Look, taxes are the single greatest expense that most people will pay over the course of their lives.

Not your dream house, not your dream car, or any other tangible thing you can put your hands on. It’s taxes. 

Believe it or not, taxes are evading almost every single part of your life. You pay taxes on your income, on your purchases, the property you own, and so much more.

But what if you could write off almost anything that you purchased?

What if we told you that taxpayers are leaving millions of dollars on the table by not taking full advantage of the tax code?

Look, there are over 80,000 pages in the tax code, and on one of those pages, it allows you to deduct almost anything.

Just take a look for yourself.

Section 162 of the internal revenue code says that you can “deduct all ordinary and necessary expenses paid or incurred during the taxable year to carry on any trade or business”.

So get ready because, in today’s post, we’re going to explain how you can write off almost anything.

Today, we’re going to teach you how to write off anything – well, almost.

What we’re about to tell you isn’t a “tax loophole” that can get you in trouble. In fact, it’s quite the opposite.

Tax write-offs and deductions are available for everyone.

It’s, quite literally, written as part of the tax code to incentivize people to take action to grow the economy.

The problem is that most people are intimidated by tax deductions and write-offs so much, so that they don’t take them at all and wind up paying way more in taxes than they have to.

In fact, some experts say that the average person will spend 25 to 35 percent of their entire life working to pay taxes.

Just think about that, 25 to 35 percent of your life. Not being spent to pay off your rent or your mortgage. Not to invest in stock markets, real estate, or your business. 

But no, literally, just to pay taxes to the government.

By the way, speaking of stock and real estate, we have another post that discusses which is the better investment – stocks vs real estate investing. Be sure to read that next.

The Tax Code is Not Your Enemy

What’s even crazier is that a lot of people think that the tax code is their enemy.

But the tax code is not your enemy. It was not written to just take your money.

It was written to grow the economy, boost jobs, provide affordable housing, and promote many initiatives that the government relies on to provide for its citizens.

Therefore, if you can make the tax code your friend, then you will be able to benefit from how it was written.

Just think about it. 

If there were no businesses, there would be no jobs. That would be a disaster, right?

So the government allows business owners to take write-offs that are not available to employees.

Or how about real estate? If there is no housing, people would not have anywhere to live. That would be chaotic, right?

So the government encourages real estate investors to invest in real estate…

…by allowing them to write off things like depreciation and so many more things that are not available to average taxpayers.

So what’s our point here?

Our point is that you can lower your tax bill, not by cheating the system, but by instead aligning yourself with the incentives that lie within it.

If you stick around until the end of this post, then you are going to know more about how taxes work and how you can take advantage of tax write-offs to lower your income.

With that said, let’s break this all the way down.

What are Tax Write Offs and Tax Deductions?

First of all, tax write-offs and tax deductions refer to the exact same thing.

So anytime you hear someone say tax write-off, just know that they are referring to tax deductions.

Ultimately, tax deductions are eligible expenses that you can deduct from your taxable income.

Now, there are two different types of taxpayers – average taxpayers, which would be wage earners.

And then there are super taxpayers, who are primarily business owners and investors.

You’ll see that the super taxpayers reap the most tax benefits, because they align themselves more closely with the interests of the government.

The “Average” Taxpayer Write Offs

The average taxpayer is someone who has a job, family, and mortgage or rent. 

The tax code was written to provide for the average taxpayer, rather than to incentivize them.

The government wants to make sure that this person has access to jobs, affordable housing, healthcare, and so forth.

Therefore, the tax code does not incentivize the average taxpayer as much. Average taxpayers, like wage-earners, are very limited in what they can deduct from their taxes.

But, they can take the standard deductions or itemized deductions.

The standard deduction is available to all taxpayers. For instance, in 2021, single taxpayers can deduct $12,500 from their taxable income, and married taxpayers can deduct about $25,000.

So for example, if you’re married and have $100,000 in income, you can immediately deduct $25,000 from your taxable income, and only pay taxes on the remaining $75,000.

Or you can itemize your deductions if you have certain expenses that exceed the standard deduction.

Itemized deductions allow you to deduct things like your home mortgage interest, property taxes, charitable contributions, and other specific items.

The idea here is that if your itemized deductions exceed your standard deduction, you should itemize to lower your tax bill.

For example, if you are single and have $15,000 in itemized deductions, then you should itemize since the standard deduction is only about $12,500.

Other than taking the standard deduction or itemized deduction, there is very little that the average taxpayer can do to lower their income taxes…

…outside of contributing to a retirement account to defer taxes until a later date.

Therefore, if you’re an average taxpayer who wants to take advantage of the tax code to write off almost anything, you have to find a way to contribute to the economy through business or real estate.

You want to become a super taxpayer.

The “Super” Taxpayer Write Offs

Super taxpayers are business owners and investors. They can deduct almost anything from their income given the right circumstance.

The tax code we showed you earlier referred specifically to business owners. 

As long as the expense is a business or investment expense, they can deduct it. 

And if that business expense provides a personal benefit, then that is a plus of being a super taxpayer.

So in general, if the purpose of the expense is to produce more income, then it can likely be deducted.

That’s why super taxpayers can deduct business meals – as long as they are eating and discussing business, they can deduct that meal from their income.

Super taxpayers can do vehicle tax deduction – as long as the vehicle is being used for business or is being used to advertise that business, they can deduct it.

Super taxpayers can deduct some of their home mortgage, utilities, and property taxes – as long as they are using a portion of their home to conduct business.

For instance, a home office or a basement that you are storing inventory in or something.

Super taxpayers can even deduct their vacations – as long as they do some type of business during that vacation period.

For instance, a real estate investor might be able to deduct a vacation if they were looking at real estate in the area they are traveling to.

As you can see, super taxpayers can deduct almost anything – food, vehicles, housing costs, travel, and more as long as it is used to help them produce more income in their business.

But many super taxpayers are afraid of taking these deductions.

Like, just last week, some of our YouTube subscribers asked us:

• Can I write off my merchant expenses from Stripe?
• Can I write off the eBay fees I pay when I sell my products?
• Can I write off company t-shirts that I use to advertise my business?

That’s all yes, as long as these are legitimate business expenses, you can write it off!

You don’t need to be afraid of tax deductions, it’s literally written in the tax law.

The problem with deductions only arises when you start claiming personal expenses as business deductions that have nothing to do with your business.

Like you can’t just buy a Porsche and write it off from your business without it serving some business purpose.

If you are wine and dining clients, using it to travel from one business to another, or even using it to advertise your business, then you may be able to deduct the expense from your income.

Business owners are able to write-off almost anything, as long as it meets a few basic requirements.

What are Eligible Expenses?

According to the tax code, the expense must be ordinary and necessary for carrying on the business.

Now, the tax law does not specifically define what ordinary and necessary means.

Therefore, it is up to you to determine what expenses qualify as “ordinary” and “necessary” for your business.

Now, the IRS does attempt to define this in a publication.

According to the publication, an ordinary expense is one that is common and accepted in your business or trade.

And a necessary expense is one that is helpful or appropriate for your trade or business.

For example, an ordinary and necessary expense for a car dealership might be buying car parts.

While for our accounting firm, it might be technology and software. Surely, we couldn’t deduct car tools for our accounting business.

Maybe if those car tools were being applied to a vehicle that was being used for business, then sure.

But the idea is that you can’t just start buying anything and writing it off. That’s when you can start getting into some big trouble with the IRS.

Steps on How to Write Off Anything (Almost)

Step 1: Start a business or become an active investor

Remember, tax deductions benefit business owners and investors the most.

A lot of people think that this means they have to be wealthy to take advantage of the tax law.

You don’t.

These tax deductions are available for all business owners and investors, regardless of how much money you make.

In fact, there are specific deductions that are made for new business owners, like the startup and organization costs deduction that allows you to deduct your startup expenses.

And we did a post on this already, but anyone can start a business. We did an entirely separate post on how to start a business without money.

In fact, we started our first business with as little as $200.

Step 2: Make sure your expenses have a business purpose

If you want to deduct almost everything, you need to make sure almost everything you buy has a business purpose.

For this, we want you to think of the worst-case scenario here. Let’s say the IRS audits you and wants to learn more about the deductions you claimed.

In that event, you want to be able to confidently explain to the IRS how the expenses you claimed as deductions were used to benefit your business.

As long as that is in accordance with the tax law, then you shouldn’t have anything to worry about.

Step 3: Make sure you document everything

The third step is to make sure that you keep up with your documentation, like your receipts or invoices.

Again, in the event of an audit, you don’t want to be all over the place.

If the IRS asks for more information on your deductions, all you need to do is show proof of the expense and what it was for.

That’s it. But if you do not keep up with the receipts and invoices, then you may have a difficult time proving that the expenses were legitimate business deductions.

So make your life easy by just keeping track of your receipts for your business expenses

Step 4: Claim the deductions correctly on your tax return

When you file your taxes, whether you’re doing it yourself or a tax preparer is doing it for you, make sure you claim your deductions correctly.

Specifically, make sure you are categorizing your expenses into the right places on your tax return.

There are specific categories for each type of business deduction, so you will want to make sure you insert the right amounts in the right categories.

You should be doing your bookkeeping throughout the year, which should make it very easy to tally up the totals and that to your tax return.

But ultimately you need to make sure you do this correctly, because any errors could trigger an audit.

So there you have it, those are the steps on how to write off anything. If you think you can save more on taxes but are just not sure how to do it, then contact us today!

We have a team of CPA tax experts ready to help in your tax planning, tax preparation, and tax resolution.

The post How to Deduct and Write-off Almost Anything from Your Taxes appeared first on Small Business Accounting & Finance Blog.

The SBA recently launched a direct PPP loan forgiveness portal in an effort to streamline the loan forgiveness process.

This is really good news, in our opinion, especially if you applied for the first or second draws of the Paycheck Protection Program.

We know many of you have had issues applying for PPP loan forgiveness through your participating lender or bank. 

And those issues range from them not accepting forgiveness applications or just not providing clarity on the forms required for forgiveness.

It’s honestly just been a hassle for a lot of business owners to successfully get their PPP loan forgiven.

So if you were 1 of the millions of small business owners who received the Paycheck Protection Program loan or PPP loan, this update is specifically for you.

PPP Overview

If you recall, the Paycheck Protection Program was released to help small business owners retain their employees and remain in business.

Now it was set up to be a “forgivable” loan.

This means once the funds were received, you could apply for forgiveness and not have to pay any of the loan back, if the funds were used for payroll and other qualifying business expenses.

The Problem with Applying for Forgiveness from Banks

Prior to this update, forgiveness could only be applied through your lender or bank. 

And this has presented huge administrative problems. 

Many business owners have been unable to apply for forgiveness through the bank because:

• banks have been closing their forgiveness applications,
• delaying the loan forgiveness process, or
• even partially forgiving loans without explanation. 

The New SBA PPP Direct Forgiveness Portal

Now, due to this SBA update, forgiveness is directly available through the SBA’s new PPP loan forgiveness portal, if your PPP loan was under $150,000.

The goal of the SBA’s portal is to ease the burden on banks by allowing small businesses to directly apply for forgiveness from the SBA.

Who Can Use the PPP Loan Forgiveness Portal?

Specifically, the portal will simplify forgiveness for smaller businesses, including sole proprietors.

The vast majority of businesses who applied for the PPP loan received loans under $150,000.

In fact, the average loan size was $42,000. So for most of you, applying directly through the SBA is a viable option.

And considering the forgiveness process is already difficult as it is…

…having this portal option is awesome news and will help millions of businesses to get back to what they do best and that’s running their businesses. 

The new PPP loan forgiveness portal will begin accepting applications from PPP borrowers on August 4th of 2021. Simply go to the SBA website to apply.

In addition to this new platform, the SBA is setting up a customer service team to answer questions and directly assist borrowers with their applications.

Again, that’s more good news, considering banks have been a little unaware of what the SBA has been asking for in terms of forgiveness applications.

You can now bypass the middle man or ‘the bank’ and speak directly to the SBA regarding your PPP questions. 

And this is the number and times you can contact them with your questions. 

The SBA also released a user guide for the portal. And it’s designed to walk you through step by step how to register on the new platform and apply for forgiveness.

Lenders Requirement

Another detail to consider is that lenders are required to opt into this program through the SBA.

Lenders actually have a separate portal they have to register through in order to opt-in.

What this means is that, as a borrower, you have 2 options to apply for forgiveness.

• One is through the new SBA PPP loan forgiveness portal site.
• And the second is through the lender you applied from.

Either option works perfectly fine. Some borrowers have not had any issues with their bank and would prefer to apply through that route.

For many others, this is not the case, and applying through the SBA’s portal would be better.

But if you do want to apply for forgiveness directly from the SBA, your bank or lender has to opt-in.

Only borrowers with participating lenders in the SBA’s portal can use the portal to apply for forgiveness. 

According to the SBA’s most recent press release, currently, 600 banks have opted in which would allow over 2 million borrowers to apply through the portal.

This is roughly 30% of loans under $150,000 that haven’t applied for forgiveness. 

However, if you navigate to this link and download their list of participating lenders, you will see that there are almost 900 lenders listed. 

So there is a good chance that your lender is participating in the SBA’s direct loan forgiveness program.

If you don’t see your lender listed, we’d recommend calling them and asking if they plan on opting in and when they expect to do so. 

Get Ready to Apply

If you do plan on applying for forgiveness and are patiently waiting for the SBA’s portal to become available…

…there are a few things you can do to prepare and submit your application as soon as it becomes available.

For borrowers with loans under $150,000, you can fill out Form 3508-S and this represents the short-form version of the loan application.

Some documents you would need to include in your forgiveness application are:

1. Bank statements or third-party payroll service provider reports
2. Payroll tax filings
3. State quarterly business and individual employee wage reporting
4. Business rent payments
5. Business utility payments
6. Covered operating expenses
7. Covered supplier costs

The specific documents that are required will depend on the information provided on your original PPP loan application and how you used the funds. 

But you can start gathering this information now so once the portal opens, you can submit your application right away. 

That’s all we have for this post. We hope you found it helpful.

But if you have any questions or if you have had issues getting your PPP loan forgiven, then work with our tax consultants today.

Our expert team can definitely help you with your concerns about taxes and more. Contact us now!

The post New SBA PPP Loan Forgiveness Portal | Apply for Forgiveness Easier appeared first on Small Business Accounting & Finance Blog.

The PPP loan forgiveness deadline is quickly approaching for anyone who got the first round of PPP in April or May.  

In fact, the PPP loan forgiveness deadline will likely be August 2021 or September 2021, depending on when you exactly received your loan.

So, you have about 1-2 months to apply for PPP loan forgiveness if you haven’t already. 

Interestingly enough, according to the SBA, as of May 24, 2021, nearly 2 million small businesses have yet to submit their PPP loan forgiveness application.

Out of 5.2 million loans given, that’s nearly 40%! 

And we have a feeling there are going to be a lot of people who end up not getting their loan forgiven either because they simply “forgot” or they didn’t really “qualify”.

So, we want to ask you; did you get the first round of PPP?

Now in case you don’t know, the PPP loan will automatically convert into a standard loan at about a 1% interest rate if a small business does not apply for forgiveness. 

And you have to apply within 10 months of the end of the covered period under which they had to spend the money according to the forgiveness guidelines.

This means you can only use the loan on payroll, rent, utilities, and other related expenses. 

So let’s do a quick example. 

If you got a PPP loan, May 15, 2020, and you had a 24 week covered period, that would mean your cover period comes to an end on October 30, 2020.

And 10 months from October 30, 2020 is August 30, 2021.

Now of course, if you got your loan in late May then the deadline may also fall in September 2021. 

If you had an 8-week covered period, then we have to deliver some bad news.

The deadline for you is already over.

But for most small businesses, it was recommended to use a 24-week covered period anyway.

However, if for some reason you could not use the money after 8 weeks, you’re going to have to pay something back. 

Now there are some people who are intentionally delaying their forgiveness application to maximize a separate tax credit that rewards businesses for retaining employees…

…which basically gives small business owners a tax benefit for each employee retained up to a certain amount. 

But the PPP loan will likely outweigh the tax credit, so we suggest applying for forgiveness as soon as you can. 

If you still need to apply for PPP loan forgiveness then you should reach out to your bank or the lender who gave your PPP Loan.

So in summary, if you receive the first round of PPP loan and you got a deposit in April or May, you need to take action asap and apply to get your loan forgiven.

Now if you need more help figuring out what to do with your PPP loans, or taxes in general, get in touch with one of our CPA tax experts today!

Contact us now to get started.

The post PPP Loan Forgiveness Deadline is September 2021 appeared first on Small Business Accounting & Finance Blog.

If you have kids under age 18 and a business, then you have a huge opportunity to save on taxes.

And that is by hiring them in your business and placing them on the payroll.

That’s right, hiring little billy and sally as employees in your business will not only save you on taxes…

…but the money you pay them can go directly to child expenses like clothes, school supplies, college savings, and much much more.

And we mean why not involve your kids in your business, show them the ropes, and teach entrepreneurship?

All while saving thousands of dollars on taxes.

We actually recommend this a lot to our clients as a strategy when they work with our tax planning services.

But there are rules and a proper way to do it.

And we’re going to break down everything you need to know in order to accomplish this.

Today, we’re excited to show you how to hire your kids and put them on the payroll.

By the end of this post, you will understand why hiring your children will save you thousands of dollars in taxes.

As well as how your kids can avoid paying tax on their income and the rules you need to abide by to hire your kids.

Benefits You’ll Get When You Hire Your Kids

So why is hiring your children a beneficial tax strategy for you and your kids?

It’s simple.

You get a tax write-off for the pay you give them and in turn, your kids (or you) can use that income tax-free to help provide for what they need.

However, it is only tax-free if you pay them under the standard deduction.

So for 2020, that is $12,400.

And what makes this a very important number is that when you hire your kids, if you pay them $12,400 or less, they are not required to file or pay taxes on their income!

Do you understand now why this is such a valuable tax strategy?

Because we all know kids cost money.

Stop paying taxes then pay your kids. It makes very little sense to do this.

Instead, pay your kids and stop paying the tax on it. Got it?

S and C-corp Strategy to Hiring Kids

So let’s say you’re sole proprietor or LLC, your business is also not required to pay payroll taxes on the income you pay to your child!

In case you didn’t know, almost everything employer must pay social security and medicare taxes or “FICA” for each employee they have on payroll.

But since you are paying your child as an employee, this is actually not required.

According to the IRS:

“Payments for the services of a child under age 18 who works for his or her parent in a trade or business are not subject to social security and Medicare taxes if the trade or business is a sole proprietorship or a partnership in which each partner is a parent of the child.”

So it doesn’t cost you any additional money to hire your kids. Only the pay you give them which you were going to spend on them anyway.

And speaking of sole proprietors, if you want to learn how to pay yourself as a sole proprietor, then check out this post next.

Family Management Company Strategy

Now, the rules are a little different if you are an S-Corp or C-corp. Because if you pay your kids from an S or Corp, you would be obligated to pay social security and medicare.

But there is a workaround.

And that is by establishing a Family Management Company or FMC. This will act as the middle man between your S or C-corp and your child.

A family management company is simply a separate business that is either a sole proprietorship, LLC, or partnership that is owned by the parent or parents.

And what you would do is have the S or C Corp pay the family management company a ‘management fee’ for services.

Then the family management company would pay your child to perform those services.

So your kids would need to be on the family management company’s payroll and get paid from the FMC so you can avoid the employer payroll tax expense. Does that make sense?

If you want to know the tax differences between sole proprietor vs. LLC vs. S-Corp, then we also have a post for that.

Rules and Steps to Hire Your Kids

So you now understand the benefits of hiring your kids, let’s talk some details on how all of this works.

1. The first thing to remember when hiring your kids is making sure you have actual work for them to do.

Now this “work” doesn’t have to be technical or complex work.

It can be as simple as addressing envelopes, janitorial tasks, answering the phones, or helping with your website.

Whatever it is, their work should be ordinary and necessary for your business.

It can’t be personal services like making the bed or washing the dishes, alright?

2. You also want to make sure that the work is age-appropriate.

It is highly unlikely that a 6-year-old can find real estate deals for your investment company or braid hair in your hair salon.

It is also unlikely that a 3-year-old can do anything at all.

So with this in mind, your kids will have to be old enough to actually do some business-related tasks in your company.

Again, it doesn’t have to be complicated but it does have to be within your child’s capabilities.

3. So once you know what they will do, it’s important to keep track of the work and hours they perform.

The IRS always wants you to document everything and this is no different.

Make sure to use something like a timesheet to keep track of the days, duties they performed, and the hours they worked.

You may even want them to sign an employment contract the outlines their job role and pay.

This is not legally required, but will help you to justify their employment in your business.

4. The next thing to keep in mind is their pay.

Your kids’ pay should be for services they actually performed and should be reasonable.

Now when doing this strategy, it is most advantageous to pay your kids as much as possible.

This is so you can take bigger business tax deductions and shift some of your income to your kids who are probably in a much lower tax bracket.

However, you can’t just pay them any amount. It has to be comparable to what others make doing the same job.

For example, you can’t pay your kids $100 per hour to clean the office when other office cleaners in your area are making $15 per hour.

So first, find out what workers doing the same duties are being paid.

You shouldn’t have a problem as long as you’re paying your kids no more than what you would pay a stranger to do the same thing.

Got it?

With that, make sure you pay them using a method that has a paper trail. So don’t pay them with cash since that is harder to keep track of.

Instead, pay them by check or direct deposit. Their pay should be made out to their name and deposited in an account with their name on it.

But get this, the account can be a 529 college savings account, Roth IRA, or a custodial account that you can control until your child turns 21.

So you can literally help them save for college or invest or even cover their routine costs all tax-free.

Because as long as their pay is not over the standard deduction, they will not have to pay taxes on the income you pay them.

5. As an employer, you still have to comply with some legal requirements as you would if you hired a complete stranger.

So you still need to fill out a W-4 and I9 for your child. Your child should have a social security number but if they don’t, they would need to apply for one.

Also, if your business does not have an EIN or employer identification number, you would need to apply for a free one on IRS.gov.

Now to help you save more on your business taxes, go ahead and talk to one of our CPA tax experts.

The post A Guide on How to Hire Your Kids and Pay Less in Taxes appeared first on Small Business Accounting & Finance Blog.

This is the number one way real estate investors accumulate wealth and that is the 1031 exchange.

The 1031 exchange specifically comes from Section 1031 in the Internal Revenue Code, and it allows real estate investors to defer paying taxes on real estate gains.

This means, you can avoid the biggest expense of them all, which are taxes, and instead use that money to reinvest and make even more money.

So today, we’re going to fully explain what 1031 exchange is, and how you can take advantage of it.

Creating a wealth snowball effect all because you legally took advantage of the 1031 exchange.

This is exactly what wealthy, successful real estate investors do to create wealth, and you should be aware of it.

What is a 1031 Exchange

Now allow us to break down 1031 exchanges. As we mentioned before, 1031 comes from the Internal Revenue Code Section 1031.

The “Exchange” is the defining part. And what it is in reference to is the ‘exchange of properties’.

So basically, the IRS states that when you sell a piece of property and earn a profit from the sale, you can defer paying taxes on that profit if you use the proceeds to buy another property.

This is otherwise known as a “like kind exchange.”

You are exchanging properties that are “like kind” or similar.

The IRS figures that since you are using the profits and proceeds from the real estate sale to acquire another similar property…

…you don’t need to pay taxes on that until you actually stop buying investment properties altogether.

Let’s take a look at an example.

Example of a 1031 Exchange

Let’s say you invest in your first rental property. It can be a single-family home, a multifamily unit, or even a commercial property.

As long as it is a piece of property purchased for investment, or business purposes.

So you bought it for $250,000.

You have tenants occupying the property, paying monthly rent. Everything is great.

Some time goes by, and you come across another property that seems to be a great investment. And perhaps your current property is not as profitable as you hoped.

So you decide to sell your current property with the intention of purchasing the better property you found.

Well, in the appreciated real estate market that we’re in, the current property is now worth $300,000 and sold for that amount.

Normal IRS rules would make you pay capital gains tax on the $50,000 gain on the sale.

But since you are going to use the profits and proceeds to purchase the better property you found, no tax is due.

And this is a 1031 exchange.

What Makes a 1031 Exchange Valuable?

So now, you might be wondering what exactly makes 1031 exchanges really valuable to a real estate investor?

This is a good question because, at first thought, it seems that your profits from a real estate sale are not going to you directly but instead being tied up in another property.

Well, we know one valuable benefit is you can avoid paying capital gains tax but you can also continue to reinvest into newer and better properties.

Which ultimately, should result in more cash flow for you assuming you are buying good investments.

And if you’ve read our real estate depreciation post, you’ll learn how you can use depreciation expense to avoid paying tax on your cash flow as well.

Benefits of 1031 Exchanges

The great part about 1031 exchanges is you’re not just limited to doing this just once.

You can continue to do 1031 exchanges for multiple properties over and over again.

So if you did a 1031 exchange and the property you bought didn’t turn out as great as you’d like, or maybe you realized it wasn’t as lucrative as you expected…

…you can turn around and do another 1031 exchange and avoid any taxes on the sale.

And use otherwise taxed income towards a better investment.

This is how you grow your real estate portfolio and build wealth.

You can sell an underperforming property for a profit and use the proceeds to buy another property.

Or, you could even sell a property that is performing well and has appreciated tremendously in value…

…maybe 40 to 50 percent, and use those proceeds from that sale to buy 2 or 3 more properties and earn cash flow from those assets.

This is exactly what the rich do to grow their wealth and net worth.

They buy a single-family home, sell it after some time and use the profits to buy a multi-family apartment unit or duplex and earn more cash flow from that.

Then that’s sold to buy an even larger asset and earn more cash flow.

All of which is tax-free through a 1031 exchange.

Even better, when used as a long-term strategy, not only can you do a 1031 exchange over and over again to buy bigger and better properties…

…when you die, all of the properties and profits you earn get passed down to your children and family, tax-free.

It’s a powerful way to create generational wealth and legacy.

If you want to build generational wealth, 1031 exchanges are a great, wise strategy to employ.

Do keep in mind that if after doing a 1031 exchange on a property, you decide that you do not want to do another 1031 exchange and decide to sell that property…

…then taxes would be due on all of the real estate gains you had leading up to the sale of that property.

So you can keep deferring the taxes due with 1031 exchanges as many times as you’d like, but if you stop doing 1031 exchanges, and sell your properties, the tax would then be due.

But this is typically not a terrible thing, especially considering the amount of cash flow and wealth you would have accumulated by that point with doing 1031 exchanges.

Rules and Steps to Take For a 1031 Exchange

Hopefully, at this point, you understand the benefits of 1031 exchanges. Now, we want to explain the rules and steps to take to successfully complete a 1031 exchange.

1. Identify the property you want to sell.

An important rule when doing a 1031 exchange is you must identify the like kind property you want to buy no more than 45 days after your current property is sold.

If you’re in real estate already, you know that 45 days is not a long time to find a property but those are the rules.

In addition, you have 180 days or 6 months to actually close on the new property.

So 45 days to find and commit to the new property and 6 months to close. Got it?

If for some reason, you need more than 45 days to find a new property, you have a few options.

One is just paying the capital gains tax which a lot of people do to avoid the stress of finding a property.

Or, you can put your 1031 money in a Delaware Statutory Trust or “DST”.

A DST is a separate legal entity that is combined with other investors’ money for the purpose of buying bigger real estate deals.

You would certainly make more money from finding and funding your own real estate deal.

But, DSTs are an option if you want to avoid capital gains taxes and the 45 days were not enough time for you.

2. Hire a qualified intermediary to facilitate the transaction.

This is probably the most important rule.

A qualified intermediary is an individual or business that agrees to facilitate a 1031 exchange.

And, they do so by holding the funds involved in the transaction until it can be transferred to the seller of the replacement property.

They’re basically a middle man.

The IRS can’t tax you for money that you never touched so this is where the qualified intermediary comes into play.

The qualified intermediary can not be related to either party in the real estate transaction.

The intermediary can include, but is not limited to, an attorney, accountant, investment broker, or real estate broker.

If you’re looking for credible CPAs to help you with this, contact us today.

It is really important to have a qualified intermediary in place before the sale of the property.

If you take possession of any of the funds, even for just a little, that can completely disqualify you from using a 1031 exchange.

3. The replacement property has to be of equal or greater value than the selling property.

This means, you can’t sell the original property for $300,000 and only acquire a $200,000 property for purposes of 1031.

We mean you can, but the difference in value is called “BOOT” and that portion is taxable.

Instead, you need to make sure the like kind or replacement property is equal to or greater than the fair market value of the original property.

There are a few more rules and requirements items to remember.

First, a 1031 exchange must be reported to the IRS. Yes, they are not taxable but the IRS still wants to know about it.

So you would report the 1031 transaction on Form 8824 and include it with your tax return.

If you have a business entity set up for your real estate deals, then 8824 would be included with your business tax return.

Next, remember 1031 exchanges are for investment or business purposes.

They are not to be used for your personal residence. So if you buy a piece of property and then decide to live in it, you can not do a 1031 exchange on that property.

Recap of Steps

1031 exchanges can be very complex transactions so let me recap the steps for you:

1. Identify the property you want to sell.
2. Hire a qualified intermediary to facilitate the transaction.
3. Once the original property is sold, you have 45 days to find a replacement property. Let your qualified intermediary know what property you want to buy.
4. Provide your qualified intermediary with the purchase contract of the new property.
   Your qualified intermediary will walk you through a lot of these steps by the way.
5. Close on the replacement property within 180 days of the sale of the original property.
6. File IRS Form 8824 reporting the 1031 exchange. Do this for the tax year in which the original property was sold.

Not so bad, right?

Reverse 1031 Exchanges

We also want you to know about the reverse 1031 exchanges.

In these cases, you identify and buy the replacement property before the original property is sold.

This is totally possible and not entirely uncommon.

The timeline works the exact same but in reverse.

You would have 45 days from the purchase of the replacement property to identify which property you want to sell.

And, have 180 days from the purchase date to complete the sale of the original property.

Again, this is known as a Reverse 1031 Exchange.

1031 Exchange Costs

So lastly, we want you to know about the costs of a 1031 exchange.

In addition to the normal costs associated with buying and selling real estate, like agent commissions and other closing costs, you’ll have to pay a qualified intermediary.

You can expect to reasonably pay anywhere between $800 – $1200 for a qualified intermediary.

Not bad. Qualified intermediaries make most of their money from the interest income they earn on holding your 1031 funds.

An optional but highly recommended cost is to hire a CPA or tax attorney. As mentioned before 1031 exchanges are very complex and impact the way you report your taxes.

And a qualified intermediary is not technically qualified to give you tax advice. So consider the costs to hire a competent CPA or attorney that specializes in 1031 exchanges.

Again, LYFE Accounting has a team of reliable CPAs that you can work with. Get in touch with us today to learn more about our services.

And that’s it! We hope you now have a better understanding of 1031 exchanges.

If you have any questions or comments, please leave them below. We’d love to hear what you think!

The post 1031 Exchange Explained: How to Pay Zero Tax on Real Estate Gains appeared first on Small Business Accounting & Finance Blog.

if you love paying property taxes then this is not the post for you.

Because today, we’re going to uncover the best states to live in to save on property taxes.

We recently published a post with a list of the worst property taxes by states.

And was it ugly that some states had property taxes as high as 2.5% which you’ll see is almost 10 times the rate that people are paying in other states.

So if you haven’t read that post yet, you definitely have to check it out.

And read this one until the end because we’re about to give you the top states with the lowest property taxes to live in to save on taxes.

In this post, we’re going to continue the fun as we go through the states with the lowest property taxes in the country.

Let’s begin!

What Are Property Taxes For?

As you know, property taxes help to fund your local state government. It funds your police, public parks, and perhaps most importantly, your local education system.

But to what extent are these property taxes just too high or too low?

Are the states with the lowest property taxes worse off than others? And if not, would you consider moving to one of these states to save more money?

With that said, let’s go ahead and jump into our list!

The Top 10 Best Property Taxes by States

1. Hawaii

Not only is Hawaii the most popular travel destination in the country, but it also has the lowest property taxes.

Now, Hawaii is one of the most beautiful places in the world, and this property tax rate is very affordable for homeowners.

The effective property tax rate in Hawaii is just 0.28% which is basically nothing in comparison with New Jersey.

New Jersey’s property taxes are about 2.5% which is almost nine times more expensive than Hawaii.

However, there are some major disadvantages of owning property in Hawaii.

First of all, it is very expensive to buy a home in Hawaii. In fact, it is the most expensive in the nation.

Hawaii’s mediated home value is $615,000 making it much more expensive than any state in the United States.

Hawaii also has the second-highest income tax in the country coming in at 11%. That’s 11 times more than other states like Florida and Texas who virtually have no income tax at all.

So with all that said, you might want to stick around to discover some of the other states if you want to pay less in property taxes.

2. Alabama

Unlike Hawaii, Alabama has both low property taxes and low home values. Its property tax rate is just 0.41% which is just 587 per year.

In this state, the median home value is $142, 000. So if you want to keep your property expenses low, Alabama might be worth looking into.

The population in Alabama has been steadily increasing and property taxes might just be the reason why.

But if you’re not in love with Alabama, then you might like the next one on our list.

3. Colorado

Here’s a fun fact about Colorado: It is the only state where you can be standing in four states at the same exact time.

But if you’re paying property taxes, you probably want to be standing in the state of Colorado.

The reason why is the fact that Colorado has the third lowest property tax rate in the country sitting right at 0.51%.

It also is home to one of the most beautiful cities in our country – Denver.

So if you’re into skiing, snowboarding, or just paying less in property taxes then definitely check out Colorado.

Now bouncing back to the deep south, number four on our list is the state of…

4. Louisiana

It is also the home to the jazz capital of the world – New Orleans.

Louisiana has very attractive property tax rates. Its property tax rate is just a few decimals shy of Colorado coming in at just 0.55%.

With its home prices being amongst the lowest in the country, Louisiana might be a perfect place to own property.

5. District of Columbia

Next on our list here is the district of Columbia. Now technically, it is not a state but it is his own entity.

So it’s worth mentioning that the district of Columbia has very low property taxes.

However, there is a bit of a plot twist here: With the district of Columbia, like Hawaii, the cost to buy property here is extremely high.

In fact, home values in dc are the second highest in the whole country falling right behind Hawaii. The median home value is $601,000.

For some perspective, that’s $100,000 more than the homes in California.

So although property taxes are very low in the district of Columbia, it may not be the most affordable place to own property.

6. Delaware

It is known for being one of the most business-friendly states in the country.

And it’s no surprise that Delaware has very low property taxes.

It was the first state to actually ratify the u.s constitution, and it also seems like they ratified low taxes. Delaware has just a 0.57% effective property tax rate and has no sales tax at all.

In the state, its population has also been rising steadily which may be affording the state the ability to keep its taxes low.

All in all, Delaware is a great state to own property in.

Also at number six, we have a tie – the state of South Carolina.

7. South Carolina

South Carolina has the exact same property tax rate as Delaware at 0.57%.

However, home values in South Carolina are much lower than Delaware’s which may ultimately make South Carolina a better place to live in if you want to save on property taxes.

The median home price in South Carolina is $162,000 while Delaware’s median home price is $251,000.

Honestly, it’s starting to seem like if you want both low property tax rates and low home values, the south might be a good home for you.

8. West Virginia

Often considered one of the most scenic states in the nation, West Virginia is simply a beautiful place to see.

And property taxes fall right in line, coming in at just 0.58%.

However, we can’t say that this is necessarily a good thing because West Virginia certainly has its share of issues.

West Virginia has one of the highest poverty rates in the country and also is known for having very poor education scores.

On one hand, maybe they should raise taxes to improve things like this in their state.

But on the other hand, if a lot of the people there are in poverty, they may not be able to afford those taxes.

9. Nevada

Because Nevada is extremely popular for tourism, it can afford to offer its residents very low property taxes.

Nevada’s effective property tax rate is just 0.6% making the state extremely attractive for people, especially on the west coast.

Not only that, but Nevada also has zero state income taxes which is another huge tax benefit of moving to the state.

So how is this even possible? Well, it’s possible because of tourism taxes.

Tourism actually funds over 34% of Nevada’s general fund.

So basically, Nevada residents are benefiting from the money of outsiders visiting their state and it’s really a beautiful thing.

10. Wyoming

This is interesting because Wyoming actually has the lowest population out of any other state in the U.S. with only about 500,000 plus people living there.

So how can they improve that well? Maybe they’re trying to improve it by making it more attractive financially.

Wyoming only has a 0.61% property tax rate but that’s not the end of the story there.

It also has a below-average sales tax rate and no state income tax whatsoever making it a perfect place to live if you want to save on property taxes.

So there you have it, folks! These are the top 10 states with the best property taxes.

Now if you think you can still save more on your taxes but are just not sure how to do it, work with our tax planning, and tax preparation services today!

Simply contact us to get started.

The post The 10 Best Property Taxes By States in 2021: Move Here to Save Money! appeared first on Small Business Accounting & Finance Blog.

Great, you have an LLC and now you have all that is required to get to work and operate your business!

Hold up! We wish it was that easy, right?

You see, everyone talks about getting an LLC but not many people talk about what to do after you start an LLC. And this is kind of scary if you don’t know what to do.

So in this post, we’re going to tell you what to do after you start an LLC.

This post will cover the next steps on your entrepreneurial journey that will keep your LLC compliant with federal and state laws, safe from liability, and you more knowledgeable and confident.

Let’s jump right into it!

What to Do After You Start an LLC

1. Create an Operating Agreement

The first thing we want you to do if you haven’t already is to create an operating agreement.

An operating agreement is a legal document that outlines the rights, rules, and obligations for the internal operations of your LLC.

It is there to lay ground rules and procedures for how the business owners and the managers of the business will handle decisions.

This includes how ownership is divided, how profits will be split, how often you will meet, what happens if a member wants to leave the LLC or passes away, and much more.

Note that most states don’t require you to have one but we highly recommend that you create one, regardless if it is required or not, to minimize misunderstanding and disputes.

If you do not have an LLC operating agreement, the default LLC rules of your State will apply which may differ from what you want for your business.

And there isn’t a one-size-fits-all type of LLC operating agreement, but most will contain six important sections:

1. Organization,
2. Management and Voting,
3. Capital Contributions,
4. Distributions,
5. Membership Changes, and
6. Dissolution

We would shy away from using a cookie-cutter template for your operating agreement as it is binding by law, and you may not agree with what you find online.

Instead, here’s a post we’ve published that literally walks you through how to set up your own LLC operating agreement to fit your preferences, and the best part is that it’s absolutely free.

Be sure to check it out.

2. Get an EIN

An EIN is a 9-digit number used to identify your LLC. You can think of an EIN number like your LLC’s social security number.

And the same way you need your social security number to do certain things personally, you need your EIN number to perform necessary business activities.

For example:

• Most banks require an LLC’s EIN number to open a business bank account, get a business credit card, or get a business loan.
• Additionally, if you plan to have employees you will need an EIN number to file your payroll taxes.
• But the biggest reason you need an EIN is to file your business taxes.

You can choose not to have a business bank account, you can choose to not have employees, but we wouldn’t even dare you to choose not to pay your business taxes.

Our Uncle Sam doesn’t play.

You can obtain an EIN number for free by visiting irs.gov/node/17090. This will redirect you to the IRS site specifically for EIN numbers. Once there, click on “Apply for an EIN online.”

If you apply online, you will get an EIN number immediately.

3. Open a Business Bank Account

Using your personal bank account as your business bank account can have some legal consequences.

Instead, open a business bank account.

By doing so, you reap a few major benefits:

• You protect your personal assets.
• You separate business and personal finances.
• You can simplify taxes.
• You can enter a partnership.
• You can sell your business.
• You satisfy a prerequisite for building business credit.

In general, there are three types of business bank accounts:

1. Checking account
2. Savings account
3. Merchant account

When deciding between business bank accounts, pay attention to the following things:

• Sign up bonuses
• Transaction limits
• Excess transaction fees
• Transfer limits
• Wire limits
• Daily balance requirements
• Online and mobile banking
• ATM access
• Interest
• Nearby branches

Depending on your needs, some of those items will be a priority, and you want to make sure you are getting the best deal.

If you want to know the best business checking accounts there are right now, be sure to read this post next.

4. Start Building Business Credit

Business credit is a company’s ability to buy something today and pay for it at a later date.

By building business credit you enjoy the following benefits as an LLC:

• Higher limits on business lines of credit and loans which provides increased purchasing power
• Utilization freedom which provides more leverage
• No effect on personal credit which protects your personal credit
• Better approval chances, terms, and prices mean cheaper financing in the short-term and long term that leaves more money in your business

To start building business credit for your LLC, do the following:

Step 1: Incorporate your LLC.

Step 2: Get an EIN which was the 2nd point in this video on what to do after you start an LLC.

Step 3: Open a business bank which was the 3rd point in this post.

Step 4: Get a business phone number.

Step 5: Register with Dun & Bradstreet to get a D-U-N-S number.

Dun & Bradstreet is one of the three top business credit bureaus. To get a D-U-N-S number, do the following:

1. Got to Dun & Bradstreet’s website at dnb.com
2. Click on “D-U-N-S number” in the menu
3. Then click “Get a D-U-N-S Number”

Step 5: Establish Tradelines with Vendors/Suppliers Who Report

Popular options with a net of 30 payments include:

• Shirtsy,
• ULINE, and
• Quill.

You could also apply for a business credit card.

We made an entire post on the best business credit cards that you can check out to cut down on your research time.

For the best business credit, be sure to pay your vendors and credit issuers early.

Business credit is calculated based on your companies payment history, negative marks, and business information such as time in business.

6. Register With Your State and Obtain a Sales Permit

In most states, you will need to register to pay state-specific business taxes, including income taxes, employment taxes, and sales taxes.

This is typically done online via your state’s specific tax portal.

Also, you may need to obtain a seller’s permit if you have an online business or have a service that needs to collect sales tax as well.

7. Budget for Taxes

Where there is revenue, there are taxes to be paid.

We can’t tell you how many business owners we’ve worked with who were shocked at the end of the year when it was time to pay federal and state income taxes.

They completely forgot to budget for them.

We suggest building taxes into your business budget. Even better, account for them in the margins of your products or services so taxes are always accounted for.

At the very least, be aware that they exist and the respective deadlines so you avoid paying late penalties.

Depending on your business and the state you do business in, the taxes you are responsible for will differ, but here are the six most common taxes:

1. Income Taxes
2. Self-Employment Taxes
3. Estimated Taxes
4. Payroll Taxes
5. Excise Tax
6. Sales Tax

Keep them in mind as you grow your business.

Well, there you have it. We hope we answered your question on what to do after you start an LLC.

And if you need any help with your business taxes, be it an LLC or other business entity, we’ll be glad to help you.

Work with our accounting and tax services today to save more on your taxes!

The post What to Do After You Start an LLC? 6 Critical Next Steps appeared first on Small Business Accounting & Finance Blog.

Today, we’re going to give an update on what exactly is going on with your money.

We know a lot of you are waiting on tax refunds, stimulus checks, and even child tax credit payments.

But recently, the IRS just announced that they are sending out refunds to 4 million people!

And this is related to the millions of people who were wrongfully taxed last year on their unemployment compensation.

If you lost your job last year and started collecting unemployment benefits from the government, this update applies to you.

For this round, the IRS identified about 4.6 million taxpayers who may be due an adjustment on their return because of this.

And of that, about 4 million taxpayers are expected to receive a refund.

The average refund is $1,265, which means some taxpayers will receive a little more and some will receive a little less.

Now, we know what you might be thinking that this is old news and you have been waiting forever to receive your refund and none of this is new.

But hear us out. There are a few new items that you need to be aware of, like if you need to file an amended return in order to receive your refund in a timely manner.

So be sure to read this post until the very end and let’s get started!

In this post, we’re going to give you the latest unemployment tax refunds update.

As well as break down to you what you need to know in order for you to claim your unemployment tax refund based on recent updates from the IRS.

Unemployment Tax Refunds Update and Recap

A little background, in case you didn’t know, due to the recent passage of the American Rescue Plan of 2021…

…the IRS has now considered the first $10,200 of unemployment compensation received in 2020 as non-taxable.

This amount doubles for married couples and makes the first $20,400 of unemployment compensation non-taxable.

Do remember that normally unemployment compensation is taxable, but because of all of the craziness last year, a portion of that has been deemed non-taxable.

And by the way, this exclusion only applies to individuals and married couples whose modified adjusted gross income was less than $150,000 in 2020.

Now, since this act was passed well into the tax season 2021, millions of taxpayers already filed their returns and wrongfully paid tax on their unemployment income.

Due to this misfire, since around May/June of this year, the IRS has started to issue refunds to these taxpayers.

Conditions If An Amended Return is Necessary

However, there is a handful of you, who may need to file an amended tax return in order to claim your refund.

Specifically, if as a result of the excluded, non-taxable unemployment compensation, you then become eligible for deductions or credits not claimed on the original return…

…then you should file a Form 1040-X, or an amended return.

It can be a bit confusing to understand if you need to file an amended return.

So, take a close look at these categories to see if you fall in one of them and need to file an amended return to receive your refund:

1. You did not submit a Schedule 8812 with the original return to claim the Additional Child Tax Credit and are now eligible for the credit after the unemployment compensation exclusion;

2. You did not submit a Schedule EIC with the original return to claim the Earned Income Tax Credit (with qualifying dependents) and are now eligible for the credit after the unemployment compensation exclusion;

3. You are now eligible for any other credits or deductions after the unemployment compensation exclusion. In this case, make sure to include any required forms or schedules with your amended return.

It might be difficult to know on your own if you fall into these categories, so make sure to confirm with your tax preparer if you need to file an amended return.

And don’t worry too much, the IRS has made it clear that they will be sending out refunds throughout the summer.

So, it is not too late to correct this information on your return.

Conditions If An Amended Return is Not Necessary

Now, for the majority of you, there isn’t any additional action you need to take to get your refund.

The reason why is that the IRS specifically states:

“To ease the burden on taxpayers, the IRS has been reviewing the Forms 1040 and 1040SR that were filed prior to the law’s enactment to identify those people who are due an adjustment”

According to the IRS, you do not need to file an amended return if you fall into one of these categories:

1. You already filed a tax return and did not claim the unemployment exclusion. The IRS will determine the correct taxable amount of unemployment compensation and tax;

2. You have an adjustment, because of the exclusion, that will result in an increase in any non-refundable or refundable credits reported on the original return;

3. You did not claim the following credits on your tax return but are now eligible when the unemployment exclusion is applied:

• Recovery Rebate Credit,
• Earned Income Credit with no qualifying dependents, or
• the Advance Premium Tax Credit

The IRS will calculate the credit and include it in any overpayment.

4. You filed a married filing joint return, live in a community property state, and entered a smaller exclusion amount than entitled on Schedule 1, line 8.

Again, the majority of people do fall under these categories but it’s wise to confirm this information.

For those who do not need to file an amendment, the IRS has been automatically making adjustments to these returns and will issue refunds accordingly via direct deposit.

If you did not include direct deposit information on your original return, the IRS will be mailing you a check to the address listed on your return.

Also, if the IRS did make an adjustment to your return, they will send you a letter within 30 days of the adjustment to inform you of what kind of adjustment was made.

For the approximately 600,000 people who qualify for the exclusion but don’t receive a check directly…

…your adjustment went to some outstanding tax debt or used to offset other authorized debts you may have.

You will also be informed of this kind of adjustment via mail.

There you go – the latest unemployment tax refunds update!

We hope you found this post helpful to better understand what is going on with your money and tax refunds.

But if you need help with your specific tax situation, get in touch with us now! Our team of CPA tax experts is always ready to help you.

The post Unemployment Tax Refunds Update & Amended Return Requirements appeared first on Small Business Accounting & Finance Blog.

Your physical address might result in you paying significantly more in property taxes than someone else.

And as millions of Americans rush from one state to another, one thing you just have to keep in mind is property taxes.

That’s why in this post, we’re going to uncover the states with the worst property taxes in the country.

Read on as today we’re going to have some fun as we go through some of the states with the highest property taxes in the country.

So let’s begin!

Are Property Taxes a Bad Thing?

Not necessarily, property taxes fund everything around you – education, emergency services, and infrastructure.

The money that you pay for these taxes funds the services that your local government provides.

So in theory, states with high property taxes are better funded and have more money to reinvest into their economy.

But who likes paying taxes?

No one we know for sure.

While death and taxes are the only things certain in life, when and how much is not so certain.

It is also no guarantee that states with higher property taxes are actually run better than states with lower taxes.

In fact, if we’re looking at migration trends, the states with the lowest property tax rates are where most people are moving.

So we guess you don’t always get what you pay for after all, at least when it comes to taxes.

But let’s take a look at some of the states with the worst property taxes in the nation and see for ourselves. We’ll do this in a countdown way up to the state with the highest tax rates.

Top 10 Worst Property Taxes By States

10. Rhode Island

The top 10 on the list of states with the worst tax rates is Rhode Island

Rhode Island is the smallest state in the United States, but that’s not the case when it comes to its property taxes.

The island is only 48 miles tall and 37 miles wide, but its property taxes will run deep in your pockets.

The effective property tax rate is 1.63%.

So if you own a $260,000 home, you’d pay over $4,000 in property taxes.

9. New York

This should not come as any surprise to you because everything is expensive in New York, and so are its property taxes.

And this kind of makes sense. Even if their tax was the same everywhere, you would pay more taxes overall in New York simply because its home prices are so high.

But that’s not even the case.

Even though New York has one of the highest property values in the country, it also has one of the highest property tax rates.

The effective tax rate is 1.72%, and their median home value is over $50,000 more than Rhode Island.

So let’s move away from New York, literally, and move on to the next one.

8. Nebraska

We tried to find some fun facts about Nebraska, but we’ve got nothing other than the fact that Kool-Aid was invented there if you’re old enough to remember those days.

And its property tax rate is also not so fun. Nebraska’s property tax rates are even higher than New York’s, coming in at 1.73%.

So clearly, Nebraska isn’t trying to attract many people to the state.

But on the flip side, the median home value is about half of the value in New York.

The median home value in Nebraska is just around $155,000 and you’d only pay about $2,700 in taxes if you owned a home at this value.

So maybe the higher property tax is due to its very low home values.

7. Texas

They say everything is bigger in Texas, and so are its property taxes.

Texans pay 1.80%, on average in property taxes. That’s 3x the amount you’d pay in Tennessee.

Yet, millions of people are moving to Texas. So what’s going on?

Well, although Texas has one of the highest property taxes in the country, it has one of the lowest income taxes.

And by lowest, we mean next to nothing. Texans pay ZERO income taxes, which is apparently very attractive to billionaires with a lot of income like Elon Musk.

Speaking of low taxes, you also might want to read our post listing the tax-free states.

6. Wisconsin

About 5 million people live in Wisconsin, so that’s about 5 million people paying sky-high property taxes.

But Wisconsin is famous for its beer so maybe whoever came up with their property tax rate was drunk at the time.

People in Wisconsin pay 1.85% of their home values in property taxes. So if you owned a $180,000 home in Wisconsin, you’d pay almost $3,500 in property taxes.

5. Vermont

Outside of Olivia Pope and Fitz moving to Vermont in scandal, we don’t know too many people who live in Vermont.

It is actually the second smallest state in the country in terms of population size.

Seems like they want to keep it this way because its annual property taxes are scorching high at around 1.90%.

But if you love nature, mountains, land, and rural life, then maybe you’ll compromise paying higher property taxes because Vermont is drop-dead gorgeous.

4. Connecticut

Connecticut is widely known as one of the richest states in the nation, if not the richest.

Billionaires like Ray Dalio and Steve Cohen are amongst many that call Connecticut home.

And we’re sure Connecticut is happy to have them because they are collecting a whopping 2.14% on the value of their homes in property taxes.

The average citizen in Connecticut pays almost $6,000 in property taxes on a median home value of $275,000.

That’s over a month in take-home pay for most people.

So, let’s move on to the top 3 worst states to live in.

3. New Hampshire

New Hampshire has the 3rd highest property tax in the nation.

But we can’t say this is a bad thing.

Although this is the case, New Hampshire has the lowest poverty rate in the entire country.

Like we said earlier, taxes may not always be a bad thing. And we don’t get the impression that New Hampshire loves taxes either.

We say this because New Hampshire is one of the only states with no income taxes and no sales taxes.

So when considering everything, New Hampshire is a tax-friendly state. But you are going to pay your fair share when it comes to property taxes.

2. Illinois

Illinois has the 2nd highest property tax in the country, and no, it does not have a low poverty rate.

In fact, its poverty rate is average and its crime rate is atrocious. Illinois is ranked in the top 10 for the highest homicide rates in the whole country.

Yet, it has a 2.27% property tax rate. You’d think that these high property taxes might result in better schools and police, but this is not the case.

So you probably would not catch us buying property here.

And last but not least, the state with the highest property tax in the nation is…

1. New Jersey

New Jersey is just flat-out expensive.

Its effective property tax rate is 2.49%, which is not just the highest in the nation, but it is the highest by far.

And just like New York, its home prices are among the highest in the country.

So you’re kind of getting slapped twice – sky-high housing prices, property taxes, and that’s just the beginning of the story.

It also has higher than average income taxes and sales taxes.

It sounds to us that New Jersey should change its name to Tax Jersey.

But what do you think? Do you think these states are justified in having higher property taxes? Comment below and let us know!

Now, if you want to pay less on your taxes but don’t want to change your residence and move on to another state, working with our CPA tax experts is the solution!

We’ll help you find the best (and legal) ways to save on your taxes. Contact us now at 470-240-1437.

The post A List of the 10 Worst Property Taxes By States appeared first on Small Business Accounting & Finance Blog.

The deadline to sign up for the new stimulus update which gives free healthcare for 6 months is August 15th so don’t miss it.

Today, we wanted to provide you with a quick stimulus update that was part of the Democrats’ $1.9 trillion rescue package that went into effect in March.

The same plan that gave $1,400 stimulus checks and monthly child tax care payments was just updated to now provide completely free healthcare plans for 6 months.

Let’s go ahead and dive in!

Who Qualifies For This New Stimulus Update

In short, if you received or were approved for unemployment benefits in 2021…

…you are automatically eligible to receive free healthcare coverage for the rest of the year by visiting the healthcare marketplace – healthcare.gov.

It doesn’t matter if you received 1 payment, 2 payments, or 20 payments.

Even if you are currently working or off of unemployment, you could still qualify.

According to recent government reports, almost 3.5 million people are actively on unemployment, with thousands of new applications coming in weekly.

Almost 11 million people were unemployed in January of this year.

This means, there are literally millions of Americans who can benefit from getting free healthcare until the end of the year.

According to the Department of Health and Human Services, three out of five eligible uninsured Americans will be eligible for the $0 healthcare plans.

And, an average of four out of five current consumers will be able to find a policy for $10 or less per month.

There are typically income limits to qualify for Obamacare coverage, but there is no income requirement to qualify here.

The only caveat is that you generally don’t qualify for any subsidies if you are able to get healthcare provided to you by your employer.

Chiquita Brooks-LaSure, who is the administrator for the Centers for Medicare & Medicaid Services said the following:

“We are doing everything we can to remove financial barriers to comprehensive health care.”

She then added that:

“The American Rescue Plan provides consumers with additional savings and will make coverage even more attainable for those most in need.”

If you don’t qualify because you did not receive unemployment payments, we will provide a few unknown options for you at the end of the post.

How to Sign Up

If you qualify, you will need to visit the revised portal on healthcare,gov website.

And then, submit a new application where you enter personal details and information on your current employment situation or update your existing application.

Say you’ve used healthcare.gov in the past and already have a login or are already receiving healthcare coverage through healthcare.gov…

…you will want to log in and select “report a life change.”

You’d just have to demonstrate that you were indeed eligible for unemployment benefits.

Once, you’ve updated your application, you will be able to see and search for the new options available to you.

The $0 plans are not considered high-end plans but are not considered low-end plans either.

They are right in the middle “silver” plans and typically also come with very low, or not deductible at all, making them even more attractive.

For 2021, a typical Obamacare premium is about $452 a month, which is a huge saving for those who were paying out of pocket or could not afford it at all.

The plans became available on June 1st and the enrollment period ends on August 15th.

So don’t wait – sign up as soon as possible if you received or were approved from unemployment benefits this year.

If you need help signing up, you can call the Marketplace Call Center at 1-800-318-2596 or by visiting healthcare.gov/find-assistance.

Note that some states, like California, do not use the Affordable Care Act Exchange and use their own exchange with their own timetables.

If you live in a state such as this, you should be able to sign up or update your information to $0 or very low-cost options in your state.

Speaking of state taxes, you also might want to check our posts about the tax-free states and top 10 states with the worst property taxes.

If that interests you, then be sure to read them next.

What If You Don’t Qualify For This New Stimulus Update?

Additionally, we also want to make you aware of two other healthcare updates in case you were not aware or do not qualify.

1. Obamacare plans have long been criticized for being too expensive.

To help, the Affordable Care Act made a change to provide subsidies where those with low income can get completely free healthcare.

And, others will pay no more than 8.5% of your total income towards healthcare premiums.

2. Those with income 400% above the poverty level can now receive subsidies for the first time as well.

The enrollment for these subsidies started on February 15th and was recently extended by three months to August 15th to give you more time to apply.

According to, Kaiser Family Foundation, “The relief bill broadened availability to 21.8 million people, including both the insured and uninsured.”

In general, many of us were not aware of the provided subsidies.

So to boost awareness, Biden has doubled the advertising budget to 100 million dollars and has a new ad circulating that details the availability of no-cost or low-cost plans.

There are so many tax deductions and tax credits that you can take advantage of to save more on your taxes.

But to ensure your taxes are done and filed the right way, let the professionals help you!

Go ahead and work with our tax preparation, tax planning, and tax resolution services today.

The post New Stimulus Update: Free Healthcare for 6 Months appeared first on Small Business Accounting & Finance Blog.