Donald Hayden | Innovative Finance Leader & Strategic Partner for Business Growth

Form 990-T is a specialized tax form used by tax-exempt organizations, such as nonprofits, religious institutions, and charities, to report any unrelated business taxable income (UBTI). While these organizations are exempt from federal income tax, they are still required to pay tax on income derived from activities not directly related to their exempt purpose. As such, preparing Form 990-T requires a nuanced understanding of what constitutes unrelated business income, applicable deductions, and compliance requirements.

In 2021, the IRS processed over 1.5 million returns for tax-exempt organizations, highlighting the importance of compliance in this sector. To simplify the process and avoid potential penalties, it is crucial to understand the structure of Form 990-T, the types of income it covers, and the strategies for accurately preparing it.

With year-end approaching, it’s the perfect time to explore ways to reduce your 2024 business taxes. At Private Tax Solutions, we’re here to help you maximize your deductions with these six effective strategies tailored to your business’s needs. Implementing these tips before the year ends can make a significant impact on your tax savings.

1. Prepay Expenses Using the IRS Safe Harbor

Take advantage of the IRS safe-harbor rule, which lets cash-basis taxpayers prepay and deduct certain expenses up to 12 months in advance. These include costs like rent, equipment leases, and insurance premiums. For example, if you pay $2,000 in monthly rent, you can prepay for 2025 this December, securing a $24,000 deduction in 2024.

As the year draws to a close, don’t forget to maximize your Section 199A deduction. This valuable tax benefit, introduced by the Tax Cuts and Jobs Act (TCJA), provides a 20% deduction on qualified business income (QBI) for pass-through businesses. However, if your taxable income exceeds certain thresholds, careful planning is required to ensure you receive the maximum deduction. Here are three last-minute strategies to help you optimize your Section 199A deduction before December 31, 2024.

Navigating the landscape of service taxes can be challenging for business owners. Unlike goods, which are generally subject to sales tax, services fall into a more complex regulatory space. Whether services are taxable depends on factors like location, the nature of the service, and state-specific tax laws. Understanding when and why your services are taxable is crucial to ensure compliance, avoid unexpected tax liabilities, and optimize pricing strategies.

At Private Tax Solutions, we understand that navigating tax laws surrounding personal property rentals can be complex. Whether you’re renting out equipment, vehicles, or other assets for business purposes, the way these rentals are taxed depends on how the activity is classified. Here’s a breakdown of the three key classifications: business, for-profit activity, and not-for-profit activity.

Receiving a penalty notice from the IRS can be stressful, but don’t rush to pay it just yet. You might qualify to have these penalties removed or even refunded. This guide breaks down effective steps for relief and how Private Tax Solutions can assist.

Learn the importance of IRS Form 1040, its variations, key sections, and tips for accurate filing and maximizing refunds. <a href="https://privatetaxsolutions.com/tax-tips/understanding-irs-form-1040-a-complete-guide/" class="more-link" rel="bookmark">Read More</a>

Owning an S corporation that holds a rental property as its primary or sole asset is a common structure for individuals seeking to manage their real estate investments efficiently. However, one of the primary concerns for owners of such businesses is what happens to the property when they pass away, especially regarding the tax implications for their heirs.

If your business operates as a regular C corporation, it’s crucial to be aware of the accumulated earnings tax (AET). This lesser-known tax can pose significant financial risks, and failing to navigate it properly may lead to hefty penalties. Understanding the ins and outs of the AET and finding tax solutions to mitigate its impact can protect your corporation from unnecessary financial burdens.