Although tax season is over, tax questions arise year round.  My husband is an experienced accountant and will be answering questions sent to me at with the subject line “Ask an Accountant”.  See previous questions and answers HERE

Although tax season is over, tax questions arise year round.  My husband is an experienced accountant and will be answering questions sent to me at with the subject line “Ask an Accountant”.  See previous questions and answers HERE.

Question:
I am a blogger and frequently attend conferences.  I accept sponsorship from companies for these conferences.  How would these sponsorships be taxed?

Answer:

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Although tax season is over, tax questions arise year round.  My husband is an experienced accountant and will be answering questions sent to me at with the subject line “Ask an Accountant”.  See previous questions and answers HERE.

Question:
I have just started selling Thirty One purses and I am curious to know if
I can deduct any of my spending on my taxes. I make commission on sales and
I do not anticipate making more than $3k this year, but next year I hope to
make more since I will have a full year under my belt. Can I deduct my
mileage to client homes, business supply expenses, and maybe even my phone as
it is used for my business now?

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Although tax season is over, tax questions arise year round.  My husband is an experienced accountant and will be answering questions sent to me at with the subject line “Ask an accountant”.

Question:
I donate from my stockplile quite frequently.  When claiming these deductions, do I deduct what I paid out of pocket or what the items would normally cost without coupons/sales?

Answer:
There are 2 schools of thinking for this question.  One side says you do not get to deduct something you have not paid for (assuming the item is free after coupons).  The other side is that you still get to deduct fair market value.  Generally speaking, I agree you deduct fair market value.  For example, on average, diapers are priced around $10.  If you buy a pack of diapers but there is a sale, you have coupons, and you have store rewards (such as register rewards, etc) so your final price is less than $10, you can still deduct $10 since the value of the diapers did not change, despite how much you paid out of pocket. 

*Please keep in mind this post is for informational purposes only and answers given are very general.  Many things depend on individual circumstances.  Please contact your personal accountant or financial advisor for your particular situation.

photo credit: austinpost.org

Although tax season is over, tax questions arise year round.  My husband is an experienced accountant and will be answering questions sent to me at with the subject line “Ask an accountant”.

Question:
In 2010 I won an all expense paid trip as a prize for winning a contest. The company immediately asked for my social security number for the purposes of taxes. I expected I would be responsible for taxes on the value of the trip (I think it was $1,800.00.) In February of this year I contacted the company to see if they were sending me a 1099-Misc so I could file my taxes. They said they were going to send the form by the end of February, but I never received the forms. I needed my tax return funds, so I went ahead and filed my taxes without their information. If they claimed my trip on their taxes for 2010, is it likely that the IRS will see that I didn’t claim the trip and come after me tacking on interest?

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Although tax season is over, tax questions arise year round.  My husband is an experienced accountant and will be answering questions sent to me at

Question:
I have been audited for medical expenses for 2008 (my husband became very ill) and have close to 300 individual expenses. If I copy every bill, check, explanation of benefits from the insurance company, flexible spending account reimbursement, credit card bill, prescription receipt, etc., I will be paying for and sending a 12 x 12 box. Will the IRS take scanned documents on CD or do you have another idea? Also, can I write off the time, postage, printer ink and paper to do this?

Answer: 

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Although tax season is over, tax questions arise year round.  My husband is an experienced accountant and will be answering questions sent to me at

Question:
What type of accounting software is the best when setting up my small business?

Answer:
The most widespread software for accounting is I personally recommend the online version.  There are several different options for the online version, so what version you need will vary depending on the business and it’s structure.  It will allow you to track income, expenses, fixed assets, liabilities, loans, write checks, and payroll is available in some versions.

Right now Amazon has a sale going on with where you can score this program for only $40-a 69% savings.  This program is fine but please keep in mind with this version there is no support and accountants will not be able to access it on their own.  If you would like the current version with more options and support, you will need to visit Intuit online here where they are offering a free trial. 

*Please keep in mind this post is for informational purposes only and answers given are very general.  Many things depend on individual circumstances.  Please contact your personal accountant or financial advisor for your particular situation.

photo credit: austinpost.org

Although tax season is over, tax questions arise year round.  My husband is an experienced accountant and will be answering questions sent to me at

Question:
If you’re late filing your taxes and the government owes you a refund, are you penalized?

Answer:
You will not be charged if the IRS owes you a refund.  They can assess a failure to file, or assess tax based on the information they receive (which is all income from reportable sources & limited deduction info) so the result will be a tax due.

Question:
Are there any tax penalties for selling your 1st personal home if you bought a 2nd personal home before the first one sold? (I’m afraid it’s going to be years before we finally get the first house sold)

Answer:
There is typically no tax on the sale of a primary residence as you are given a $250K exclusion (Single) or $500K exclusion (Married filing Jointly).  If the gain (sales price less original cost plus improvements) exceeds the exclusion, then you will pay capital gains tax on the gain.   You can own & deduct a primary & a secondary for tax purposes so this should not be an issue if the first does not sell immediately.  The only issue I see here is if the original primary was a rental property after you bought the 2^nd home.  Then there is no exclusion & it is all capital gain.

*Please keep in mind this post is for informational purposes only and answers given are very general.  Many things depend on individual circumstances.  Please contact your personal accountant or financial advisor for your particular situation.

photo credit: austinpost.org

Although tax season is over, tax questions arise year round.  My husband is an experienced accountant and will be answering questions sent to me at

Question:

What expenses can you not claim on your taxes?

Answer:

The items not deductible are expenses that would not be used to generate a profit.  One example would be groceries.  You could not deduct groceries from a shopping trip that you used to post on your website.  The groceries are a necessary item needed to sustain life, not make a profit.  Commuting mileage cannot be deducted, only the mileage to and from couponing class held outside of your home/office.  Personal expenses and profit distributions are not deductble.  This question is better answered by including what is deductible…epenses directly related to the generation of profit, that are not necessary living expenses

*Please keep in mind this post is for informational purposes only and answers given are very general.  Many things depend on individual circumstances.  Please contact your personal accountant or financial advisor for your particular situation.

photo credit: austinpost.org

Although tax season is over, tax questions arise year round.  My husband is an experienced accountant and will be answering questions sent to me at

I have received A LOT of questions lately about setting up a business.  I wrote a post HERE about deciding on what entity to be.  My husband (the accountant) has created a graph below that may make things more understandable.

There are several choices for set up…however, depending on the structure of the business, the liability protection, and the money you are going to be taking out of the business as compensation will determine the best way to organize.  I have omitted the Partnership Entity simply because this MUST be made up of 2 or more individuals and is a hybrid form of LLC & S-Corp (pays Self Employment tax, can have W-2 wages, limited distributions, files a Form 1065 that flows through to personal return. See chart below:

Structure	Cost to set-up/maintain	Liability Protection	Ease of Getting out $$$
Sole Proprietor (Sch C)	Low, files Sch C on your 1040.  Pays self-employment tax	None	No W-2 for owner/can take unlimited distributions
LLC	Medium files Sch C on your 1040.  Pays Self-Employment tax	Limited Personal protection	No W-2 for Owner/can take unlimited distributions
Incorporated (C-Corp)	High, files its own 1120 tax return, pays its own tax at higher corporate tax rates	Excellent personal protection	Compensation on W-2, can take dividends (these are taxed)
Incorporated (S-Corp)	High, files its own tax return, pays no tax at corporate level, profit “flows through” to personal tax return	Excellent personal protection	Compensation on W-2, can take non-taxable distributions, but is limited to “basis” in the business.

This chart is not all-inclusive, but is a good start for you to make a determination as to what you think you may want to do.

*Please keep in mind this post is for informational purposes only and answers given are very general.  Many things depend on individual circumstances.  Please contact your personal accountant or financial advisor for your particular situation.

photo credit: austinpost.org