While the IRS has been working to implement the new rules and regulations brought forth by the Tax Cuts and Jobs Act (TCJA), my team and I have been reading and reviewing this major tax legislation to see how it…
Taxes on the sale of a home containing a home office depend on whether your office is located inside or outside of your home, and how you filed your deductions. If your office is within the walls of your home and you used the simplified deduction, there are no additional taxes on the sale of your home because of your home office. If your office was located outside of your home (like in a backyard shed), you will have to pay taxes on the portion of the sale tied to your home office. If you took deductions for depreciation of your home office, you will need to pay a tax on those deductions when you sell your home.
Amortization is similar to depreciation but focuses on the costs of intangible assets. It allows businesses to account for the cost of intangible assets over time. Intangible assets are non-physical assets that are expected to provide value to a business for more than a year. The most common way to amortize is to divide the cost of an intangible asset over the number of years you expect it to provide value to your business.
Accrual accounting records a monetary transaction when the good or service is delivered—so when you send an invoice or receive a bill. Cash accounting records monetary transactions when the money actually moves—so when bills or invoices are paid. Cash accounting can be preferable for tax purposes since you’re only taxed on the money you’ve actually received. Accrual accounting can make your revenue look more steady since it doesn’t represent time lag in payments.
The IRS telephone number is 1-800-829-1040, and they are available from 7 a.m. – 7 p.m. Monday thru Friday. The best time to call is early in the morning. Once you’ve set your language, do NOT choose Option 1 (regarding refund info). Choose option 2 for Personal Income Tax instead. Next, press 1 for form, tax history, or payment. Next, press 3 for all other questions. Next, press 2 for all other questions. When the system asks you to enter your SSN or EIN to access your account information, do NOT enter anything. Finally, press 2 for personal or individual tax questions. The system should then transfer you to an agent.