TAX PLANNING WITH DEDUCTIONS
01.Core Concepts
• Employees • Most deductions are below-the-line • Business Owners • Ordinary, necessary, and reasonable in the operation of a trade or business. • Deductions are above-the-line (no phase-out limitations). • Allocate as many expenses as possible to the business. • Investors • Expenses directly related to production of income. • Real Estate Expenses – above-the-line deductions. • Portfolio Expenses – below-the-line deductions. Investment interest is not subject to the 2% floor. Investment advisory fees are subject to the 2% floor and are, therefore, suspended for tax years 2018-2025. OBBBA permanently repealed the deduction for miscellaneous itemized deductions subject to the 2% floor. 25