All Forum Posts by: Michael Plaks

@Jason Williams

I would not pursue an S-corp without talking to us tax experts first. Particularly after the new tax reform. Things got more interesting and more complicated.

My answer would be a textbook accountant's answer: it depends. The current rules which are interpreted by the IRS and clarified by a tax attorney leave some wiggle room. I'd say that paint and fire extinguishers bought in 2017 would be deductible in 2017 even if not used. A screen door probably should wait until installed.

@Buddy Holmes

I'm not an expert in retirement accounts. As far as I know (but it may not be enough), you cannot make a QCD from 401k. But I do not see any problem with a rollover from 401k to an IRA, followed by a QCD. Rollover is not a distribution.

Again - do not take my opinion without a second one. 

 Yes for meals. No for lodging.

The rule that @Basit Siddiqi described applies to a home that you own. I cannot be 100% sure without some research, but I do not believe that it can be used for a home that you rent.

I recommend that you report income on Schedule C, but yes, you can offset the income with the rent you paid during the time that the place was available for rent (i.e. advertised and not used by you). You can also deduct other misc expenses - like advertising, supplies etc.  It may even create a deductible loss, if your intention was to make money from AirBnB.

Looks like you're talking about setting aside taxes for your future profits.

First, let's define "profits." It's all your assignment fees MINUS all expenses - such as marketing, education, driving (a big one!) etc. Whatever is left after these deduction is called net business income, or unofficially profit. It will be subject to 3 taxes, as @Basit Siddiqi explained: Federal income tax, Utah state tax, and Federal self-employment tax (Soc Security + Medicare). 

Together, they end up being anywhere between 15% and 40%. A rule of thumb is to set aside 1/3 of the net profit. Since you do not know your expenses, then you can instead use 1/4 of gross (before expenses) income. In other words, set aside 1/4 from each assignment check for taxes.

Good luck wholesaling! Tough to start, but could be rewarding.

 No change for taxes

The 20% deduction is for businesses, including renting for income. You cannot (legally) create it on your personal residence, even with your girlfriend involved.

I'm not an attorney, but your information appears faulty:

https://law.justia.com/codes/arkansas/2010/title-4/subtitle-3/chapter-27/subchapter-15/t/4-27-1501

@Chris C.

No difference on taxes. And creating an LLC for house hacking is probably an overkill.