Tax Q&A: Short-Term Rentals, 1099 Confusion, Entity Conversions, and Creative Tax Strategies

Have you ever considered how advanced tax strategies, from customized retirement contributions to optimizing home office deductions, might lower your overall tax burden? 

In this Q&A episode, host Mike Jesowshek answers listener questions on various tax topics. He covers issues ranging from retirement planning strategies, such as after‑tax contributions and Roth conversions in a solo 401(k), to the proper methods for paying oneself as a sole proprietor versus an S corporation. Mike also explains home office deductions, board meeting expenses, handling duplicate tax forms, and business entity conversions. 

[00:00 -  05:02] Retirement Contributions and Solo 401(k) Options

• Mike discusses using after‑tax contributions and a Roth conversion in a solo 401(k) for high‑income earners.
• New members receive immediate access to a comprehensive suite of tax-saving tools and consultations.

[05:02 - 10:42] Owner Draws, Home Office Deductions, and Board Meeting Expenses

• Mike explains how to oneself as a sole proprietor using owner draws versus payroll for S corporations.
• Understand that taking money out of a business as an owner draws does not reduce taxable profit.
• Ensure that business spaces are used exclusively for business, and document meetings carefully when using home space.

[10:42 -  15:32] Hiring Family Members, Deducting Mileage Expenses, and Entity Conversion

• Mike discusses claiming mileage expenses when an employee uses a personal vehicle for business.
• Recognize that converting a C corporation back to an LLC may trigger taxable events; professional consultation is advised.

[15:32 - 20:17] Handling Duplicate 1099 Forms and Short-Term Rental Deductions

• Work with the issuer to correct mistakes or offset the extra reporting with a matching expense entry.
• Understand the timing of deductions and whether expenses need to be capitalized based on service start dates.

[20:17 - 27:20] S Corporation and Subsidiary Structures; Home Office with Additional Facility

• Mike details the benefits of an S corporation holding company structure for multiple LLCs and addresses home office deductions when using a separate facility.
• Proper structuring can consolidate profit and loss reporting, and the administrative office rule allows a home office deduction even when an additional business location exists.

Direct Quotes:

"If you are helping out family members, and those family members can also do some work for your business, why not get a business deduction for that help that you want to do anyways?" - Mike Jesowshek, CPA

Check out this episode’s blog post! Visit https://www.taxsavingspodcast.com/blog/tax-q-a-short-term-rentals-1099-confusion-entity-conversions-and-creative-tax-strategies 

Click here to book a demo call or you can visit https://taxelm.com/demo/ 

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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast

Join TaxElm: https://taxelm.com/

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