January 2014, Tax Tips & More

We wish you a happy and prosperous New Year! In keeping with this spirit, and since we are in the business of legally minimizing taxes, here are a few tax related tips for a profitable 2014:

IRS to Audit flow through entities

As we previously reported, the IRS has announced that it will audit and examine partnership and other pass-through entities, such as LLCs, S-corporations, and sole proprietorships as a top priority in 2014. Therefore, now is the time to coordinate with other owners and partners to make sure that all parties are aware of the increased risk of audit.

Simplified Home Office Deduction

You can now elect a simplified deduction for the business use of your home. However, the maximum deduction is only $1,500 per year, therefore this deduction may be of limited use tax wise for the majority of individuals.

Increase in Payroll and Self-Employment Tax

The Patient Protection & Affordable Care Act imposes an additional tax of .9% upon wage earners and self-employed taxpayers whose wages and self employed income exceeds $250,000 for married filing jointly, and $200,000 for all others. Prepare for this increase by adjusting your withholding (W-4) or estimated tax payments.

Negotiating business sales or purchases?

Most purchases or sales focus on price first and then terms: length of payment, interest, balloon payments, payment dates, inventory value, good will, etc. These terms can have tremendous tax implications. See our article in the San Francisco Business Times for more information.

Required Records – create a system now for use all year

You are required to maintain records that document income and deductions in order to determine tax liability. Failure to document expenses can lead to the disallowance of deductions. Since this is the beginning of the year, most calendar year taxpayers can now implement a systematic approach for retaining records. Ideally, records will document the amount of the expense, the time and place of the expense, the business purpose of the expense, and the business relationship amongst parties involved.

Whether it is a simple accordion binder to save receipts in or hiring an affordable bookkeeping service, now is the time to set yourself up for success. We are proud to offer affordable monthly and tax preparation bookkeeping services. Please contact Erin for more information.

New Tax Rules for Legally Married Same-Sex Couples

Same-sex couples will now be treated as married for all federal tax purposes (income, gift, and estate taxes) where marriage is a factor. Contact us prior to April and find out if amending your past tax returns to married filing joint tax status will result in tax refunds.

As always, it is our distinct pleasure to serve your legal needs and to be a resource for all of your tax questions. I hope that you contact us with any questions or concerns.


Steve Moskowitz, Founding Partner & all of us at Moskowitz LLP.