Tax Guide for RV park owners - Sole proprietor - Schedule C

Simplified employee pension plan contributions are made only by the employer and self-employed owners can set up accounts for themselves. The contribution limit is 25% of employees compensation or 57,000 (2020) whichever is less. Employers must contribute equally to all employees. Employees are always 100% vested.

401K allows participants to make salary deferrals of up to 19,500 (2020) plus an additional 6,500 (2020)  for tax payers age 50 and older. Contributions can be made on a pretax or Roth basis. Participants can contribute up to 25% of additional net earnings from self-employment for total contributions up to 57,000 (2020).

To have a Simple Plan the employer must have fewer then 100 employees and it must be the only retirement plan offered. The employer must contribute each year either matching 3% or a 2% "non-elective" contribution.

There are other benefit plans as well, RV Park Owners have lots of options for retirement plans.

Federal insurance Contribution Act (FICA) is Social Security and Medicare. Social Security Tax is 12.4% and Medicare Tax is  2.9%. These amounts are split 50-50 with employer and employee. If you are self employed you will pay both halves and 1/2 will be an adjustment to your AGI. Social security tax is only on the first 137,700 (2020) of your wages. 

RV Park owners can take advantage of section 179 and bonus depreciation which is 100% for property placed into service. Bonus depreciation will begin phasing out in 2023.

Section 199A is a pass-through deduction of 20% of the non wage portion of your income. RV Park owners can take a Section 199A deduction if they qualify. As a passthrough entity, this includes LLC, LLPs, S-corporations and sole proprietors. This deduction phases out from and AGI of 163,300 to 213,000 for single filing status and 326,600 to 426,600 for married filing status. 

The deduction is limited to 50% of the W-2 wages of QBI or the sum of 25% of W-2 wages plus 2.5% of the adjusted basis of qualified property immediately after acquisition.

Fees paid to accountants and attorney are deductible as a business expense on Schedule C. RV Park owners can deduct these expenses for the portion of the accounting allocated to the RV park. Personal Tax preparation is not allowed as deduction. 

This is deductible and includes

* Driving from one workplace to another

* Visiting Clients and Customers

* Driving to a business meeting away from your regular workplace

* Driving from home to a temporary workplace

***Commuting is a nonbusiness expense***

Methods to deducting

* Keep records of milleage and use the Standard Mileage rate of 57.5 cents in 2020 plus Parking and tolls.

* Keep records of Actual Costs. For actual costs taxpayer can include business portion of Gas, Oil, Repairs, Tires, Insurance, Registration Fees, licenses and depreciation. Plus the taxpayer can include parking and tolls. 

To Use the Standard Mileage Rate you must

* Own or Lease the car

* Not Operate 5 or more cars at the same time

* Not have claimed depreciation for the car using any other method then straight line. 

* Not have claimed special depreciation allowance on the car. 

* Not have claimed actual expense after 1997 for a car leased

* Not be a rural mail carrier who received a "qualified reimbursement". 

* In order to use the standard mileage deduction, for an owed vehicle,  the taxpayer must use it during the first year the vehicle is used for business but can use a different deduction in later years. If the vehicle is leased then the tax payer must use the standard mileage deduction in all tax years. 

It can me deducted if you exclusively and regularly used as an office where you also meet with clients. using this deduction raises audit points. You can also use the deduction if you use your home for storage space for your business if you meet the following criteria: Sell products at wholsale or retail as a trad or business, Keep inventory or product samples in home for use in trade or business, home is the only fixed location of the trade or business, you use the storage space on a regular basis, The space is used separately.