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Archives for January 2019

How Real Estate Agents Save Big on Self-Employment Tax

If you are a real estate agent or broker, you are most likely subject to the self-employment tax. We will go over how you can potentially save thousands on your tax bill.

If you’re like many real estate agents and brokers, you are paid as independent contractor.

As an independent contractor, you are considered self-employed and subject to the full 15.3% self-employment tax. W-2 employees pay 7.65% and their employer pays the other 7.65%

Electing to have you LLC to be taxed as an S-Corporation allows you to hire yourself as a W-2 employee and split your earnings between salary and distributions.

It is very important to work closely with a CPA to set a reasonable compensation for yourself to avoid IRS scrutiny. Creating an entity and electing to be taxed as an S Corp has its advantages and can potentially lower your tax liability, but has many considerations which are warranted before making the tax election and changing your company structure.

Contact our team today to discuss you entity selection in detail as it related to your specific financial circumstances.

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Overstock First Company To Pay Taxes In Cryptocurrency

Overstock, the US online retailer, announced that it will pay a portion of its business taxes in Ohio in Bitcoin.

Earlier in November, the state of Ohio opened a cryptocurrency portal that allows businesses to pay 23 different taxes with the digital currency, ranging from cigarette and tobacco to fuel and sales taxes.

Overstock will pay its eligible commercial activity taxes (CAT) via OhioCrypto.com site starting from next month. Businesses interested in paying their taxes in bitcoin can do so after registering with the new website and signing up with crypto payment processor BitPay.

Do not forget that paying taxes or spending cryptocurrency in any other form is also potentially a taxable event.


Whether you need tax preparation services, assistance with properly reporting gains and income from virtual currencies on your taxes, cryptocurrency portfolio analysis, or any other service provided by a certified accountant, Camuso CPA can help.

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What Meals Can You Deduct After the 2018 Tax Law Changes?

On 22 December 2017, the President signed tax reform legislation known as the Tax Cuts and Jobs Act (TCJA). While the full implications of the Tax Cuts and Jobs Act are still unraveling, a number of tax-planning opportunities have presented themselves.

The Tax Cuts and Jobs Act of 2017 has also made significant changes to the deductibility of business meals and entertainment starting in 2018.

Generally, entertainment expenses are nondeductible and most meals are 50 percent deductible. Previously entertainment expenses were 50 percent deductible and a most meals were 100 percent deductible.

We anticipate this area of tax reform will be heavily scrutinized by the IRS. It is important that your accounting records accurately categorize these activities.

How Does It Work

In order for meals to be considered 50 percent deductible business must be discussed during the meal. If no business is discussed the meal is not deductible for tax purposes and thus should be entered as entertainment. Meals with employees/coworkers where business is discussed along with meals while travelling are considered 50 percent deductible as well. Company activities, such as holiday parties, birthday and anniversary celebrations, picnics, etc. are fully deductible.

Here at Camuso CPA, we offer a wide array of tax services for investors including tax preparation and tax planning. Financial service and technology companies are transitioning from employee driven revenue models to information driven revenue models. Camuso CPA strives to deliver useful insights and offer relevant explanations about the latest tax and financial topics.

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What To Do If You Have Not Reported Your Real Estate Investments On Last Year’s Tax Return

Here at Camuso CPA, we offer a wide array of tax services for real estate investors including tax preparation and tax planning. If you are interested in how this might specifically benefit your business or portfolio, please don’t hesitate to reach out in detail today to schedule a free initial consultation regarding your specific facts and circumstances.

The IRS can go back up to three years to prosecute cases of tax evasion, and in cases where they find substantial error, they can decide to go back up to six years or more. If you did not report your real estate transactions properly in prior years the best course of action is to file an amended tax return.

Step 1: Calculate Your Tax Liability

When preparing your tax return, you are going to have to figure out your taxable income from your real estate investments for the year. This involves figuring out how much of your assets were sold for capital gains. Additionally, if you own rental properties you will have to determine the amount of taxable income to report from your portfolio.

If doing real estate tax is proving to be a challenging feat, you should consider enlisting the services of a qualified CPA at a professional tax firm such as Camuso CPA.

Step 2: Amend your return

Once you have determined your capital gains and tax liabilities, you should download a current IRS Form 1040X, Amended U.S. Individual Income Tax Return

Step 3: Mail in your amended return

After preparing your amended tax return to reflect your real estate transactions they will be mailed to the IRS along with all applicable tax payments.

While paying taxes can at times be painful, it is very important that you include your real estate businesses and portfolio properly on your tax return. Ultimately, if you choose not to file your gains/losses and/or income, you will be committing blatant tax fraud to which the IRS can enforce a number of penalties, including criminal prosecution, five years in prison, along with a fine of up to $250,000.

Here at Camuso CPA, we do have the ability to offer tax preparation and planning services to our real estate clients. If you are interested into how this might benefit your business or portfolio, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answers any questions you have.

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How Real Estate Syndicators Are Impacted By Tax Law Changes To Business Interest

Here at Camuso CPA, we offer a wide array of tax services for real estate investors including tax preparation and tax planning. If you are interested in how this might specifically benefit your business or portfolio, please don’t hesitate to reach out in detail today to schedule a free initial consultation regarding your specific facts and circumstances.

Tax reform, also known as the Tax Cuts and Jobs Act (TCJA), was enacted at the end of 2017, resulting in considerable changes to the federal tax code including a new limitation on the business interest deduction.

Business interest expense was generally deductible under the previous law. Beginning in 2018, however, the business interest deduction may be limited to the sum of a taxpayer’s business interest income for the tax year and thirty percent of the taxpayer’s adjusted taxable income for the tax year.

Syndicators can elect out of this limit by electing to be a real estate trade or business for tax purposes. The drawaback then is that real property has to follow a longer depreciation schedule. And may not be eligible for 100% bonus or accelerated depreciation on property with useful lives of 5,7, or 15 years.

Syndications can be a powerful tax planning tools ,but can also have negative tax consequences if you’re not careful. Be sure to speak with a qualified CPA before investing or starting a syndication.

Here at Camuso CPA, we do have the ability to offer tax preparation and planning services to our real estate clients. If you are interested into how this might benefit your business or portfolio, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answers any questions you have.

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Tax Implications of Paying Your Employees in Cryptocurrency

Here at Camuso CPA, we offer a wide array of tax services for cryptocurrency investors and traders including tax preparation, tax planning and portfolio reconciliations.

If you’re thinking about paying your employees in a cryptocurrency such as Bitcoin or if you are an employee interested in receiving it as a portion of your pay, there are a few tax implications you need to consider before doing so.

The IRS treats cryptocurrencies as property. Simply holding cryptocurrency, whether it has gained value or lost value, does not mean that you owe taxes. In order to owe taxes, you would have to sell cryptocurrency, trade for another cryptocurrency, or purchase something with it. These are known as taxable events.

This means that if a business uses cryptocurrency as a payment method for employees that there are multiple tax implications. Based on the company’s holding period and cost basis they will be exposed to capital gains liabilities when they use their assets to pay employees. They will still be able to report the employee’s payment as a business expense which is beneficial for taxes.

A taxpayer who receives digital currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, measured in U.S. dollars, as of the date that the virtual currency was received. If a virtual currency is listed on an exchange and the exchange rate is established by market supply and demand, the fair market value of the virtual currency is determined by converting the virtual currency into U.S. dollars (or into another real currency which in turn can be converted into U.S. dollars) at the exchange rate, in a reasonable manner that is consistently applied.

According to the IRS, all payments paid to employees are subject to income withholding requirements regardless of what form of payment the business uses to pay the wage.  Therefore, the fair market value of an employee’s cryptocurrency earnings must be included on that employee’s W-2 form, and these wages will also be subject to federal income tax withholding, Federal Unemployment Tax Act, and Federal Insurance Contributions Act requirements that apply to property-backed payments.

Business owners who are exploring using cryptocurrencies to pay independent contractors and carry out business-to-business payments aren’t immune to information reporting requirements just because they’re using virtual currencies.  So if a company pays rent, salaries, annuities or other compensation using cryptocurrency transactions that are valued at $600 or more—and the recipient is not considered a tax-free entity—the company is required to report the fair market value of each transaction at the time of payment both to the IRS and to the recipient.  If you’re also making payments to independent contractors for services rendered, you would also need to be reported payments valued at over $600 on the contractor’s Form 1099-MISC.  Failure to do could result in hefty fines for your business.

If you searching for CPA firms to assist you with reporting cryptocurrency income and capital gains, contact Camuso CPA. Whether you need tax preparation services, assistance with properly reporting gains and income from virtual currencies on your taxes, cryptocurrency portfolio analysis, or any other service provided by a certified accountant, Camuso CPA can help.

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How To Calculate Depreciation On Rental Portfolios

Here at Camuso CPA, we offer a wide array of tax services for real estate investors including tax preparation and tax planning. If you are interested in how this might specifically benefit your business or portfolio, please don’t hesitate to reach out in detail today to schedule a free initial consultation regarding your specific facts and circumstances.

How To Calculate Depreciation On Rental Portfolios

If you own a rental property and want to take advantage of the tax breaks one of the most useful tax tools at your disposal is depreciation. Rental property depreciation allows investors to write off the structure and improvements to the property over a period of time. This is non-cash expense that you can use as a write-off on your taxes. Depreciation is one of the biggest benefits to real estate investing because it can reduce reportable net income and therefore, your taxes

Depreciation is the loss in value to a building over time due to age, wear and tear, and deterioration. You can also include land improvements you’ve made and items inside the property that are not part of the building like appliance and carpeting. You can only depreciate the improvements to the structure itself – not the land.

Depreciation deductions are spread out over the useful life of a property. The IRS allows an owner to depreciate the value of the home over a 27.5 year period. The time periods of depreciation can be adjusted based on the components of the property which can offer even larger tax planning opportunities. We cover this in other articles here.

It is important for all real estate investors to deeply understand depreciation and how it applies to their portfolio. There are many tax planning opportunities available related to depreciation.

Here at Camuso CPA, we do have the ability to offer tax preparation and planning services to our real estate clients. If you are interested into how this might benefit your business or portfolio, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answers any questions you have.

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What Investors Don’t Know About Tracking Cryptocurrency For Taxes and How It Will Hurt Them

Here at Camuso CPA, we offer a wide array of tax and accounting services for cryptocurrency investors and traders including tax preparation, tax planning and portfolio reconciliations. Camuso CPA strives to deliver useful insights and offer relevant explanations about the latest tax and financial topics.

How It Works

How you report the cryptocurrency transactions will depend on how long ago you bought your cryptocurrency and on the price at which you purchased it. If you’ve held the crypto for less than a year before transacting with it, it’s taxed as a short-term capital gain, which is still taxed at the same rate as ordinary income. But if you’ve held crypto for longer than a year before using it, it is taxed as a long-term capital gain at lower rates.

As discussed before, the IRS requires that taxpayers report the fair market value of their coins – in a reasonable and consistent manner – on the date of purchase. The fair market value reported by a taxpayer disposing of cryptocurrencies should serve as the additional cost basis for the new taxpayer acquiring the currency. This is easier said than done because taxpayers tend to report conflicting cost basis that maximize personal tax advantages. As you can see tracking cost basis is a cumulative process.

How This Impacts Taxpayers

Properly tracking and reporting your cost basis is imperative to protect your assets from penalties and interest as a result of underreporting. When analyzing cryptocurrency portfolios our starting point is the last ending tax year’s cost basis for each asset which is considered along with all relevant transactions from the current year to arrive at both an ending tax liability and ending cost basis for each respective asset you are holding.

This means that if you did not track your cost basis correctly in prior years or did not report it that your portfolio calculation for years following that will also be incorrect.

It is clear that, with the huge price declines in cryptocurrency markets during 2018, many people will be considering harvesting losses and reporting this for a tax benefit.

If you did not report crypto activity up to now or tracked your cost basis improperly, those choosing to reveal losses this year will be at a high risk of audit and tax penalties. Taxpayers that have not previously reported will also need to report their crypto transactions every year going forward.

If you searching for CPA firms to assist you with reporting cryptocurrency income and capital gains, contact Camuso CPA. Whether you need tax preparation services, assistance with properly reporting gains and income from virtual currencies on your taxes, cryptocurrency portfolio analysis, or any other service provided by a certified accountant, Camuso CPA can help.

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Form 1099-K: What Cryptocurrency Investors Need to Know in 2019

Here at Camuso CPA, we offer a wide array of tax and accounting services for cryptocurrency investors and traders including tax preparation, tax planning and portfolio reconciliations. Camuso CPA strives to deliver useful insights and offer relevant explanations about the latest tax and financial topics.

The IRS has demonstrated it intends to enforce existing 1099 reporting rules on cryptocurrency exchanges, but it has not followed up by providing clarity regarding those rules. For instance, trading platforms might have to send 1099-B forms to users who exchange one type of coin for another, but they’re not explicitly required to send the forms the way brokers are for stock trades. Generally, requirements surrounding the 1099-B remain unclear for cryptocurrencies.

The IRS has already forced a Coinbase to report users on form 1099-K, the same form home-share and ride-share companies use to report transactions with homeowners and drivers. The federal reporting threshold for the 1099-K is currently set at $20,000 and 200 transactions per year.

The 1099-K lacks the cost basis details required to capture the capital gain/loss calculation that would ultimately determine taxable income and tax revenue for the IRS.

If people are transacting in digital currency, it’s important that anyone understands that there’s a tax obligation on their part. Whether they’re paying their taxes or whether they’re day traders– it doesn’t matter. Any time there is a transaction with digital currency, it’s important that people understand there is a tax liability.

The reason that 1099-K are not usually accurate is because they do not report the relevant cost basis data necessary to accurately calculate capital gains/losses. Additionally, this form does not reconcile trades across multiple exchanges. Our team at Camuso CPA works with cryptocurrency investors and traders on a daily basis to accurately calculate all of your cryptocurrency transactions in order to properly report them for tax purposes.

Properly tracking and reporting your cost basis is imperative to protect your assets from penalties and interest as a result of underreporting. When analyzing cryptocurrency portfolios our starting point is the last ending tax year’s cost basis for each asset which is considered along with all relevant transactions from the current year to arrive at both an ending tax liability and ending cost basis for each respective asset you are holding. This means that if you did not track your cost basis correctly in prior years or did not report it that your portfolio calculation for years following that will also be incorrect. This can cause cascading and costly issues across multiple years of tax returns in many cases.

Analyzing financial transactions are a detailed process that can easily be plagued with costly errors if you do not have a structured process and workflow in place. Analyzing crypto transactions adds another layer of complexity due to the nascency of this industry and the reporting standards from exchanges. Without the proper experience and training it is very easy for well-meaning accountants to make costly errors related to the portfolio calculations and advisory they provide investors.

Be careful and do you due diligence. At the end of the day your tax return is your responsibility and it is your job to work with an experienced CPA firm to protect your assets. I would suggest that investors work with a CPA that not only understands and invests in crypto but also a CPA that has a strong background in financial services.

If you searching for CPA firms to assist you with reporting cryptocurrency income and capital gains, contact Camuso CPA. Whether you need tax preparation services, assistance with properly reporting gains and income from virtual currencies on your taxes, cryptocurrency portfolio analysis, or any other service provided by a certified accountant, Camuso CPA can help. We are industry leaders in cryptocurrency tax services and you will not find a better team of CPAs to assist  you with your tax needs.

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How To Treat Earnest Money Deposits for Tax Purposes

Here at Camuso CPA, we offer a wide array of tax services for real estate investors including tax preparation and tax planning. If you are interested in how this might specifically benefit your business or portfolio, please don’t hesitate to reach out in detail today to schedule a free initial consultation regarding your specific facts and circumstances.

Many investors think earnest money deposits are an expense when in fact they are treated as an asset. Although an earnest money deposit is no longer in your possession once paid, it will give you a direct value in the near future whether you purchase a property or whether you receive a refund of your earnest money deposit.  When you pay the earnest money deposit, you are creating a current asset, and when you purchase the property, the earnest money deposit reduces your cash payment that is a reduction of a current asset.

While it is very important to track earnest money deposits for any real estate investor, it becomes increasingly important for flippers and investors who are purchasing real estate on a large scale.  When you expand your business or portfolio and there are multiple purchases taking place in a short amount of time, earnest money deposits can be overlooked.

Here at Camuso CPA, we do have the ability to offer tax preparation and planning services to our real estate clients. If you are interested into how this might benefit your business or portfolio, please don’t hesitate to give us a call today. One of our friendly and knowledgeable representatives will be happy to answers any questions you have.

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