s corp question legal deductions home owner in Los Angeles

Hi there,

ā€‹

We recently bought a house in LA, didn’t try to time the market obviously, we needed to move out of a toxic rental and so we did. My husband is an animation editor, he’s working for a film studio on a union animated movie like he usually does. His boss said he can form an s corp next year but not this year because you can’t be an employee and an s corp for the same company in the same year. This probably isn’t the exact correct forum to post on, but I’m wondering if this is the right move? I think it is because of how expensive our mortgage and taxes and utilities, and given that his office is a bedroom, which comes at a substantial cost where we live (buying a 2 vs 3 bedroom house which what we did specifically for his work). In his case, health insurance is paid for pretty much by the union, well really through residuals which isn’t worth getting into but I bring it up because one main reason people don’t want to incorporate is due to the cost of healthcare. I’m under the impression that by forming the s corp, my husband will be able to shelter more of our income by utilizing various tax id forms (I know home office deduction isn’t a thing anymore) by which we will be able to legally write off a portion of our mortgage, insurance, and utilities, and then a small percentage of meals and car travel and then equipment or associated costs for animation editing. I’ve heard some people say it’s not worth itemizing when the standard deduction was raised, but as anyone living in CA or NY knows, the extremely high cost of living here can easily make it worth itemizing, and I’ve also heard it can circumnavigate the cap on SALT deduction. He makes around 200 a year and we bought our house for $850,000. Will the s corp save us $ and be worth the trouble (i.e. increased bookkeeping, tax man fees, ect)? Thanks for anyone who read and took time to respond.

submitted by /u/Jomobirdsong
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Hi there, ā€‹ We recently bought a house in LA, didn’t try to time the market obviously, we needed to move out of a toxic rental and so we did. My husband is an animation editor, he’s working for a film studio on a union animated movie like he usually does. His boss said he can form an s corp next year but not this year because you can’t be an employee and an s corp for the same company in the same year. This probably isn’t the exact correct forum to post on, but I’m wondering if this is the right move? I think it is because of how expensive our mortgage and taxes and utilities, and given that his office is a bedroom, which comes at a substantial cost where we live (buying a 2 vs 3 bedroom house which what we did specifically for his work). In his case, health insurance is paid for pretty much by the union, well really through residuals which isn’t worth getting into but I bring it up because one main reason people don’t want to incorporate is due to the cost of healthcare. I’m under the impression that by forming the s corp, my husband will be able to shelter more of our income by utilizing various tax id forms (I know home office deduction isn’t a thing anymore) by which we will be able to legally write off a portion of our mortgage, insurance, and utilities, and then a small percentage of meals and car travel and then equipment or associated costs for animation editing. I’ve heard some people say it’s not worth itemizing when the standard deduction was raised, but as anyone living in CA or NY knows, the extremely high cost of living here can easily make it worth itemizing, and I’ve also heard it can circumnavigate the cap on SALT deduction. He makes around 200 a year and we bought our house for $850,000. Will the s corp save us $ and be worth the trouble (i.e. increased bookkeeping, tax man fees, ect)? Thanks for anyone who read and took time to respond. submitted by /u/Jomobirdsong [link] [comments]

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