Archive for the ‘Uncategorized’ Category

Last Minute 2014 Tax Savings Tip

December 28, 2014

tax-deduction-time-to-save-taxes    It is not too late to consider a very easy tax deduction for 2014.  Gather up some your stuff that you no longer use, no longer fits or flatters or maybe just takes up space to make room for your new Christmas and Hanukkah gifts. If you take these to your local charity before December 31 and you itemize your deductions, you may decrease your 2014 taxable income by the fair market value of these items. If at all possible, get a receipt and take a picture of the donated items to document the deduction. If you donate by dropping it off at a collection box, take a picture of you, the donation and the collection box. Then download the pictures to your computer. The file date on your computer will be on or before December 31 so you have documented your deduction. Keep a list of what was in the bags and boxes so you can put a value on the donation. (Watch for a future blog on how to determine the value of your donation.)  And have a Happy New Year!

Lots of Celebration.

November 10, 2013

CelebrateNovember 11 is Veterans’ Day.  We are thankful for the service provided by our active duty military personnel and Veterans who have offered their lives to protect the freedoms guaranteed by our Constitution.

This year is also the 100th anniversary of the 16th Amendment which implemented our current income tax system.

And the 70th anniversary of the institution of income tax withholding.

Some events are more meaningful to celebrate than others.

http://economix.blogs.nytimes.com/2013/10/22/tax-withholding-still-controversial-after-70-years/?_r=0

Are You Ready?

October 23, 2013

Selected for AuditOur tax software vendor just let us know that “According to IRS tax gap studies, small businesses account for 40% of the $450 billion annual loss in tax revenue to the US Treasury, largely due to the under-reporting of income and overstating of credits and deductions. As a result, the IRS focuses much of its audit activity on small businesses, especially in field audit examinations.”  Let’s see, 40% of $450 billion (with a “B”)…that is not pocket change.

However, this is really not surprising.   Small business has always been a prime target for the IRS.  Many times the business owner is good at creating and delivering their product or service but not quite as good at the administrative side.  So if you were the IRS, would you audit a well-prepared business that  has their records in perfect shape and understands the tax law or would you go after the under-prepared small business owner.  Hmmmm.  Let me think.

The IRS will tell you that their goal is to determine the correct tax liability (whatever that means).   However, if they can disallow a deduction because of bad records or no records, it is much easier and faster than spending hours going through records and arguing tax law with a Taxpayer or their representative.

I had an IRS Appeals Officer once tell me that more deductions were disallowed because of inadequate records than for tax law interpretations.  This has been the case since I was an IRS Agent and will probably continue until people learn to keep better records.  The most frequently disallowed deductions are vehicle expenses, meals & entertainment and travel simply because the required documentation is clearly defined in the Internal Revenue Code (The Law).

Are you ready for an IRS Audit?  You only have one chance with the Auditor to show the credibility of your records.  If you fail that first impression, you should prepare to spend a lot of time with the Auditor and write a sizable check at the end .

Records don’t have to be complicated to be credible.  Ask yourself “Am I willing to spend a little time on keeping records NOW that will save me considerable money and time in the future?” Good records can also  significantly add to your peace of mind.  Priceless.

MyTaxBuddy is a simple-to-use system that you use from your smartphone, tablet and computer and provides complete, IRS-credible records for all your income, activity and expenses, all in one place.  Having all the pieces required for travel, meals & entertainment and vehicle mileage documentation is not difficult if you can remember it all.  We provide the structure. MyTaxBuddy is as simple as using an online calendar.   If you start today it could save your bacon when the IRS comes calling.  That is why we are your Buddy!

Similar Questions – Different Answers

September 21, 2013

Groucho SmartOn the surface, the questions “Can I deduct it?” and “Is it deductible?” seem very similar.  They are not.

“Can I deduct it?” means that a person has enough guts to put it on their tax return and risk the consequences if they are wrong.  It does not necessarily mean that there is any legal support to take the deduction.

“Is it deductible?” means the same as “Is there any legal justification for taking this deduction?”  A whole different question.

Many people get tax advice from “interesting” places – party talk, their stylist, realtor, mechanic, business associates, at church.  If you do get tax advice from those sources, be certain the person knows the actual tax law and have not just heard it somewhere then had the guts to deduct something on their own return.

Although a heart surgeon and a motorcycle mechanic both understand how systems work together to make a unit operate properly as a whole, I’m not letting my mechanic do heart surgery.

But I’m just funny that way.


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