With warmer temperatures upon us, here's a springtime tax savings opportunity for you and your family......
It's Yard/Garage Sale Season and perhaps you've been thinking about having one.
Here's a better idea that will:
-- get rid of all your clutter once and for all
-- save you many hours of time
-- put hundreds dollars of tax savings in your pocket
-- enable you to help others while forcing Uncle Sam to actually *pay* you for all your "old stuff"
What am I talking about?
I've written a new Special Small Report called:
"How To Save Time, Increase Your Deductions And Slash Your Taxes By Donating Your Old Stuff To Charity"
http://www.YouSaveOnTaxes.com/sr-donate-order.html
By "Small Report", I mean just that -- about 10 pages. But it's 10 of the most practical tax-slashing info you'll ever get your hands on.
Here's what you'll learn:
-- Why having a yard sale may be a terrible idea
-- 4 reasons to donate your stuff instead of having a yard sale
-- How to properly document your charitable contribution
-- How to find the right place to donate your "old stuff" (there are literally hundreds of them)
-- How to get a tax deduction for donating used items (like clothes and many everyday household things)
-- How to make sure you do the paperwork right (to keep Uncle Sam off your back and out of your life)
-- How to fill out the tax forms correctly -- the first time!
Plus you get 4 Bonuses:
How To Determine The Value Of Donated Property
Everything You Need To Know About Charitable Contributions
How To Report Non-Cash Charitable Contributions
Free Review Of Your 2009 Income Tax Return
To get your copy, click here:
http://www.YouSaveOnTaxes.com/sr-donate-order.html
The cost of the report is $10.
Friday, May 14, 2010
Monday, April 12, 2010
Need Help Figuring Out How To Pay The Tax Man?
April 15 is just a few days away. Do you owe Uncle Sam and don't know how you're going to come up with the money? Are you wondering what to do if you don't have the money to pay the balance due?
Here's some helpful tips from the IRS:
People who owe taxes but can’t pay the full amount owed by the April deadline should still file their return on time and pay as much as they can to avoid penalties and interest. If you can’t pay the full amount, you should contact the IRS to ask about alternative payment options. Here are some of the alternative payment options you may want to consider:
1. Additional Time to Pay.
Based on your circumstances, you may be granted a short additional time to pay your tax in full. A brief additional amount of time to pay can be requested through the Online Payment Agreement application at IRS.gov or by calling 800-829-1040. Taxpayers who request and are granted an additional 30 to 120 days to pay the tax in full generally will pay less in penalties and interest than if the debt were repaid through an installment agreement over a greater period of time.
2. Installment Agreement.
You can apply for an IRS installment agreement using the Web-based Online Payment Agreement application on IRS.gov. This Web-based application allows taxpayers who owe $25,000 or less in combined tax, penalties and interestto self-qualify, apply for, and receive immediate notification of approval. You can also request an installment agreement before your current tax liabilities are actually assessed by using OPA. The OPA option provides you with a simple and convenient way to establish an installment agreement and eliminates the need for personal interaction with IRS and reduces paper processing. You may also complete and submit a Form 9465, make your request in writing, or call 1-800-829-1040 to make your request. For balances over $25,000, you are required to complete a financial statement to determine the monthly payment amount for an installment plan. For more complete information see Tax Topic 202, Tax Payment Options on http://www.irs.gov./
3. Pay by Credit Card or Debit Card.
You can charge your taxes on your American Express, MasterCard, Visa or Discover credit cards. Additionally, you can pay by using your debit card. However, the debit card must be a Visa Consumer Debit Card, or a NYCE, Pulse or Star Debit Card. To pay by credit card or debit card, contact one of the service providers at its telephone number or Web site listed below and follow the instructions. There is no IRS fee for credit or debit card payments, but the processing companies charge a convenience fee or flat fee. If you are paying by credit card, the service providers charge a convenience fee based on the amount you are paying. If you are paying by debit card, the service providers charge a flat fee of $3.89 to $3.95. Do not add the convenience fee or flat fee to your tax payment.
The processing companies are:
Official Payments Corporation
To pay by debit or credit card: 888-UPAY-TAX (888-872-9829)
www.officialpayments.com/fed
Link2Gov Corporation
To pay by debit or credit card: 888-PAY-1040 (888-729-1040)
www.pay1040.com
RBS WorldPay, Inc.
To pay by debit or credit card: 888-9PAY-TAX (888-972-9829)
www.payUSAtax.com
For more information about filing and paying your taxes, visit www.IRS.gov and choose 1040 Central or refer to the Form 1040 Instructions or IRS Publication 17, Your Federal Income Tax. You can download forms and publications at www.IRS.gov or request a free copy by calling 800-TAX-FORM (800-829-3676).
Here's some helpful tips from the IRS:
People who owe taxes but can’t pay the full amount owed by the April deadline should still file their return on time and pay as much as they can to avoid penalties and interest. If you can’t pay the full amount, you should contact the IRS to ask about alternative payment options. Here are some of the alternative payment options you may want to consider:
1. Additional Time to Pay.
Based on your circumstances, you may be granted a short additional time to pay your tax in full. A brief additional amount of time to pay can be requested through the Online Payment Agreement application at IRS.gov or by calling 800-829-1040. Taxpayers who request and are granted an additional 30 to 120 days to pay the tax in full generally will pay less in penalties and interest than if the debt were repaid through an installment agreement over a greater period of time.
2. Installment Agreement.
You can apply for an IRS installment agreement using the Web-based Online Payment Agreement application on IRS.gov. This Web-based application allows taxpayers who owe $25,000 or less in combined tax, penalties and interestto self-qualify, apply for, and receive immediate notification of approval. You can also request an installment agreement before your current tax liabilities are actually assessed by using OPA. The OPA option provides you with a simple and convenient way to establish an installment agreement and eliminates the need for personal interaction with IRS and reduces paper processing. You may also complete and submit a Form 9465, make your request in writing, or call 1-800-829-1040 to make your request. For balances over $25,000, you are required to complete a financial statement to determine the monthly payment amount for an installment plan. For more complete information see Tax Topic 202, Tax Payment Options on http://www.irs.gov./
3. Pay by Credit Card or Debit Card.
You can charge your taxes on your American Express, MasterCard, Visa or Discover credit cards. Additionally, you can pay by using your debit card. However, the debit card must be a Visa Consumer Debit Card, or a NYCE, Pulse or Star Debit Card. To pay by credit card or debit card, contact one of the service providers at its telephone number or Web site listed below and follow the instructions. There is no IRS fee for credit or debit card payments, but the processing companies charge a convenience fee or flat fee. If you are paying by credit card, the service providers charge a convenience fee based on the amount you are paying. If you are paying by debit card, the service providers charge a flat fee of $3.89 to $3.95. Do not add the convenience fee or flat fee to your tax payment.
The processing companies are:
Official Payments Corporation
To pay by debit or credit card: 888-UPAY-TAX (888-872-9829)
www.officialpayments.com/fed
Link2Gov Corporation
To pay by debit or credit card: 888-PAY-1040 (888-729-1040)
www.pay1040.com
RBS WorldPay, Inc.
To pay by debit or credit card: 888-9PAY-TAX (888-972-9829)
www.payUSAtax.com
For more information about filing and paying your taxes, visit www.IRS.gov and choose 1040 Central or refer to the Form 1040 Instructions or IRS Publication 17, Your Federal Income Tax. You can download forms and publications at www.IRS.gov or request a free copy by calling 800-TAX-FORM (800-829-3676).
Friday, April 9, 2010
Everything You Need To Know About Filing An Extension
Top Five Reasons to File an Extension For Your Personal Tax Return
Looking for a reason for put off until October 15 what you can do on April 15? Do you need some encouragement to join America's largest group of procrastinators? Then read on to discover five good reasons to join millions of other loyal American taxpayers who legally file their tax return late, without any late filing penalties and without being harassed by the IRS.
Reason #1: It's free.
Of course, if you file Form 4868 by snail-mail, it will cost you a whopping 44 cents. If you e-file it, then it is free. You can use your own tax software program to e-file the extension, or check out the IRS FreeFile website here for e-filing options:
http://www.irs.gov/efile/article/0,,id=118986,00.html
Reason #2: It's automatic.
You don't have to have a good reason, a bad reason, or any reason at all. Just send in the form and that's all there is to it. No need to come up with some lame excuse like "My dog ate my W-2."
Reason #3: It's relaxing.
Remember how you've spent April 14 or April 15 in previous years? It's way past your bedtime, coffee pot still brewing, an opened bottle of Tylenol on top of your calculator, papers strewn all over your desk, receipts everywhere. Is this anyway to prepare your tax return? Of course not. Do you really need another source of stress in your life? File the extension and now imagine what you'll be doing on April 15 while thousands of frantic taxpayers are stuck in traffic at their local post office; instead, you'll be working in your garden or reading a good book, because you've got all summer to finish your return.
Reason #4: It's easy.
As tax forms go, this is one of the easiest tax forms to complete. You put in your name, address and social security number - and you are already halfway done! Only four more lines to go: an estimate of your 2009 tax liability, the total amount of 2009 tax payments (from W-2 or 1099 withholdings and/or quarterly estimated tax payments), any balance due, and the amount you are paying with the form. A tax form can't be any easier than that.
Reason #5: It's fast.
You can e-file Form 4868. Talk about fast! You push the Enter button on your keyboard and the data gets transmitted to the IRS in a nanosecond. You'll then receive an electronic confirmation from the IRS after the form has been processed and accepted. If you use a tax professional to prepare your return, he/she should be able to e-file the form for you, and since no signature is required on this form, getting it done quickly can take as little as a 5-minute phone call.
Filing an extension sounds too good to be true. What's the downside? Read on!
Are There Any Pitfalls To Avoid When Filing An Extension?
April 15 is fast approaching but there's no way you can get your personal income tax return done by then. What's a procrastinator to do? File an extension, of course.
But perhaps you are wondering whether this is the best option for you. Read on to find out.
You can automatically extend the April 15 due date to October 15 by filing Form 4868, "Application for Automatic Extension of Time To File U.S. Individual Income Tax Return." So now you have six more months to file your personal income tax return.
The nice thing about Form 4868 is that simply filing this form grants an automatic, no-questions-asked 6-month extension. You don't have to have a reason. Just sending this form to the IRS on or before April 15 gets you the extra six months.
But here's another important point about Form 4868: This 6-month extension is NOT an extension to pay any tax you may owe on the tax return. Form 4868 only grants an extension of time to file the tax return.
So, if you usually get a refund on your personal tax return, you are OK. But, if you think you might have a balance due, or if you are not sure, then you should go ahead and prepare the return to the best of your ability, do the calculations, and see where you stand.
If you are getting a refund, great. If you're not in a hurry to get the refund, then file the extension form and wait until October 15 to send in the return. But if you have a balance due on the return, then you should send in your balance due with Form 4868. That way you avoid any penalty and interest for late payment of tax.
When October 15 rolls around, you send in the return, showing the Form 4868 payment as a credit. The end result is this: you paid your tax on time (April 15), and you filed your tax return legally late (October 15) because you filed the extension form on time.
Obviously, the key here is whether or not you have a balance due on your return. If you have a balance due, but don't send in the payment with Form 4868, then you will have penalty and interest charges for paying the tax after April 15.
Bottom line: Do not overlook the fact that Form 4868 does not grant you an extension of time to pay the tax. It only gives you an extension of time to file the return.
Looking for a reason for put off until October 15 what you can do on April 15? Do you need some encouragement to join America's largest group of procrastinators? Then read on to discover five good reasons to join millions of other loyal American taxpayers who legally file their tax return late, without any late filing penalties and without being harassed by the IRS.
Reason #1: It's free.
Of course, if you file Form 4868 by snail-mail, it will cost you a whopping 44 cents. If you e-file it, then it is free. You can use your own tax software program to e-file the extension, or check out the IRS FreeFile website here for e-filing options:
http://www.irs.gov/efile/article/0,,id=118986,00.html
Reason #2: It's automatic.
You don't have to have a good reason, a bad reason, or any reason at all. Just send in the form and that's all there is to it. No need to come up with some lame excuse like "My dog ate my W-2."
Reason #3: It's relaxing.
Remember how you've spent April 14 or April 15 in previous years? It's way past your bedtime, coffee pot still brewing, an opened bottle of Tylenol on top of your calculator, papers strewn all over your desk, receipts everywhere. Is this anyway to prepare your tax return? Of course not. Do you really need another source of stress in your life? File the extension and now imagine what you'll be doing on April 15 while thousands of frantic taxpayers are stuck in traffic at their local post office; instead, you'll be working in your garden or reading a good book, because you've got all summer to finish your return.
Reason #4: It's easy.
As tax forms go, this is one of the easiest tax forms to complete. You put in your name, address and social security number - and you are already halfway done! Only four more lines to go: an estimate of your 2009 tax liability, the total amount of 2009 tax payments (from W-2 or 1099 withholdings and/or quarterly estimated tax payments), any balance due, and the amount you are paying with the form. A tax form can't be any easier than that.
Reason #5: It's fast.
You can e-file Form 4868. Talk about fast! You push the Enter button on your keyboard and the data gets transmitted to the IRS in a nanosecond. You'll then receive an electronic confirmation from the IRS after the form has been processed and accepted. If you use a tax professional to prepare your return, he/she should be able to e-file the form for you, and since no signature is required on this form, getting it done quickly can take as little as a 5-minute phone call.
Filing an extension sounds too good to be true. What's the downside? Read on!
Are There Any Pitfalls To Avoid When Filing An Extension?
April 15 is fast approaching but there's no way you can get your personal income tax return done by then. What's a procrastinator to do? File an extension, of course.
But perhaps you are wondering whether this is the best option for you. Read on to find out.
You can automatically extend the April 15 due date to October 15 by filing Form 4868, "Application for Automatic Extension of Time To File U.S. Individual Income Tax Return." So now you have six more months to file your personal income tax return.
The nice thing about Form 4868 is that simply filing this form grants an automatic, no-questions-asked 6-month extension. You don't have to have a reason. Just sending this form to the IRS on or before April 15 gets you the extra six months.
But here's another important point about Form 4868: This 6-month extension is NOT an extension to pay any tax you may owe on the tax return. Form 4868 only grants an extension of time to file the tax return.
So, if you usually get a refund on your personal tax return, you are OK. But, if you think you might have a balance due, or if you are not sure, then you should go ahead and prepare the return to the best of your ability, do the calculations, and see where you stand.
If you are getting a refund, great. If you're not in a hurry to get the refund, then file the extension form and wait until October 15 to send in the return. But if you have a balance due on the return, then you should send in your balance due with Form 4868. That way you avoid any penalty and interest for late payment of tax.
When October 15 rolls around, you send in the return, showing the Form 4868 payment as a credit. The end result is this: you paid your tax on time (April 15), and you filed your tax return legally late (October 15) because you filed the extension form on time.
Obviously, the key here is whether or not you have a balance due on your return. If you have a balance due, but don't send in the payment with Form 4868, then you will have penalty and interest charges for paying the tax after April 15.
Bottom line: Do not overlook the fact that Form 4868 does not grant you an extension of time to pay the tax. It only gives you an extension of time to file the return.
Friday, March 26, 2010
Top 9 Errors To Avoid At Tax Time
Courtesy of the IRS, here's a great list of the most common mistakes folks make on their personal income tax returns. With April 15 less than 3 weeks away, please take note!
1. Incorrect or missing Social Security Numbers. When entering SSNs for anyone listed on your tax return, be sure to enter them exactly as they appear on the Social Security cards.
2. Incorrect or misspelling of dependent’s last name. When entering a dependent’s last name on your tax return, ensure they are entered exactly as they appear on their Social Security card.
3. Filing status errors. Make sure you choose the correct filing status for your situation. There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow(er) With Dependent Child. See Publication 501, Exemptions, Standard Deduction, and Filing Information to determine the filing status that best fits your needs.
4. Math errors. When preparing paper returns, review all math for accuracy. Remember, when you file electronically, the software takes care of the math for you!
5. Computation errors. Take your time. Many taxpayers make mistakes when figuring their taxable income, withholding and estimated tax payments, Earned Income Tax Credit, Standard Deduction for age 65 or over or blind, the taxable amount of Social Security benefits, and the Child and Dependent Care Credit.
6. Incorrect bank account numbers for Direct Deposit. If you are due a refund and requested direct deposit, be sure to review the routing and account numbers for your financial institution.
7. Forgetting to sign and date the return. An unsigned tax return is like an unsigned check – it is invalid.
8. Incorrect Adjusted Gross Income information. Taxpayers filing electronically must sign the return electronically using a Personal Identification Number. To verify their identity, taxpayers will be prompted to enter their AGI from their originally filed 2008 federal income tax return or their prior year PIN if they used one to file electronically last year. Taxpayers should not use an AGI amount from an amended return, Form 1040X, or a math error correction made by IRS.
9. Claiming the Making Work Pay Tax Credit. Taxpayers with earned income should claim the Making Work Pay Tax Credit by attaching a Schedule M, Making Work Pay and Government Retiree Credits to their 2009 Form 1040 or 1040 A. Taxpayers who file Form 1040-EZ will use the worksheet for Line 8 on the back of the 1040-EZ to figure their Making Work Pay Tax Credit. The credit is worth up to $400 for individuals and $800 for married couples filing jointly. Many people who worked during 2009 are slowing down the processing of their tax return by not properly claiming this credit.
1. Incorrect or missing Social Security Numbers. When entering SSNs for anyone listed on your tax return, be sure to enter them exactly as they appear on the Social Security cards.
2. Incorrect or misspelling of dependent’s last name. When entering a dependent’s last name on your tax return, ensure they are entered exactly as they appear on their Social Security card.
3. Filing status errors. Make sure you choose the correct filing status for your situation. There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow(er) With Dependent Child. See Publication 501, Exemptions, Standard Deduction, and Filing Information to determine the filing status that best fits your needs.
4. Math errors. When preparing paper returns, review all math for accuracy. Remember, when you file electronically, the software takes care of the math for you!
5. Computation errors. Take your time. Many taxpayers make mistakes when figuring their taxable income, withholding and estimated tax payments, Earned Income Tax Credit, Standard Deduction for age 65 or over or blind, the taxable amount of Social Security benefits, and the Child and Dependent Care Credit.
6. Incorrect bank account numbers for Direct Deposit. If you are due a refund and requested direct deposit, be sure to review the routing and account numbers for your financial institution.
7. Forgetting to sign and date the return. An unsigned tax return is like an unsigned check – it is invalid.
8. Incorrect Adjusted Gross Income information. Taxpayers filing electronically must sign the return electronically using a Personal Identification Number. To verify their identity, taxpayers will be prompted to enter their AGI from their originally filed 2008 federal income tax return or their prior year PIN if they used one to file electronically last year. Taxpayers should not use an AGI amount from an amended return, Form 1040X, or a math error correction made by IRS.
9. Claiming the Making Work Pay Tax Credit. Taxpayers with earned income should claim the Making Work Pay Tax Credit by attaching a Schedule M, Making Work Pay and Government Retiree Credits to their 2009 Form 1040 or 1040 A. Taxpayers who file Form 1040-EZ will use the worksheet for Line 8 on the back of the 1040-EZ to figure their Making Work Pay Tax Credit. The credit is worth up to $400 for individuals and $800 for married couples filing jointly. Many people who worked during 2009 are slowing down the processing of their tax return by not properly claiming this credit.
Friday, March 19, 2010
How To End All Your Record Keeping Frustrations
Looking for an easy way to both get organized and save a bundle on your tax bill this year?
Check out the "Tax MiniMiser" --
https://tdpi.infusionsoft.com/go/home/wmdctp/
Here's what The Experts say....
"For years I've been telling all my tax clients and readers around the world that the IRS and the Tax Court require you to keep good records & receipts. Now, finally, you don't have to go out and create your own system — just use this one!"
-- TaxMama™ Eva Rosenberg, EA, MBA
www.TaxMama.com
"The Tax MiniMiser is, by far, the best of all the manual record systems I’ve seen in my 40 years of helping small and home-based business clients in all 50 states. It is easy to use in effectively helping my clients bring me excellent records so that I can do my best job for them. And when I represent clients in tax audits, these accurate records will help make them completely IRS compliant."
-- Mr. Tom Buck, CPA
www.buckcpa.com
"Looking for an easy and affordable way to end all your bookkeeping and record keeping frustrations? Then get the Tax MiniMiser today! It is by far the most user-friendly bookkeeping system on the planet. I recommend it to any and every small business owner or self-employed person who is sick and tired of fighting the IRS-mandated paperwork battle. It will help you sleep better at night because once you start using the Tax MiniMiser to organize your tax records, you'll no longer have any fear of what might happen to you if you get audited. You'll be ready, willing, and able to prove every deduction. With the Tax MiniMiser in hand, you will audit-proof your tax return forever. Good-bye shoe box, hello Tax MiniMiser!
-- Wayne M. Davies, author,
The Ultimate Small Business Tax Reduction Guide
www.SmallBusinessTaxReductionGuide.com
Go for it!
https://tdpi.infusionsoft.com/go/home/wmdctp/
And Many Happy Returns,
Wayne Davies
www.YouSaveOnTaxes.com
Check out the "Tax MiniMiser" --
https://tdpi.infusionsoft.com/go/home/wmdctp/
Here's what The Experts say....
"For years I've been telling all my tax clients and readers around the world that the IRS and the Tax Court require you to keep good records & receipts. Now, finally, you don't have to go out and create your own system — just use this one!"
-- TaxMama™ Eva Rosenberg, EA, MBA
www.TaxMama.com
"The Tax MiniMiser is, by far, the best of all the manual record systems I’ve seen in my 40 years of helping small and home-based business clients in all 50 states. It is easy to use in effectively helping my clients bring me excellent records so that I can do my best job for them. And when I represent clients in tax audits, these accurate records will help make them completely IRS compliant."
-- Mr. Tom Buck, CPA
www.buckcpa.com
"Looking for an easy and affordable way to end all your bookkeeping and record keeping frustrations? Then get the Tax MiniMiser today! It is by far the most user-friendly bookkeeping system on the planet. I recommend it to any and every small business owner or self-employed person who is sick and tired of fighting the IRS-mandated paperwork battle. It will help you sleep better at night because once you start using the Tax MiniMiser to organize your tax records, you'll no longer have any fear of what might happen to you if you get audited. You'll be ready, willing, and able to prove every deduction. With the Tax MiniMiser in hand, you will audit-proof your tax return forever. Good-bye shoe box, hello Tax MiniMiser!
-- Wayne M. Davies, author,
The Ultimate Small Business Tax Reduction Guide
www.SmallBusinessTaxReductionGuide.com
Go for it!
https://tdpi.infusionsoft.com/go/home/wmdctp/
And Many Happy Returns,
Wayne Davies
www.YouSaveOnTaxes.com
Friday, March 12, 2010
Where to Find a Boatload of Free Tax Advice for the Self-Employed
Believe it or not, there's a boatload of tax resources available for self-employed folks at the IRS website.
If you are reluctant to spend a dime on tax advice, this is a good place to start looking for help:
Self-Employed Individuals Tax Center
http://www.irs.gov/businesses/small/article/0,,id=115045,00.html
Small Business & Self-Employed Tax Center
http://www.irs.gov/businesses/small/index.html
Small Business Forms & Publications
http://www.irs.gov/businesses/small/article/0,,id=99200,00.html
Small Business Tax Workshops, Phone Forums and Webinars
http://www.irs.gov/businesses/small/article/0,,id=99202,00.html
e-file for Business and Self-Employed Taxpayers
http://www.irs.gov/efile/article/0,,id=118520,00.html
Small Business Products (these are free too!)
http://www.irs.gov/businesses/small/article/0,,id=101169,00.html
S Corporations
http://www.irs.gov/businesses/small/article/0,,id=98263,00.html
And if you are willing to spend a few dollars to get help with your tax return or to get answers to your tax questions, check out my new Tax Return Coaching Service:
http://www.YouSaveOnTaxes.com/tax-return-coaching.html
Either way.....Many Happy Returns!
If you are reluctant to spend a dime on tax advice, this is a good place to start looking for help:
Self-Employed Individuals Tax Center
http://www.irs.gov/businesses/small/article/0,,id=115045,00.html
Small Business & Self-Employed Tax Center
http://www.irs.gov/businesses/small/index.html
Small Business Forms & Publications
http://www.irs.gov/businesses/small/article/0,,id=99200,00.html
Small Business Tax Workshops, Phone Forums and Webinars
http://www.irs.gov/businesses/small/article/0,,id=99202,00.html
e-file for Business and Self-Employed Taxpayers
http://www.irs.gov/efile/article/0,,id=118520,00.html
Small Business Products (these are free too!)
http://www.irs.gov/businesses/small/article/0,,id=101169,00.html
S Corporations
http://www.irs.gov/businesses/small/article/0,,id=98263,00.html
And if you are willing to spend a few dollars to get help with your tax return or to get answers to your tax questions, check out my new Tax Return Coaching Service:
http://www.YouSaveOnTaxes.com/tax-return-coaching.html
Either way.....Many Happy Returns!
Friday, March 5, 2010
How To Deduct Anything
Looking for an easy way to know exactly what you can and cannot deduct on your income tax return? Knowing what is deductible and what isn't deductible has mystified self-employed people for decades. This post should help you see the big picture.
What's deductible? Believe it or not, anything is deductible. Anything? Yes, anything. Let me explain.
Anything is deductible, provided that it is specifically mentioned in the tax code as deductible. It's as if Uncle Sam is saying, with a big smile on his face, "This particular item is deductible, no doubt about it."
Anything is deductible, provided that it is not specifically mentioned in the tax code as non-deductible. There are deductions that are specifically disallowed. Again, imagine Uncle Sam (this time with a frown) telling you, "Sorry, but this particular item is not deductible, no doubt about it."
But what most taxpayers do not realize (and the IRS is in no hurry to tell you this) is that most deductions are not specifically mentioned anywhere in the tax code. By that I mean this: most allowable deductions are not said to be deductible or non-deductible.
Getting confused? Bear with me....
For example, where does it say in the tax code that paper clips used in your office are deductible? Guess what - it doesn't. How about staples? Same thing -- there isn't really a specific reference to that either. But neither does it say that paper clips (or staples) are non-deductible.
Then how do we know what is deductible and what isn't? Because the tax code does provide some general rules about what is deductible, and these general rules can be boiled down to this famous statement: Anything is deductible, provided that it is an ordinary and necessary business expense. Any expense that meets that two-part requirement is deductible. Let's unpack that concept.
Here's how the IRS defines these two requirements: By "ordinary", the tax code simply means an expense that is "common and accepted" in your type of business. Is it common for an office to use paper clips in the normal course of business? Obviously. How about staples (not to mention the stapler)? Of course.
Not only are basic office supplies commonly used in virtually every business, but it is an accepted practice for these items to be a normal part of a typical business, right? I think you get the idea. And you should also now see why the tax code doesn't specifically mention paper clips or staples in it's list of legitimate business deductions.
By "necessary", the tax code means an expense that is appropriate and helpful for your business. Now apply that concept to office supplies. Are paper clips and staples appropriate and helpful? Naturally.
One more key concept: An expense does not have to be indispensable to be considered necessary.
Do you have specific questions about what's deductible and non-deductible? Looking for a way to get those questions answered quickly while you are preparing your 2009 income tax returns?
Check out my new Tax Return Coaching Service:
www.YouSaveOnTaxes.com/tax-return-coaching.html
Many Happy Returns!
What's deductible? Believe it or not, anything is deductible. Anything? Yes, anything. Let me explain.
Anything is deductible, provided that it is specifically mentioned in the tax code as deductible. It's as if Uncle Sam is saying, with a big smile on his face, "This particular item is deductible, no doubt about it."
Anything is deductible, provided that it is not specifically mentioned in the tax code as non-deductible. There are deductions that are specifically disallowed. Again, imagine Uncle Sam (this time with a frown) telling you, "Sorry, but this particular item is not deductible, no doubt about it."
But what most taxpayers do not realize (and the IRS is in no hurry to tell you this) is that most deductions are not specifically mentioned anywhere in the tax code. By that I mean this: most allowable deductions are not said to be deductible or non-deductible.
Getting confused? Bear with me....
For example, where does it say in the tax code that paper clips used in your office are deductible? Guess what - it doesn't. How about staples? Same thing -- there isn't really a specific reference to that either. But neither does it say that paper clips (or staples) are non-deductible.
Then how do we know what is deductible and what isn't? Because the tax code does provide some general rules about what is deductible, and these general rules can be boiled down to this famous statement: Anything is deductible, provided that it is an ordinary and necessary business expense. Any expense that meets that two-part requirement is deductible. Let's unpack that concept.
Here's how the IRS defines these two requirements: By "ordinary", the tax code simply means an expense that is "common and accepted" in your type of business. Is it common for an office to use paper clips in the normal course of business? Obviously. How about staples (not to mention the stapler)? Of course.
Not only are basic office supplies commonly used in virtually every business, but it is an accepted practice for these items to be a normal part of a typical business, right? I think you get the idea. And you should also now see why the tax code doesn't specifically mention paper clips or staples in it's list of legitimate business deductions.
By "necessary", the tax code means an expense that is appropriate and helpful for your business. Now apply that concept to office supplies. Are paper clips and staples appropriate and helpful? Naturally.
One more key concept: An expense does not have to be indispensable to be considered necessary.
Do you have specific questions about what's deductible and non-deductible? Looking for a way to get those questions answered quickly while you are preparing your 2009 income tax returns?
Check out my new Tax Return Coaching Service:
www.YouSaveOnTaxes.com/tax-return-coaching.html
Many Happy Returns!
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