Tax Q&A: Short-Term Rentals, 1099 Confusion, Entity Conversions, and Creative Tax Strategies
Feb 12, 2025
On this Podcast we answer listener questions! If you have a question you would like discussed on a future episode, submit it now!
- Go to www.TaxSavingsPodcsat.com
- Click Podcast
- Scroll to the Bottom and Submit Your Question
You never know, your question may be on the next Q&A session. Below are today's questions, tune into our Podcast to hear the answers!
Neil: Dear Mike, love the podcast. This is a pretty long scenario but I am sure many other podcast listeners are going to have. I do not think you need the entire question but for context. My tax situation overview 1. Primary W2 Income: >$400,000 2. New 1099 Income via SMLLC: ~$10,000 (2024), expected >$50,000 (2025) Current 401(k) Status (Day Job): 1. Employee contribution: $23,000 2. Employer match: $10,000 Total: $33,000 Solo 401(k) Options for Side Income [i.e. 10k]: a. Employer Contribution Route: - Limited to 20-25% of profit - Would allow only $2,000-2,500 contribution b. My proposed Strategy: - Make after-tax employee contributions to Solo 401(k) - Convert to Roth via in-plan conversion - Allows for contributing entire side income amount Tax Considerations: As I have already exceeded Social Security wage base ($168,600), I will only have medicare tax obligations: - Regular Medicare tax: 2.9% - Additional Medicare tax: 0.9% Total Medicare tax: 3.8% --------- With this in mind, 1. What are the drawbacks to the after-tax contribution/Roth conversion strategy? 2. Are there other tax implications to consider? 3. Why isn't this strategy more widely discussed?
Listener from Buffalo Center (Rural), Iowa: Good Morning! I can't not locate the link to the TaxElm software. Any chance you can direct me where to locate that?
Listener from Modesto, California: If I join tax ELM now, what services will be available to me over the next 2 months as I finish up the year?
Anonymous Facebook Group Member: I run a small online boutique, sole proprietor, should i be taking share distributions, paying myself payroll?
Andrea: Hi, I started listening about two weeks ago, and I love the podcast! I send it to family members who run businesses as well. I have a question: I own two companies—a sole proprietorship with 100% ownership and an LLC with 50% ownership (my husband owns 49%). I heard your podcast about home offices, and my husband and I both have our own offices in the home. Can I write off both home offices? My second question is related to the first: Since we own an LLC, can my husband and I hold a board meeting once a month at our home and use the $1,400 rental tax strategy?
Marcee: You talk about paying your children, but can you pay your retired parents and get a deduction as well?
Listener from Forth Worth, Texas: If I let my employee use my personal car for business purposes can I as the owner claim the mileage expense? This is a temporary arrangement (seasonal) so I don’t want to buy another company car and I have a spare personal car. Thanks!
Usha: I formed single owner LLC in 2018 in Texas and converted to C-Corp in same year. How can I convert back to LLC(Entity names remain the same)? Is conversion has any Tax implications? Please help to clarify.
Listener from Minneapolis, Minnesota: Hi Mike! Thanks for this recent episode. I wonder what happens when I receive a 1099k and a 1099nec for the same income? There seems to be differing advice out there. Will the IRS think I'm under reporting, in other words, see this as doubling my income?
Listener from Calumet, Michigan: We are setting up a short term rental and have put $40,000 into it over the past year with many hours over the 500 limit for real estate professional. If we are starting the short term rental in 2025, can we still deduct all of the things that are deductible in the short term on the profits for 2025 if we bought them in 2024?
Facebook Group Member Rex: If I start an S Corp to serve as sole owner of my future LLC operating companies (multiple industries) would all profits and losses be reported on the S corporations tax return or would they need to be filed separately?
Eric: Can you claim a home office deduction on the house you own if you have a separate facility that you rent for your business?
The Time Is NOW To Start Paying Less In Taxes.Ā Join TaxElm and start eliminating taxes and growing your wealth!
What you'll get:
- Tax Savings Blueprint and Training: This is your roadmap to hit the ground and start implementing. Know exactly which strategies are relevant to you and which ones you should focus on first! Then dive into the training library with content, videos, downloads, guides, templates, etc. and start implementing right away!
- Unlimited Access to Tax Experts: Got a specific question about a tax rule? Youā€™ll have unlimited messaging access directly with-in the software to our team of tax experts to get the accounting and tax answers you need.
- Annual Comprehensive Consultation: Once a year you get a live meeting with a tax expert to discuss anything tax savings you would like. This is your time to get your questions answered live 1-on-1.
- Annual Tax Return Review: Each year, upload your prior year tax returns, and our expert team will meticulously analyze them to generate a custom report highlighting key findings and actionable savings strategies tailored to your specific tax situation.
- Monthly Webinars and Training: Every month, we host a live, virtual training session on a key tax topic. Join us live and bring your questions or view the training on your own schedule (recordings are added to the tax training library).
- Partner Directory and Discounts: You get exclusive, members-only rates and access to our expert referral network for accounting, bookkeeping, tax preparation, payroll, financial planning, legal, retirement planning, tax resolution, and more!
- TaxElm Guarantee: We will present tax saving strategies that will, at a minimum, cover the cost of your subscription fee or your money back!
It is like having a taxĀ strategist walking with you along this entrepreneurial journey!
Stay connected with news and updates!
Join our mailing list to receive the latest news and updates from our team.
Don't worry, your information will not be shared.
We hate SPAM. We will never sell your information, for any reason.
