Feeding Your Employees

You can provide the following items to employees without adding to their W-2s:
1.Coffee, doughnuts, soft drinks or similar items.
2. Occasional meals provided to an employee working overtime.
3. Occasional parties or picnics for employees and their guests like the office Christmas party.
The IRS calls these items a de minimis benefit and allows you to deduct their full cost instead of the normal 50% for business meals and entertainment. It is the best of both worlds, a full tax deduction for you and no compensation for the employee.

Are Inheritances Taxable?

Suppose you get two million dollars from your deceased Aunt Sally per her will. Do you have to give the IRS a portion of that? No you don't as long as none of the money came from retirement accounts such as IRAs or 401ks.

US Treasury Bonds and State and Local Bonds

US Treasury bond interest is subject to Federal tax but not state tax. State and local bond interest is exempt from Federal tax and state tax if the bond is from your state of residency. For example, a bond for Fulton County GA is exempt from Federal and Georgia tax if you are a Georgia resident. This can be a nice way to receive totally tax free income. If you are a Georgia resident and you have bond interest from a California city bond, the interest is not subject to Federal tax but  is subject to Georgia tax.

$100,000 Penalty OMG!

The IRS really wants you to disclose any foreign bank accounts. If you have over $10,000 in the bank account at any time during the year, you need to fill out form TDF 90-22.1. Only the government could come up with such a form number. There is no tax due as the IRS only wants information regarding the account. If you willfully fail to follow the rules, the IRS can hit you with a penalty up to $100,000.