mathis here. Today we’re going to be talking about how you can take expenses that you’ve incurred personally, that are not deductible, and are hereinafter gone because we’re not even going to be able to write off miscellaneous itemized expenses anymore since they removed from the Tax Cuts And Jobs Act, but how we can take those expenses that we don’t get to write off and how we can make them reimbursable business expenses that we can receive reimbursement from a business. It can write it off and I don’t have to report it as taxable income. Yeah, you heard me right.... Read Full Transcript
Toby Mathis, is a founding partner of Anderson Law Group and current manager of Anderson’s Las Vegas office. He has helped Anderson grow its practice from one of business and estate planning to a thriving tax practice and national registered agent service with more than 18,000 clients. In his work as an attorney, he has focused exclusively in areas of small business, taxation, and trusts. In addition, Toby was the past director and host of the longest-running local business radio program on KNUU in Las Vegas “The BOSS Business Brief”. He sits on the board of directors for several companies and was recently appointed to the local board of Entrepreneurs’ Organization, a worldwide association of owners of successful businesses. He has authored more than 100 articles on small business topics and has written several books on good business practices, including first and second editions of Tax-Wise Business Ownership and 12 Steps to Running a Successful Business.