Ask The Godfather of Tax

Can I deduct donations made to a needy family?

You can IF the money is first donated to a charitable organization (such as your church, synagogue, etc) and then donated to the needy family on your behalf. Donations made DIRECTLY to individuals are not tax deductible.

Can I file a tax return without a W-2, just using a paystub?

IRS publication 1345 forbids filing without a w-2. You can only file without a w-2 if you are unable to get one not that you are anxious and you don’t want to wait for it in the mail. If you can’t get one then there is special forms and steps to take to file without one.

Otherwise, you must wait until February 15th to file with a paystub if you have not received a W-2.

Will it cost extra tax preparation dollars to be an LLC for our rental property? Do I need a separate checking account?

There is no additional tax form to file using the LLC status as it is just rental income and goes on Schedule E, LLC or not. There is an annual fee the State charges @ $75. You will need a separate checking account, just to keep the revenue and expenses separate for tax time.

We have been working on a business plan for the last year feel that now is the time to go ahead and make a C-Corp for the company. What impact on our taxes will there be?

You do not want a C-corp, unless you are expecting 100 shareholders or more! A C-corp traps profit inside the corp and causes ‘double taxation,’ as you can only take money out as dividends after the corp has paid taxes (which is then taxed to you) or salary (with accompanying self employment taxes) You would want an S-Corp, and would need to set up an LLC first and then ask the IRS for S-corp status, or we can do it for you. Also, c-corps have the highest tax rates. S-corps allow profit and loss to flow directly to the 1040 return, thus avoiding double taxation.

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