As we all know, it’s that dreaded time of the year-Tax time!

In honor of tax season, I have a series called “Ask An Accountant”.  Simply send in your tax questions each week to and I will post the question and give an answer from an experienced accountant.

 

Even with the last minute tax bill signed on December 19, 2014, The IRS will begin accepting 2014 tax returns electronically on January 20, 2015.  As a reminder, these tax extenders are only valid for the 2014 tax returns as they have expired December 31, 2014.

 

The “tax extenders” that will affect the majority of taxpayers are as follows:

• $250 above the line deduction for teacher classroom expenses
• Discharge of indebtedness on principal residence excluded from income
• Mortgage insurance premiums (MIP) treated as deductible mortgage interest
• Deduction for state and local general sales taxes
• Above the line deductions for qualified tuition and related expenses
• Tax-free distributions from IRAs to certain public charities for individuals over 70-1/2

There are several others and some “Business Extenders”.  A few of the “Business Extenders” are:

• Research and Development Credit
• Work Opportunity Tax Credit (WOTC)
• 15 year straight line depreciation for “qualified” restaurant and retail leasehold improvements
• Bonus Depreciation of real property
• Section 179 Accelerated Depreciation on real property

The Energy Credits that many individuals took advantage of in prior years has also returned for Non-business energy property (energy efficient doors, siding, windows, heat sources).

This list is not all-inclusive and each tax situation is different.  Please talk to a professional tax preparer about your specific situation.

 

IRS Circular 230 Notice:

Any U.S. tax advice in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

As we all know, it’s that dreaded time of the year-Tax time!

In honor of tax season, I have a series called “Ask An Accountant”.  Simply send in your tax questions each week to and I will post the question and give an answer from an experienced accountant.

My husband often gets asked about blogger expenses so he has made a sheet of common blogger expenses.  Keep in mind this is not an all inclusive list, simply a starting point when preparing your tax information.  If you have any further questions, please feel free to email me.

 Common Blogger Expenses:

Website Maintenance:  any and all site related maintenance to include domain registrations, design, set up fees, monthly fees to maintain, add ons, plug-ins, phone apps, etc…

Subcontractors: any payments to outside persons (not employees) for services rendered in relation to posting on the site

Advertising & Giveaways:  any costs to advertise the website, business cards, linkys, your contribution to giveaways.

Bank Fees: bank service charges, credit card fees, PayPal fees

Charitable Contributions:  donations of cash to qualified non-profit organizations

Dues & Subscriptions:  club dues, group dues, newspaper subscriptions, magazine subscriptions, IT monthly service plans

Meals & Entertainment: meals or entertainment costs incurred while traveling on business, networking, entertaining a client, customer or employee.  You can deduct either the actual cost (with receipt) or by taking the standard meal allowance (per Diem) 

Equipment Lease:  Computer, auto, copier rentals or leases, not subject to capital lease treatment

Insurance:  Fire, theft, flood, credit insurance, group hospitalization and medical insurance for employees, liability insurance, Worker’s Comp insurance (except 2% shareholders of S-Corp)

Interest:  interest on credit cards, loans, or payables

Office Supplies: ordinary & necessary office supplies not recorded in inventory to include but not limited to, stationary, pens, pencils, staplers, folders, envelopes, printer ink, flash drives, canned software

Professional Fees:  legal & professional fees, accounting fees

Rent:  rent paid for office space or storage

Repairs & Maintenance:  costs to keep business equipment in good operation, to include repairs & preventative maintenance

Payroll Taxes:  employer portion of social security, Medicare, Federal unemployment, state unemployment

Wages:  wages/compensation earned by bona-fide employees or shareholders

Supplies: any business supplies that would not be office supplies

Taxes & Licenses: business licenses, local or state taxes (not payroll or sales)

Telephone: phone service that is not the first telephone line into a residence.  May include second line, fax line, cell phone

Travel: all business related travel except to primary workplace.  If working from home then any business related travel expenses incurred to include toll, parking, gas (mileage should be tracked separately, as you must decide with your accountant, whether you will use the depreciation plus actual expenses method or the mileage method

Utilities: business related utility costs to include electricity, gas, water, security, internet, cable

 

IRS Circular 230 Notice:

Any U.S. tax advice in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

With the end of 2013 hours away, I thought I would offer a few last minute tax saving tips for the bloggers and other cash basis businesses.

If you need any equipment (computer, laptop, printer, camera, software etc…) now is the time to purchase, but you do not need to pay for the item(s) up front.  You can finance these items and utilize a provision in the tax code that allows for 100% accelerated depreciation on these items.  Remember, if you have a tax question, email my husband who is an experienced accountant at  or check out my for previous Q&A’s.

Today’s question has got to be in the top 5 most asked questions my blogging friends have me ask my husband!

It’s that time of the year to get your year end tax information organized. My “should help with many questions that may arise. Remember, if you have a tax question, email my husband who is an experienced accountant at

Question:

I work at home.  Can I claim home office as a business expense?

Answer:

 

To take a business deduction a tax payer must use part of his/her home under one of the following situations:

• The area of the home must be used exclusively and regularly as the principle place of business.
• The area of the home must be used exclusively and regularly as the place to meet clients/customers.
• The area of the home must be used exclusively and regularly as storage for inventory or product samples.
• There can be a separate structure such as a shed or detached garage that can be used as an office.
• The home is used for a rental activity.
• The home is used for daycare.

 

Please keep in mind this post is for informational purposes only and answers given are very general. Do not rely on this column for definite tax answers as many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.

photo credit: austinpost.org

IRS Circular 230 Notice: Any U.S. tax advice in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions

IRS Circular 230 Notice: Any U.S. tax advice in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions

 

Believe it or not, tax season is right around the corner!  My “should help with many questions that may arise. Remember, if you have a tax question, email my husband who is an experienced accountant at .

Question:
I know there are tax breaks for military families but I can’t seem to find a comprehensive list.  Do you have one available?

Answer:
There are actually many of tax breaks for the military.  Here are ten from the IRS with information on how to find out about the rest:

1. Moving Expenses If you are a member of the Armed Forces on active duty and you move because of a permanent change of station, you may be able to deduct some of your unreimbursed moving expenses.

2. Combat Pay If you serve in a combat zone as an enlisted person or as a warrant officer for any part of a month, all your military pay received for military service during that month is not taxable. For officers, the monthly exclusion is capped at the highest enlisted pay, plus any hostile fire or imminent danger pay received. You can also elect to include your nontaxable combat pay in your “earned income” for purposes of claiming the Earned Income Tax Credit.

3. Extension of Deadlines The deadline for filing tax returns, paying taxes, filing claims for refund, and taking other actions with the IRS is automatically extended for qualifying members of the military.

4. Uniform Cost and Upkeep If military regulations prohibit you from wearing certain uniforms when off duty, you can deduct the cost and upkeep of those uniforms, but you must reduce your expenses by any allowance or reimbursement you receive.

5. Joint Returns Generally, joint income tax returns must be signed by both spouses. However, when one spouse is unavailable due to military duty, a power of attorney may be used to file a joint return.

6. Travel to Reserve Duty If you are a member of the US Armed Forces Reserves, you can deduct unreimbursed travel expenses for traveling more than 100 miles away from home to perform your reserve duties.

7. ROTC Students Subsistence allowances paid to ROTC students participating in advanced training are not taxable. However, active duty pay – such as pay received during summer advanced camp – is taxable.

8. Transitioning Back to Civilian Life You may be able to deduct some costs you incur while looking for a new job. Expenses may include travel, resume preparation fees, and outplacement agency fees. Moving expenses may be deductible if your move is closely related to the start of work at a new job location, and you meet certain tests.

9. Tax Help Most military installations offer free tax filing and preparation assistance during and/or after the tax filing season.

10. Tax Information IRS Publication 3, Armed Forces’ Tax Guide, is an excellent resource as it summarizes many important military-related tax topics. Publication 3 can be downloaded from IRS.gov or may be ordered by calling 1-800-TAX-FORM ).

Please keep in mind this post is for informational purposes only and answers given are very general. Do not rely on this column for definite tax answers as many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.

photo credit: austinpost.org

IRS Circular 230 Notice: Any U.S. tax advice in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions

Even though it’s not tax season, you should never ignore your tax situation throughout the year!  My “should help with many questions that may arise. Remember, if you have a tax question, email my husband who is an experienced accountant at .  We don’t have a question to answer this week but thought that this IRS website information would be perfect for some of your teenagers!

A Tax Lesson for Students Starting a Summer Job

Here are six things students to be aware of when they start a summer job.

1. When you first start a new job you must fill out a Form W-4, Employee’s Withholding Allowance Certificate. This form is used by employers to determine the amount of tax that will be withheld from your paycheck. If you have multiple summer jobs, make sure all your employers are withholding an adequate amount of taxes to cover your total income tax liability.

2. Whether you are working as a waiter or a camp counselor, you may receive tips as part of your summer income. All tips you receive are taxable income and are therefore subject to federal income tax.

3. Many students do odd jobs over the summer to make extra cash. Earnings you receive from self-employment – including jobs like baby-sitting and lawn mowing – are subject to income tax.

4. Even if you do not earn enough money to owe income tax, you will probably have to pay employment taxes. Your employer will withhold these taxes from your paycheck. If you earn $400 or more from self-employment, you will have to pay self-employment tax. This pays for benefits under the Social Security system that are available for self-employed individuals the same as they are for employees that have taxes withheld from their wages. The self-employment tax is figured on Form 1040, Schedule SE, Self-Employment Tax.

5. Food and lodging allowances paid to ROTC students in advanced training are not taxable. However, active duty pay – such as pay received during summer camp – is taxable.

6. Special rules apply to services you perform as a newspaper carrier or distributor. You are treated as self-employed for federal tax purposes regardless of your age if you meet the following conditions:

• You are in the business of delivering newspapers.
• All your pay for these services directly relates to sales rather than to the number of hours worked.
• You perform the delivery services under a written contract which states that you will not be treated as an employee for federal tax purposes.
• If you do not meet these conditions and you are under age 18, then you are generally exempt from Social Security and Medicare tax.

 

Please keep in mind this post is for informational purposes only and answers given are very general. Do not rely on this column for definite tax answers as many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.

photo credit: austinpost.org

IRS Circular 230 Notice: Any U.S. tax advice in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions

It’s tax time! My “should help with many questions that may arise. Remember, if you have a tax question, email my husband who is an experienced accountant at .

Question:

Do I need to pay estimated taxes?

Answer:

You may need to pay estimated taxes to the IRS during the year if you have income that is not subject to withholding. This depends on what you do for a living and the types of income you receive.

1. If you have income from sources such as self-employment, interest, dividends, alimony, rent, gains from the sales of assets, prizes or awards, then you may have to pay estimated tax.

2. As a general rule, you must pay estimated taxes in 2012 if both of these statements apply: 1) You expect to owe at least $1,000 in tax after subtracting your tax withholding (if you have any) and tax credits, and 2) You expect your withholding and credits to be less than the smaller of 90 percent of your 2012 taxes or 100 percent of the tax on your 2011 return. Special rules apply for farmers, fishermen, certain household employers and certain higher income taxpayers.

3. For Sole Proprietors, Partners and S Corporation shareholders, you generally have to make estimated tax payments if you expect to owe $1,000 or more in tax when you file your return.

4. To figure your estimated tax, include your expected gross income, taxable income, taxes, deductions and credits for the year. Use the worksheet in Form 1040-ES, Estimated Tax for Individuals, for this. You want to be as accurate as possible to avoid penalties. Also, consider changes in your situation and recent tax law changes.

5. The year is divided into four payment periods, or due dates, for estimated tax purposes. Those dates generally are April 15, June 15, Sept. 15 and Jan. 15 of the next or following year.

6. Form 1040-ES, Estimated Tax for Individuals, has everything you need to pay estimated taxes. It includes instructions, worksheets, schedules and payment vouchers. However, the easiest way to pay estimated taxes is electronically through the Electronic Federal Tax Payment System, or EFTPS. You can also pay estimated taxes by check or money order using the Estimated Tax Payment Voucher or by credit or debit card.

Please keep in mind this post is for informational purposes only and answers given are very general. Do not rely on this column for definite tax answers as many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.

photo credit: austinpost.org

IRS Circular 230 Notice: Any U.S. tax advice in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions

It’s tax time! My “should help with many questions that may arise. Remember, if you have a tax question, email my husband who is an experienced accountant at .

 

Please keep in mind this post is for informational purposes only and answers given are very general. Do not rely on this column for definite tax answers as many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.

Still looking for ways to slash your tax bill? 

This year you have a little extra time to do so.  Consider contributing to an IRA.  Because tax day falls on a Sunday this year & April 16^th is a Washington DC holiday, 2011 Individual Tax returns are not due until Tuesday April 17^th 2012.  This means you have until April 17^th  2012 to contribute.  Taxpayer (and spouse)  can each contribute up to $5,000 to an IRA (6,000 if they are 50 or older at the end of 2011).   This can certainly reduce your tax bill significantly and may also give you additional benefit due to a “saver credit” aimed at encouraging lower income taxpayers to contribute to their retirement.

photo credit: austinpost.org

IRS Circular 230 Notice: Any U.S. tax advice in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

It’s tax time! My “should help with many questions that may arise. Remember, if you have a tax question, email my husband who is an experienced accountant at .

Charitable contributions can reduce your tax bill.  Here are some guidelines for making the contribution:

1. If your goal is a legitimate tax deduction, then you must be giving to a qualified organization. Also, you cannot deduct contributions made to specific individuals, political organizations or candidates.
2. To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A. If your total deduction for all noncash contributions for the year is more than $500, you must complete and attach Form 8283 to your return.
3. If you receive a benefit because of your contribution such as merchandise, tickets to a ball game or other goods and services, then you can deduct only the amount that exceeds the fair market value of the benefit received.
4. Donations of stock or other non-cash property are usually valued at the fair market value of the property. Clothing and household items must generally be in good used condition or better to be deductible. Special rules apply to vehicle donations.  It is also recommended you have photos of the items donated for your records.
5. Fair market value is generally the price at which property would change hands between a willing buyer and a willing seller, neither are coerced, and both having reasonable knowledge of all the relevant facts.
6. Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record, payroll deduction records or a written communication from the organization containing the name of the organization and the date and amount of the contribution. For text message donations, a telephone bill meets the record-keeping requirement if it shows the name of the receiving organization, the date of the contribution and the amount given.
7. To claim a deduction for contributions of cash or property equaling $250 or more, you must have a bank record, payroll deduction records or a written acknowledgment from the qualified organization showing the amount of the cash, a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more.
8. Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which generally requires an appraisal by a qualified appraiser.

Please keep in mind this post is for informational purposes only and answers given are very general. Do not rely on this column for definite tax answers as many things depend on individual circumstances. Please contact your personal accountant or financial advisor for your particular situation.

photo credit: austinpost.org

IRS Circular 230 Notice: Any U.S. tax advice in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

It’s tax time! My “should help with many questions that may arise. Remember, if you have a tax question, email my husband who is an experienced accountant at .

Question:

I am getting a check from long term disability insurance. Is that taxable?

Answer:

It’s tax time! My “should help with many questions that may arise. Remember, if you have a tax question, email my husband who is an experienced accountant at .

Question:  
I’ve got two sons, both deliver pizzas for Dominos.  Dominos gives the drivers around $1.85 per delivery. Most deliveries are at least 6 or 7 miles. If they document their mileage and their reimbursements, can they deduct the difference as unreimbursed business expenses?

 Answer: 

It’s tax time! My “should help with many questions that may arise. Remember, if you have a tax question, email my husband who is an experienced accountant at .

Instead of a question and answer this week, I’d like to attempt to clarify the confusion that seems to surround LLC/S-corp statuses and filing:

Have you filed your tax return already? I’m sure you’re wondering where your refund is so here is a helpful link that can help you find it!

Do not fret if your refund does not show up, the IRS has announced there is a problem with the database and some refunds are not showing when you enter your information.  You will need the following info before you go to the link:

• primary taxpayer Social Security #
• filing status
• refund amount 

Also, if you are still gathering your tax information and are knee deep in the confusion that can be taxes, check out posts for answers to commonly asked questions!

It’s tax time! My “should help with many questions that may arise. Remember, if you have a tax question, email my husband who is an experienced accountant at .

Question:
What can I do if I am still waiting on a 1099 and have gotten no response from a company?

Answer: