Standard Deduction vs. Itemized Deductions A deduction is something the IRS offers to help maximize your refund or reduce your liability. It is an amount you can subtract from your Adjusted Gross Income to reduce the overall income subject to taxation. There are two types of deductions, the standard deduction and itemized deductions. In this article, we will go over the standard deduction vs. itemized deductions to determine which is best for you. Standard [...]

Above-the-Line Deductions There are both itemized and above-the-line deductions. They will affect your Adjusted Gross Income in different ways. In this article, we will go over the basics of above-the-line deductions. Adjusted Gross Income Before you can understand above-the-line deductions, you must understand Adjusted Gross Income. Your AGI includes your combined income from wages, business and rental income, capital gains, and unemployment. The number is used for many calculations on your tax return. For [...]

Home Office Deduction The home office deduction is available to small business owners who regularly and exclusively use a portion of their home for business related activities. This deduction is taken if you file a Schedule C. In this article, we will go over the basics of the home office deduction. The Basics You can claim the home office deduction as both a homeowner and a renter. Your dwelling can be a single family [...]

Understanding Form 1120-S Form 1120-S is the name of the tax return for S-Corporations. It calculates the business’ taxable income and liability, which is passed on to shareholders to report on their personal tax returns. In this article, we will go over some basic information about Form 1120-S. Required Information First, you will need basic information that is easy to locate. Such as the name and employer identification number of the business. You will [...]

Form 1065-Partnership Tax Return A Form 1065 allows a partnership to report their financial activities to the IRS. This would include profits, losses, deductions, and credits. Partnerships do not pay income tax with this return. Rather they pass the profits or losses on to the partners to report to their individual tax returns. Partnerships that can use Form 1065 include general partnerships, limited partnerships, and LLCs qualified as domestic partnerships. Filing Process Your Form [...]

Schedule K-1 Basics A Schedule K-1 is an IRS form that reports your share of an income or loss from a pass-through entity. It prevents double taxation by avoiding taxes at the entity level and shifting the liability to the owners/beneficiaries who will report income or loss on their personal tax return. In this article, we are going over the basics of how a Schedule K-1 works and what it reports to the IRS. [...]