Tag: tax


April 15 Countdown & Last Minute Tax Tips

April 14th, 2014 — 2:50pm
last minute tax tips 604cs032713 300x162 April 15 Countdown & Last Minute Tax Tips

Tick Tock, TickTock…April 15th Deadline

With the clock about to strike midnight on the 2013 Tax Year Filing season, the following is a quick list of tax tips for all you last minute filers out there:

April 15th Deadline

Yes, we all know the saying “Death & Taxes…”. And nothing drums up the cold sweats and association with taxes like the April 15th deadline. However, here is something that many taxpayers do not know: This deadline is only if you OWE taxes to the IRS.  If you are due a refund from the IRS, you actually have 3 full years from the April 15th deadline to claim and receive your refund before it becomes the property of the U.S. Government.  So, as long as you file your 2013 tax return by April 15th, 2017 you will get your refund.  There are of course, many reasons to file your 2013 tax return before the deadline.  It’s your money!  So don’t let the government hold on to it especially when they do not have to pay interest on it.  If you owe, and you do not have all of your tax documents ready, you can always file an extension.  Extensions must also be filed before the April 15th deadline.  REMEMBER: An extension is only an extension to file your final tax return, NOT to pay the taxes you owe.  Therefore, expect to send payment for the estimated amount of taxes you owe along with any extension.

Beware of IRS Scams

IRS & Tax related Scams have been steadily increasing over the last few years.  The most common scam going around is IRS impersonators contacting unsuspecting taxpayers and getting them to divulge their confidential personal information which can be used to open up credit cards in the victims name and/or to a file a fraudulent tax return in their name in order to steal refunds.  NOTE: The IRS will NEVER initiate contact with your via email, phone, fax or text.  They will always send you a written notification with instructions.  Even if you receive written communication, double check that the contact information on the letter matches the IRS contact information from the IRS website.  If you think that you are the target of a tax related scam, report it to phishing@irs.gov.

Sign Your Return & Mail To Correct Address

While this may sound trivial, many taxpayers forget to sign their tax returns!  Your tax return is technically not considered filed if it is not signed.  While the majority of tax returns are filed electronically, there are still many reasons why a return would be filed as paper.  Furthermore, if you had your return prepared by a professional, be sure that they signed the return as well.  While the taxpayer is ultimately responsible for what is listed on their return, a common scam that many “professionals” use to avoid any liability is to file a tax return as “self-prepared”.  In other words, the IRS thinks that the taxpayer prepared and filed the tax return themselves when in reality it was filed by a paid income tax preparer.  So be sure to check for all appropriate signatures!  Furthermore, be sure you are mailing your tax return to the right IRS processing center.  The IRS tends to change their mailing addresses annually and some  have separate mailing addresses for refunds and taxes due.  Here is a list of all the IRS tax processing centers.

Keep Your Tax Records

So you just sent in your taxes and now you can throw all of your W2s, 1099s, receipts & other tax related documentation into the fireplace, right?  WRONG! Depending on your situation, the IRS says to keep all of your tax records between 3 & 6 years.  So, just to be on the safe side, keep all of your tax records for at least 6 years.  Sometimes it could take years before the IRS notifies you with an issue and/or adjustment on your tax return.  If you plan on contesting changes in the IRS’ favor, you’ll need your backup documentation.  Recent budget cuts to the IRS will probably delay the notification process even more.

File With A Tax Professional

While millions of taxpayers are electing to forego using a tax professional in favor of filing themselves, the numbers don’t add up.  A couple of years ago R&G Brenner investigated The True Cost Of Preparing Your Own Tax Return and found that taxpayers who filed themselves were losing an average of $594 in refunds as opposed to using a Tax Professional.  Similarly, H&R Block is running ads this year that found 1 in 5 taxpayers who prepares their own taxes are not claiming all the deductions they are entitled to and are losing $490 in refunds.  Now there are many taxpayers who have very simple returns (standard deductions, no house, no kids, etc) and can easily file themselves.  However, the moment your tax return gets even a little bit complicated, you should seek professional help.  If you are going to Itemize Deductions (Schedule A), claim mortgage interest, have children (Earned Income Tax Credit), deduct business expenses (Schedule C), have rental income (Schedule E), or other complex tax positions, it is almost never a good idea to prepare your own tax return.

If you would like information about R&G Brenner, our services or if you need any tax assistance before or after the April 15th deadline, please feel free to contact us here, or call us toll free at (888) APRIL-15.

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NY Suspending Drivers Licenses For Those That Fail To Pay Taxes

March 24th, 2014 — 12:29pm

 

suspended drivers license 300x158 NY Suspending Drivers Licenses For Those That Fail To Pay Taxes

NY Suspending Licenses For Those That Owe $10k+

Governor Andrew M. Cuomo today announced that 8,900 New Yorkers had their driver licenses suspended for failing to pay taxes they owe the State. The crackdown is the result of legislation signed into law last year aimed at encouraging individuals who owe more than $10,000 in back taxes to settle their bills with the Tax Department.

“We are sending a clear message to tax delinquents that they either have to pay the taxes they owe, or face real consequences,” said Governor Cuomo. “For many, this message is getting through and as a result thousands of people have come forward to do the right thing and find a way to pay their taxes. Those who haven’t are losing their drivers licenses.”

“Driver licenses are a privilege, not a right, and this program has prompted unprecedented action from tax delinquents who were otherwise ignoring their debt,” said Commissioner Thomas H. Mattox. “Thousands have contacted us to do the right thing – pay their tax bills in full, or work with us to arrange a payment plan that satisfies the debt. Those who continued to ignore their debt have had their licenses suspended.”

In the first round of notifications, more than 17,700 drivers were contacted beginning in August, 2013. Along with the 8,900 suspensions, 6,500 tax debtors have either paid in full or are making payments on their debt, while 2,300 were determined to be ineligible for suspension.

As a result of the program, tax collections increased nearly $56.4 million on a state and local basis – a 34 percent increase over the initial estimate of $42 million. The program will continue to raise millions of dollars annually as thousands of other debtors are notified and, ultimately, resolve their debt.

When a driver gets a license suspension notice from the Tax Department, they have 60 days from the mailing date to arrange payment. If the taxpayer fails to do so, the Department of Motor Vehicles sends a second letter providing an additional 15 days to respond. If the delinquent taxpayer again fails to make contact, DMV is authorized to suspend the license until the debt is paid or a payment plan is arranged.

A taxpayer who drives with a suspension in effect is subject to arrest and penalties. Those with a suspended license can, however, apply for a restricted license that allows them to drive to work, and return directly home.

In New York State, 96 percent of taxes are paid by businesses and individuals who voluntarily meet their tax responsibilities. The remaining four percent is collected through the Tax Department’s audit, collections and criminal investigations programs. Through enforcement programs, such as suspension of driver licenses, the Department ensures fair tax administration for all New Yorkers.

Contact the NY Sate Tax Department

  • Visit www.tax.ny.gov 

  • Call (518) 862-6000 to settle a tax debt or arrange a payment plan

If you need additional assistance with this or filing your current or back taxes, contact an R&G Brenner tax professional today.

Source: NY State Department Of Finance & Taxation

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Tax Breaks for New Parents

March 13th, 2014 — 3:03pm
new baby 300x297 Tax Breaks for New Parents

Tax Breaks For New Parents

Having a child changes your life in countless ways, one of which is how you are taxed. New parents unlock several different tax breaks not otherwise offered which are designed to make raising a family financially easier. Here’s a look at a few of them.

Adoption Credit/Adoption Assistance

If you adopt a child, you might be able to use the costs associated with the adoption to reduce your tax burden. Adoption tax breaks come in two forms: a tax credit and a tax exclusion for adoption assistance provided by an employer. These apply if the adopted person is under 18 or unable to care for themselves. In 2013, the overall amount was worth up to $12,970 per child.

Here’s how it works: In one example provided by the IRS, you pay $12,970 in adoption expenses. You receive $2,970 from your employer to help, which lets you reduce your gross (taxable) income by that amount. The remainder ($10,000) becomes a tax credit—so you owe $10,000 less in taxes.

Higher Education Tuition Deduction

If you pay for a child’s higher education at an eligible institution, you can probably deduct many of the expenses and fees involved. The IRS defines an eligible institution as “any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education. It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions.” 

Regardless of whether you take the standard deduction or itemize your deductions, you can adjust your taxable income by up to $4,000 by paying for the education of a dependent. Tuition and fees are deductible, but some expenses (such as room and board) are not. 

Child Tax Credit

In perhaps the simplest of all child-driven tax breaks, the child tax credit might let you “reduce your federal income tax by up to $1,000 for each qualifying child under the age of 17,” per the IRS. There are several conditions to this credit, which are easy to meet for many, if not most, families.  For instance:

  • The child must be under the age of 17
  • The child must live with the taxpayer for the majority of the year
  • the child itself must provide less than half of their support

A phase-out of the credit starts at the following income levels: $110,000 for married taxpayers filing jointly, $55,000 for separately-filing married taxpayers, and $75,000 for everyone else.

Earned Income Tax Credit (EITC)

This one’s a bit more complicated than the child tax credit, but can be just as rewarding. The EITC applies to some individuals with no children, but its amount scales up the more children there are in a family. In an IRS-provided example from 2013, a joint-filing married couple making less than $48,378 (in both earned an adjusted gross income) with two qualifying children could receive a $5,372 maximum credit. With three or more children, the maximum income goes to $51,567 and the maximum credit leaps to $6,044. Several more combinations work as well, so some research may be necessary to see if your family qualifies. Note: to receive the EITC, a family must have earned no more than $3,300 in investment income.

Having a child can be a wonderful, if stressful, experience. However, new parents can rest a bit easier knowing that there are new tax options open to them. Contact an R&G Brenner tax professional to see if you qualify for these tax exemptions, credits and deductions and new parents can spend more time enjoying their family, and less time stressing about their finances. 

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Inheritance & Estate Tax 101

March 6th, 2014 — 2:53pm
estate tax 267x300 Inheritance & Estate Tax 101

Inheritance Vs. Estate Taxes

If you have recently inherited a large sum of money, you may have some questions about the inheritance tax, and whether or not it will affect you this tax season. Before you worry about having to pay an inheritance tax, read on to find out what exactly an inheritance tax is, whether your state requires you to pay an inheritance tax, and whether you qualify for an exemption.

The Inheritance Tax: What is it?

An inheritance tax refers to a tax where a person who has received money, assets, or property from a deceased person must pay a tax on those received items. Unlike an estate tax, the person who receives the money or property (i.e., the beneficiary) is the one who is responsible for paying the tax. Only eight states have implemented an inheritance tax, and the rules for how much you pay vary by state. These states are Indiana, Iowa, Kentucky, Maryland, Nebraska, New Jersey, Pennsylvania, and Tennessee. To better understand your state’s regulations, it is best to consult an accountant or professional tax preparer to help you with your state’s laws.

Exemptions and Reductions

Remember, the inheritance tax laws differ depending upon which of the eight states with the inheritance tax you live in. As such, exemptions regarding the tax also differ. In most cases, children who are beneficiaries will receive exemptions. Additionally, sometimes an exemption or reduction will be granted depending upon the relationship of the beneficiary with the deceased. Usually, family members or direct relatives have a higher chance of being granted an exemption than a friend or associate does.

Federal Estate Tax: The Death Tax? 

The federal government does not have any form of an inheritance tax. Rather, there is a federal estate tax. According to the IRS, the estate tax is “a tax on your right to transfer property at your death.” The federal estate tax differs from the inheritance tax in who is paying the tax—in an inheritance tax, the beneficiary is responsible for the tax; in the federal estate tax, the tax is taken from the property and/or assets of the deceased individual. This payout to the federal government for tax purposes occurs before the remaining assets are distributed to beneficiaries. An estate tax is only applied to assets/properties where the value of the assets is greater than one million dollars. Due to this, very few people are affected by the estate tax each year—only about 2 percent.  As of 2013, the filing of an estate tax is only required for estates that claim assets amounting to $5,340,000 dollars or more.

If you think you will be affected by the inheritance or the estate tax, contact an R&G Brenner professional for assistance.

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Making Sense of Tricky Tax Terms: AGI vs. Taxable Income, Dividends, Exemptions & Deductions

March 3rd, 2014 — 3:57pm
free tax help title 6241 300x124 Making Sense of Tricky Tax Terms: AGI vs. Taxable Income, Dividends, Exemptions & Deductions

tax (tăks) n. : One of the only things certain in life. See also Death.

Tax season can be intimidating to those who aren’t certified accountants or tax professionals. With all the tax terminology out there, simply understanding the terms on the form you’re filling out can be daunting. No fear—a tax-terminology-debunker is here:

Understanding: Adjustable Gross Income

First things first, you need to understand the total income. Total income refers to all income that was made in the fiscal year, either earned or unearned, before any exemptions or deductions. So, total income will refer to all the money you made in the year, including money from social security benefits, unemployment, alimony, wages/tips, pensions, etc.

Your adjustable gross income (AGI) refers to your total income minus adjustments that were made for moving expenses, IRA contributions, student loan interest, and alimony. Any adjustments can be found on your 1040, on lines 23-35. Don’t panic; If you need help filing your taxes, you can always consult an R&G Brenner tax professional.

Understanding: Taxable Income

Taxable income is pretty simple, and refers to the amount of money that you can be taxed for. This number is found by taking your AGI less your deductions and personal exemptions. This number will be used to find what tax bracket you fall into, and to then calculate your tax rate.

Understanding: Exemptions

A tax exemption can be taken by an individual, a business, or a charity, and refers to money or property that taxes do not have to be paid on, or may be reduced for. For example, charitable organizations do not have to pay property taxes. Another exemption sometimes granted is the case of those who inherit larges amount of money not having to pay an inheritance tax. In some cases, a tax exemption entirely precludes an individual from paying taxes, or significantly reduces the amount of money one has to pay.

Understanding: Deductions

A tax deduction, or a “tax write-off,” refers to an amount of money you get to subtract from your AGI due to various expenses that you paid or incurred throughout the year. For example, a deduction may be educational expenses, health insurance, mortgage interest, royalties, a home office, or auto expenses. Depending on whether you’re filing taxes as an individual or as a business, the types of deductions you quality for will differ as will the total percentage one is allowed to deduct.

Understanding: Dividends

A dividend is a percentage of profit that is paid out, in the form of income, to shareholders of stock and the like. A dividend tax is a tax that is levied on the amount of money that is allocated to each shareholder. If you are a shareholder and received money from those shares this year, you can expect to pay a dividend tax.

Understanding: Tax Due

Perhaps the most simple of tax terms (and the most detested), tax due means exactly what it says. The last line of your 1040, the tax due box, will tell you the total amount of money you owe to the IRS for any given tax year after all your deductions and exemptions have been calculated and applied.

Making sense of tax terms can initially feel frustrating—but it shouldn’t be. With a little bit of research, and a FREE consultation with an R&G Brenner tax professional, you can make this tax season your easiest yet!

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Understanding Obamacare’s Hardship Exemption

February 28th, 2014 — 10:27am

 

Affordable Care Act1 300x187 Understanding Obamacares Hardship Exemption

Do You Qualify for a Hardship Exemption?

9 million individuals have signed up for health insurance as mandated by the Patient Protection and Affordable Care Act of 2010 (PPACA). Also referred to as the ACA or Obamacare, the law requires all Americans to purchase or be covered under a plan of insurance for healthcare by  March 31, 2014. Failure to obtain coverage by this date results in a penalty that will be assessed on your 2014 tax return.

Problems with the operation of the website used for enrollments resulted in an expansion of the hardship exemption to individuals whose health insurance plans were cancelled. The exemption allows certain individuals to bypass the requirement for insurance coverage under extraordinary circumstances or hardship. It is important to understand both the individual mandate and hardship exemption and how it may affect your requirement to purchase health insurance under the ACA.

About the Individual Mandate

The individual mandate was created as a penalty to induce those individuals who otherwise qualified for health insurance to become enrolled in a plan of coverage. If a person is not otherwise exempt from the requirement to purchase health insurance they are subject to a non-compliance penalty beginning this year. The amount of the penalty is the greater of $95 or 1% of your taxable income in 2013. For example, if your taxable income in 2013 was $40,000, the penalty amount you would be assessed for not having health insurance would be $400.  However, this penalty can grow to over $2000 per family by 2016.

Basic Exemptions from Affordable Care Act Requirements

The individual mandate to purchase health insurance applies to nearly all Americans. Those not required to enroll in an individual plan of coverage before the deadline under the ACA include the following:

  • those who are currently insured;
  • individuals covered by either Medicare, Medicaid or state sponsored health insurance plan;
  • veteran health or TRICARE plan participants;
  • individuals who are permitted to claim a religious exemption;
  • persons who are undocumented and living in the United States;
  • individuals who are incarcerated;
  • Native American tribe members; and
  • those with individual income of $10,000 or household income of $20,000 in 2013 or where health insurance premiums represent 8% or more of their income.

Hardship Exemptions for the Individual Mandate

The hardship exemption, as explained in the ACA, is provided for those individuals who may not meet the requirements of the basic exemptions enumerated in the law. There are 14 different categories available for individuals looking to claim a hardship exemption from the individual mandate penalty imposed under the law.

These categories include: (1) homelessness; (2) notice of eviction or foreclosure within the six month period prior to January 1, 2014; (3) utility shut-off notice; (4) victim of domestic violence; (5) death of a close family member; (6) property damage due to a natural or human caused disaster; (7) a bankruptcy filing; (8) accrued medical expenses for at least 2 years; (9) an increase in expense related to the care of a family member who is ill, disabled or aging; (10) claiming a dependent child denied CHIP or Medicaid and subject of a court order for someone else to pay medical support for the child; (11) eligibility appeals decision for coverage; (12) reside in a state that did not expand Medicaid eligibility under ACA; (13) cancelled insurance coverage; and, (14) other hardship. 

Qualifying for a hardship requires the filing of an application and the provision of certain supporting documents as required for the numbered hardship exemption. Once approved, a hardship exemption certificate number will be issued that must be placed on your tax return in order to waive the individual mandate penalty.

For more information relating to the health care exchanges, please contact R&G Brenner’s insurance division at healthcare@rgbrenner.com.

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IRS Commish: Extensive Wait Times Calling IRS

February 12th, 2014 — 11:50am

New IRS commissioner John Koskinen warned taxpayers in the following video below that if you plan to speak to an IRS representative, expect to wait…a lot.  Koskinen said:

 “Given our very limited resources, our phone lines are going to be extremely busy this year – and there will frequently be extensive wait times…

While he tempers that statement by saying many tax resources can be found on the IRS.gov website, sometimes speaking with a person is ultimately necessary.  Given the recent report that found the IRS only answered 61% of the calls last year, don’t expect this number to climb anytime soon.  In fact, the IRS’ budget was cut by over $500 Million this year.  In other words, pray that you don’t have a problem (like identity theft) with your tax return that requires a phone call to the IRS.

 

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Will Inflation Affect Your 2014 Taxes?

February 10th, 2014 — 10:00am
f3748218ec804a56873addfe03398979 Will Inflation Affect Your 2014 Taxes?

How Inflation Affects Your Taxes

Everyone know the old adage ‘The only things certain in life are death and taxes”. As it turns out, inflation may have to be included in this saying. Inflation decreases the value of money as time goes on, ultimately making the dollar of today worth more than the dollar of the future. It influences how much we spend on everyday items, how much we make, and how much things like houses and cars cost. It even helps dictate what we owe the government come April 15th. In fact, in regards to tax season, inflation can actually help us save a few bucks.

The Rate of Inflation

In the past few years, the rate of inflation has been consistently inconsistent: it has fluctuated among the one, two, or three percentiles (with a few months that presented negative numbers). While inflation isn’t always all that noticeable on a month-to-month basis, its impact is truly felt over a period of several years. For example, according to the Bureau of Labor and Statistics, a $250,000 house purchased in 2008 would be worth approximately $270,000 in present day (if inflation is the only variable taken into consideration).

Inflation and Taxes

Each year, annual inflation leads to a number of tax changes. In 2014, per the Internal Revenue Service, more than 40 tax provisions are scheduled to be adjusted. Some of these adjustments include:

  • Tax Rate: The 2014 rate has changed to 39.6 percent for singles who have an income level higher than $406,750 and married couples (filing a joint return) who have an income level higher than $457,600. These numbers are up from $400,000 and $450,000, respectively.
  • Deductions: The 2014 standard deduction amount has increased to $6,200 for singles and $12,400 for married couples (filing a joint return). These numbers are up from $6,100 and $12,200, respectively. The 2014 standard deduction amount for heads of the household also increases, up to $9,100 from $8,950.
  • Personal Exemptions: The 2014 personal exemption amount rises to $3,950, up from $3,900. However, this phases out at $376,700 (for singles) and $427,550 (for married couples who are filing a joint return).
  • Earned Income Credit: The 2014 maximum Earned Income Credit rises to $6,143 for married taxpayers (who are filing jointly and have three or more qualifying children). This is an increase from the 2013 amount of $6,044.
  • Estate Exclusions: For people who pass away in 2014, the basic exclusion amount for their estates to descendants rises to $5,340,000. This is an increase from $5,250,000 for the estates of decedents for people who died in 2013.
  • Foreign Earned Income: The 2014 foreign earned income increases to $99,200. This is an increase from the 2013 amount of $97,600.
  • Alternative Minimum Tax Exemption: The 2014 Alternative Minimum Tax Exemption increases to $52,800 for singles and to $82,100 for married couples (filing jointly). This is an increase from the 2013 amounts of $51,900 and $80,800, respectively.

Provisions that Remain Unchanged

Despite the rate of inflation, some tax provisions remain unchanged. For example, the 2014 annual exclusion for gifts is $14,000 (the same as it was in 2013). Healthcare flexible spending arrangements (FSA) also stay at their 2013 level: the annual dollar limit on employer contributions to employer sponsored health FSAs remains at $2,500.

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Is Your Small Business Taking Advantage of Tax Deductions?

February 7th, 2014 — 12:57pm
small business taxes 300x199 Is Your Small Business Taking Advantage of Tax Deductions?

Is Your Business Taking Advantage of Credits & Deductions?

As a small business owner, this is the time of the year to begin thinking about the tax filing deadline. According to a study commissioned by the U.S. Small Business Administration (SBA), small businesses in the United States pay an effective federal tax rate of 19.8%. Sole proprietors pay the smallest effective rate of 13.3% while partnerships and Subchapter S Corporations classified as small businesses pay an effective rate of 23.6% and 26.9%, respectively.

Because much of the tax burden borne by small business is due to compliance with complex rules and filing requirements, as a small business owner you should look for any and all deductions you are eligible for in order to reduce your tax burden. There are many of deductions available; many of which were enacted through the Small Business Jobs Act of 2010. These include a deduction for the purchase of mobile telephones for the business, a health care tax credit for businesses with 25 or fewer employees, mileage expense deduction for vehicles placed in service for the business, work opportunity tax credits, and a startup deduction. 

Mobile Telephones Deduction for Small Business

If you purchased a mobile telephone for use in your small business, you are eligible to deduct the expense of the device(s) purchased on your small business tax return. This deduction, which was a part of the Small Business Jobs Act, is often ignored by small business owners, meaning that you may be leaving money on the table by ignoring this simple deduction. If you purchased a mobile device (which does not have to be a smartphone) and used it for any percentage of time in your business, you can take a proportionate usage deduction. 

Health Care Tax Credit

This tax credit–as opposed to the deduction that is available to small businesses– is a result of the Jobs Act and the Affordable Care Act. A credit is an amount that is used to lower the amount of taxes owed, while a deduction is an amount that is used to lower your taxable income. Both are valuable for small business owners, and the health care tax credit can provide a valuable benefit.

If you are a small business owner with 25 or fewer employees, you can take a credit of up to 35% of the premiums paid for any health insurance plan in place. Starting in 2014, the maximum credit increases to 50% of health insurance premiums paid by a small business owner. 

Mileage Expense Deduction

The mileage expense deduction is another often overlooked deduction that is easy for small business owners to take. If you use your car or any other vehicle for business purposes, as most small business owners do, you are permitted to deduct a percentage of the expense based on mileage. The mileage rates used to calculate the deduction are provided by the Internal Revenue Service, which in for tax year 2013 is 56.5 cents for vehicles used for business purposes. 

Work Opportunity Tax Credits

If you employ certain at-risk individuals or returning persons (those convicted of a crime), you are eligible for a credit. This program is an incentive of the U.S. Department of Labor to move certain individuals from dependency to self-sufficiency and provides a credit to a small business that ranges from $1,200 to $9,600. 

Startup Cost Tax Deduction

As a small business and particularly as one that commenced operation on or after October 22, 2004, you can take a startup deduction of up to $5,000 for any expense associated with creating the business. This deduction is available to your business provided that the total costs incurred are $50,000 or less. For startup costs that exceed $50,000, the deduction is reduced by the corresponding amount over $50,000, with a phase out of the deduction at $55,000.

For small business owners, saving money is important. Contact an R&G Brenner professional today to see if you can use a few of these tax deductions to cut costs, and use your funds for what matters most: growing your company

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15 Ways To Get Audited By The IRS

February 6th, 2014 — 12:08pm
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15 Ways to Get Audited

While there are reports circulating that the IRS’ budget has been slashed and audits are going down, there are still many sure shot ways you can get yourself audited by the IRS.  Forbes.com list the 15 most common ways to invite an Audit by the IRS:

Be Super Wealthy

This may seem like a “duh” moment. But the IRS finally is increasing the percentage of really rich people it audits, on the reasonable theory there’s a lot more potential to uncover big dollars owed. It even has special “wealth squads” looking at all their holdings.

Hide Offshore Accounts

It’s not illegal for U.S. taxpayers to have accounts in Switzerland or Hong Kong or some Caribbean island. It’s only illegal not to declare them or their income. Ask the ex-clients (some now convicts) of Swiss banking giant UBS.

Be a Tax Protestor

Let’s be blunt. The IRS simply does not like it when you claim you owe no taxes because the income tax is illegal or only applies to weird income categories that don’t apply to you. Such wacky theories landed actor Wesley Snipes in jail.

Claim Huge Charitable Contributions

Rules require complete before-you-file documentation of your gifts to nonprofits. The IRS’ use of correspondence audits, in which it demands you mail in the documents backing various deductions, makes claims of substantial contributions a tempting target.

Omit Some Reported Income

IRS computers are very good at matching all the little pieces of paper you get reporting your income with what you put on your 1040. These papers include employer W-2s and independent contractor, brokerage and bank 1099s.

Take a Big Home-Based Business Loss Every Year

The IRS presumes that a Schedule C business losing money three years out of five is not necessarily all that legitimate. You might have to produce evidence of a profit motive.

Claim a Loss On a Hobby

By definition, a hobby is not pursued for profit. But that doesn’t stop some taxpayers from trying to write off expenses for their dog showing, comic book trading or other “business.”

Use a Sleazy Tax Preparer

The IRS’ efforts to regulate all paid tax preparers were just shot down by a federal judge. But that doesn’t stop its ongoing campaign to ferret out and shut down the sleazy ones. When the feds get onto a tax pro playing fast and loose, his or her clients become easy target

Write Off Big Unreimbursed Employee Business Expenses

They’re only deductible beyond 2% of adjusted gross income. The IRS may use a by-mail audit to ask for back-up paperwork, thinking you are trying to write off ordinary work clothes, commuting costs and other not-allowed items.

Take Deductions In Round Numbers

The world is an uneven place. So if you file a tax return taking deductions ending in lots of zeros, the IRS might think you don’t have the required paper backup. You risk an audit by mail.

Make Math Errors

IRS computers are programmed to check your math. Returns with errors can invite scrutiny that might trigger more IRS requests for back-up information.

Brag A Lot

Laws require the IRS to pay minimum rewards for tips in cases that result in big collections. The neighbor overhearing your expansive claims may become a government informant.

Anger An Ex-Business Partner, Employee or Spouse.

They might blow the whistle on you too. And it’s possible they won’t do it just for the informant’s bounty.

Make Careless Mistakes

These can include not signing a return, leaving off your Social Security number or miswriting it. All are red flags.

Fail to File On Time or at All

The IRS has a special program that will generate a substitute return using W-2 and 1099 paperwork. Don’t expect it to allow your deductions.

Source: Forbes

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