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Frequently Asked Questions
What's the best way to borrow to make consumer purchases?
Prior to 2018, many homeowners took out home equity loans. Unlike other consumer-related interest expenses (e.g., car loans and credit cards) interest on a home equity loan was deductible on your tax return. However, for tax years 2018 through 2025 interest on home equity loans is only deductible when the loan is used to buy, build or substantially improve the taxpayer’s home that secures the loan.
What special deductions can I get if I'm self employed?
You may be able to take an immediate expense deduction of up to $1,020,000 for 2018 ($1,000,000 in 2018), for equipment purchased for use in your business, instead of writing it off over many years. There is a phaseout limit of $2,550,000 in 2019 ($2,500,000 in 2018). Additionally, self-employed individuals can deduct 100 percent of their health insurance premiums. You may also be able to establish a Keogh, SEP or SIMPLE IRA plan and deduct your contributions (investments).
Can I ever save tax by filing separately instead of jointly with my spouse?
You sometimes may benefit from filing separately instead of jointly. Consider filing separately if you meet the following criteria:
- One spouse has large medical expenses, miscellaneous itemized deductions, or casualty losses.
- The spouses’ incomes are about equal.
Separate filing may benefit such couples because the adjusted gross income “floors” for taking the listed deductions will be computed separately.
Why should I participate in my employer's cafeteria plan or FSA?
In 2019, medical and dental expenses are deductible to the extent they exceed 10 percent of your adjusted gross income or AGI. For 2018, it was 7.5 percent. If your employer offers a Flexible Spending Account (FSA), Health Savings Account or cafeteria plan, these plans permit you to redirect a portion of your salary to pay these types of expenses with pre-tax dollars.
What tax-deferred investments are possible if I'm self-employed?
Consider setting up and contributing as much as possible to a retirement plan. These are allowed even for a sideline or moonlighting businesses. Several types of plan are available: the Keogh plan, the SEP, and the SIMPLE IRA plan.
Visit our conveniently located offices
The CPA Advisory Group is located conveniently in north-central Columbus, off U.S. Route 23, just north of Interstate 270. Our offices at 131 Dillmont Drive are convenient to Powell, Worthington, Lewis Center and Dublin, as well as Westerville and New Albany.