Frequently Asked Questions

“LLC” stands for “limited liability company.” It is like a corporation but offers more flexibility in management and taxation and generally has fewer recordkeeping requirements.

Corporation have been around for a long time, and they offer a predictable structure, perpetual life, and easy transferability of shares—important features if you plan to seek outside investors.

LLCs and corporations are both business entities that are created by filing formation documents with the state. Both provide their owners with the same type of liability protection: owners are generally not personally responsible for business obligations of either LLCs or corporations.

You may be able to take an immediate Section 179 expense deduction of up to $1,080,000 for 2022 ($1,050,000 in 2021), for equipment purchased for use in your business, instead of writing it off over many years. There is a phaseout limit of $2,700,000 in 2022 ($2,620,000 in 2021). Additionally, self-employed individuals can deduct 100 percent of their health insurance premiums. You may also be able to establish a Keogh, SEP, or SIMPLE IRA plan and deduct your contributions (investments).

You sometimes may benefit from filing separately instead of jointly. Consider filing separately if you meet the following criteria:

• One spouse has large medical expenses, miscellaneous itemized deductions, or casualty losses.
• The spouses' incomes are about equal.

Separate filing may benefit such couples because the adjusted gross income "floors" for taking the listed deductions will be computed separately.

If you also have an investment on which you have an accumulated loss, it may be advantageous to sell it prior to year-end. Capital gains losses are deductible up to the amount of your capital gains plus $3,000 ($1,500 for married filing separately). If you are planning on selling an investment on which you have an accumulated gain, it may be best to wait until after the end of the year to defer payment of the taxes for another year (subject to estimated tax requirements).

For tax years 2018 through 2025 interest on home equity loans is only deductible when the loan is used to buy, build or substantially improve the taxpayer's home that secures the loan. Prior to 2018, many homeowners took out home equity loans. Unlike other consumer-related interest expenses (e.g., car loans and credit cards) interest on a home equity loan was deductible on your tax return.

The first step is to think about how much you can afford to pay out each month for a mortgage payment. Keep in mind that a mortgage payment typically includes property taxes and mortgage insurance as well as the mortgage payment itself. The general rule of thumb is that no more than 30 percent of your gross monthly income should be spent on housing expenses.