Top 10 tax misses this filing season

by Mike Bosma in the Northern Nevada Business Weekly

Mike Bosma

Most every CPA and Enrolled Agent I run into agrees — 2020 is the “wonkiest” tax season on record. 

While most taxpayers were celebrating the change of the official tax filing date from April 15th to July 15th of this year, the preparers of these tax returns issued a collective groan.

Basically, their “busy season” had been extended 3 months. Wahoo! As the team wrapped up this “filing” season, I thought it would be prudent to list the Top 10 mistakes that cost you a buck or ten. Drumroll please:

10. Not taking losses from self-rental. Generally, losses from rental of real estate is, per se, passive as it relates to the passive activity loss rules under IRC section 469. If your partnership or S corporation business rents from your related entity, generally you can deduct any loss from the rental against other active income. 

9. Not making aggregation election for a real estate professional. Real estate professionals get to deduct losses against active income (i.e. the holy grail of tax planning). The be considered a real estate professional, you must spend more than half of your time in a real estate trade or business, with a minimum of 750 hours. If you elect to aggregate your real estate activities, it is easier to meet this hurdle. Often more importantly, is how this can treat the income from these endeavors as being subject to the 3.8% Net Investment Income Tax.

Read the entire article in the Northern Nevada Business Weekly: https://www.nnbw.com/news/michael-bosma-top-10-tax-misses-this-filing-season-voices/

Mike Bosma