On 2008-08-27, Jon Anderson wrote:
Ignoramus17245 wrote:

But Grant would get rental income, which he would need to report, it
is a wash.

Yes, I noted that, though to be precise, there is a difference
between renting and leasing. I also noted it is considered unearned
income and is taxed differently than earned income. I believe one of
the benefits is that SSI is not applied to unearned income. I've not
done it myself and so don't really know all the details, but know
several people that have. A good tax person can tell him if it's
worth doing in his case, but it is an option.

What I do know is that the IRS is looking for businesses to produce
cash, either as salary or dividends. They also want the owners to pay
themselves a reasonable salary (what is reasonable to them, may be a
pittance compared to market, but it should be something).

They may frown upon shenanigans such as paying oneself rent etc, and
having no income or SS paying salary. I am all for saving on taxes,
etc, but not at the cost of being flagged for an audit, or worse. A
good accountant would tell Grant what ratios to follow, etc.

Anyone in Grant's shoes really should cough up the money for
an enrolled agent. If they feel the money didn't save them
enough to justify, they can always go elsewhere the next
year or DIY.

First year I went to my current tax guy, he saved me 3
grand. And noting I'd used H&R Block the year before, asked
questions about that return. Turns out H&R missed a number
of deductions. He filed an amended return for the previous
year and I picked up another $500 or so. I was very very
happy to write him a check for $280 for his services! With
taxes, the devil is in the details, and the details can
really add up to big savings.

I had a similar experience, went from a zombie accountant who never
cared, except for the quantity of customers, to someone who cares.

i

btw, anyone in the Sacramento area that wants a first class
enrolled agent, email me privately for his contact info.


Jon

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