J&T Accounting Services

This is one of our most common questions. The answer is it depends on your accounting method. If you use cash based accounting, you only claim income when it is constructively received. Meaning that you have full access to it. In this case, you never recorded the unpaid invoice so there is nothing to deduct. You can still deduct all the expenses associated with this job so that is how you take the loss. If you use accrual based accounting, then you record the income when invoiced, regardless if received or not. If you recorded the income as received, and then the invoice is not paid, you would then record the loss as an uncollectable debt for a full write off. Either way gets you to the same point, it just depends on how you report income. Most small businesses use the cash based accounting method so the answer to this questions is usually no. Last Updated: Oct 1, 2025, 3:39 PM

This was a good scenario under past tax law but now the SALT limit has increased to $40K so joint filers now can get a greater benefit. You have a choice how to divide the mortgage interest and property taxes for itemized deductions. Anyone who is listed on the loan may claim the deduction. Most people in this situation run the numbers both ways (including 50/50) to see who it will benefit most. If one person qualifies as Head of Household and the other as single, the single person taking 100% of the expenses could get the deduction that otherwise would go unclaimed if claimed 50/50.

On a side note, be sure to claim the 1099-INT (escrow interest) on the return for the Social Security number listed on the form. You can split this 50/50 as well as long as it is noted. If this amount does not show up on the tax return, an IRS letter could be issued.

Last Updated: Oct 1, 2025, 3:31 PM

Taxes are due when income is received. This is why taxes are always taken out of your paycheck on a regular basis. If you do not have taxes taken out, such as from self-employment or investments, then you must make quarterly estimated payments throughout the year. If you do not make proper estimated payments, the IRS and state tax agencies have the full legal right to assess penalties for not doing so. Interest accrues when payments are not made by the due date (not including extensions). This includes payment dates for estimated quarterly payments as well.

Last Updated: Aug 22, 2025, 12:00 AM

Are you spending the money solely because you are self-employed? This is a start. For more detail, please see our Forms Library for a robust list of possible deductions and the explanations of each. These will vary based upon your business type.

Personal food is NEVER a deduction. A business meal is one shared by two or more people for the purpose of conducting business and is only 50% deductible. Meals or snacks provided to employees or staff can be 100% deductible if provided as a benefit to those individuals while they are working (e.g., coffee/water service, staff lunch during a meeting, etc.).

Last Updated: Aug 22, 2025, 12:00 AM

Do not make this decision based on social media or internet research. Please seek professional advice. There are major pros and cons to entity selection, and choosing the wrong one in the beginning can have dire consequences. We can provide personal guidance on this subject for those with questions.

Last Updated: Aug 22, 2025, 12:00 AM

This is another question we get a lot. The answer is: It depends on your business entity.

Sole Proprietor or Single Member LLC: Income taxes and self-employment tax is all personal tax. The only situation where the business would owe a tax is a state LLC fee on the business entity. This is common in certain states like California if you are an LLC.

Partnership: All tax is personal tax and flows to your personal return via K-1. The exception is the same as listed above for LLC fees if the partnership is an LLC.

S Corporation: All tax is personal tax and flows to your personal return via K-1. The exception is any state franchise or S Corp tax levied on the corporation. This is common in states like California for all S Corporations, and states like Utah and Maryland for any out-of-state owners.

C Corporation: All tax is business tax and owed by the business, not the individual. This is the only situation where federal payments to IRS are made for income tax using the business tax ID.

Very important to pay tax under the proper entity choice using the correct tax ID number. Please ask prior to making payments if in doubt.

Last Updated: Aug 22, 2025, 12:00 AM

Single: Unmarried on the last day of the tax year (December 31st). If you are legally married but legally separated (in divorce proceedings) for at least the last six months of the year, you can be considered unmarried for tax purposes and file as single.

Head of Household: Not married, but have a dependent child or dependent parent you care for and provide more than 50% support. This status causes the most confusion as people think they are Head of Household if they earn the most money. This filing status carries multiple criteria that must be certified as true and correct on the tax return. If you are a single parent, and someone else is paying more than 50% support (such as the other parent through child support), you cannot claim Head of Household status. You can claim single status with dependents. The child must live with the parent who is claiming Head of Household status for more than half the year. These are challenged by the IRS all the time, and documented proof of nights spent with the claiming parent will be required.

Head of Household status can also be claimed for an unmarried individual who supports his or her parent (or stepparent/in-law). That parent does not have to live with the taxpayer, but the taxpayer must provide more than 50% support.

Married Filing Joint: Married on the last day of the tax year. One tax return is filed for a married couple, and one spouse is listed as taxpayer, the other as spouse. It does not matter who is listed first—just stay consistent because the IRS will use the taxpayer number only to identify the return. This is very important when making payments to use the correct number.

Married Filing Separate: This is the second most misunderstood filing status. This status is used for separated couples who are not in divorce proceedings. This can also be used for married couples living together but who choose to file separate. The tax rates for Married Filing Separate are double that of Married Joint, and this status is not eligible for many tax credits and benefits. Choose this option carefully. Also keep in mind, if you live in a community property state, you must each claim half the other spouse’s income. We see people filing separate for a variety of reasons, but the most common are due to student loan or back tax matters.

Surviving Spouse: This is for someone who was married but the spouse passed away prior to year-end. The surviving spouse can continue to be treated as Married Joint for two additional years after the date of death if the surviving spouse has a dependent child. Please be sure to provide this information if it applies to you.

Last Updated: Aug 22, 2025, 12:00 AM

Very simply, pay all tax payments (including estimates) on time by the due date. Your total withholding or estimated tax must be either 100% of the prior year's tax bill or 90% of your current tax bill.

For example, if your total federal tax liability on your 2023 return was $5,000, and your total tax liability in 2024 is $6,000, your 2024 withholding (or estimates paid) to avoid penalty must be $5,000. If your 2024 total tax liability is $4,500, then your minimum withholding would be $4,050. Anytime you owe more than $1,000 when you file, you can be subject to penalties unless these criteria are met.

Last Updated: Aug 22, 2025, 12:00 AM

Absolutely not! This is a scam, and the easiest way to get yourself into debt and file for bankruptcy! No one (including those who preach it) practices this in real life and succeeds.

Profit First Accounting, as it is commonly called, is the practice of having multiple bank accounts for your business and then transferring money on a frequent basis based on a percentage of gross income to each account. Expenses are then paid out of each account accordingly. Typical bank accounts would be income, cost of goods sold, operating expenses, taxes, savings, and the big kahuna, “Profit”. The theory behind this practice is to take your “Profit” first and then allocate the rest of the revenue to each category of expenses. Business owners are promised more money for themselves and more success by using this method of accounting money. Where everyone fails is that they take too much money as profit off the top, thus starving the business of operational capital. This creates countless overdraft fees, late fees, and finance charges as the bills are not getting paid due to the amount of money taken as “Profit” before it is earned. You now have six bank accounts to monitor, and these all have thresholds to avoid fees. This is a full-time job and creates a mess for your accountant—not to mention serves absolutely no purpose other than driving you out of business.

Quick test for those who have practiced this: Did you transfer money to your profit account only to have to transfer it back to the main account to pay your bills? If so, you just failed. Don't worry—everyone fails who tries this because it does not work.

Money should all flow in one direction: Income in, expenses out. After all expenses are paid, then and only then should profit be moved from the business account to personal. That is the only recipe for success.

Last Updated: Aug 22, 2025, 12:00 AM

Either use accounting software like QuickBooks Online or a spreadsheet. Keep accurate records and receipts. Most importantly, have a separate business account from a personal account. No co-mingling personal with business! We recommend either Wells Fargo or Bank of America (not user-friendly for credit cards). Credit unions tend to have more issues with business accounts.

Last Updated: Aug 22, 2025, 12:00 AM

Maybe—there are many factors that come into rental properties. There are absolutely no guarantees of tax savings through losses.

Please advise: This is a complicated subject that needs individual attention. Please do not get caught up with internet promises of deductions from depreciation or cost segregation. There is so much bad information being circulated, and we have seen countless people devastated to find out things do not apply to them.

Last Updated: Aug 22, 2025, 12:00 AM