For numerous businesses and individual entrepreneurs, one of the most valuable deductions is the automobile allowance. This deduction permits you to reduce your income based on the expenses you incur when using an automobile for business purposes. Here are a few tips on deducting the business use of an automobile.
Know what business mileages are deductible.
In general, you can deduct expenses for cars, pickup trucks and SUVs that are used in the course of your business. However, you cannot deduct expenses related to the use of vehicles for hire or vehicles that qualify as equipment, such as dump trucks. Continue reading
You may have done nothing wrong. But the prospect of an IRS audit makes everyone sweat.
Many things probably go through your mind as you’re preparing a tax return or looking at one that’s been completed for you. Did I declare all of my income? Are all of the deductions I claimed legitimate? Do I have the required background documentation in case I get audited?
Even if everything is in order, you may still be selected for additional scrutiny by the IRS. Some IRS audits are entirely random. You may be chosen as the result of computer screening or based on a statistical formula. Other triggers include: Continue reading
Anyone who collects tips must include them in their taxable income. This requirement is not limited to waiters and waitresses; it applies to anyone who collects tips, including taxicab drivers, beauticians, porters, concierges, etc.
Tips are amounts freely given by a customer to a person providing a service. They are generally given as cash, but they include tips made on a credit or debit card or as part of a tip-sharing arrangement. Continue reading
If you have already filed your tax return and overlooked an item of income or forgot to claim a deduction or credit, it is not too late! An amended return can be filed to correct an already filed tax return. Failing to report an item of income will most certainly generate an IRS inquiry, which typically happens a year or more after the original return was filed and after the interest and penalties have built up. Therefore, it is best to file an amended return as soon as possible to avoid the headache of IRS correspondence and to minimize the interest and penalties on any additional tax you might owe.
On the flip side, if you overlooked a significant deduction or tax credit and you have a refund coming, you certainly don’t want that to go by the wayside.
The solution is to file an amended return as soon as the error or omission is discovered. Amended returns can also be used to claim an overlooked credit, correct the filing status or the number of dependents, report an omitted investment transaction, submit information from delayed K-1s, or anything else that should have been reported on the original return.
If the overlooked item will result in a tax increase, penalties and interest can be mitigated by filing an amended return as soon as possible. Procrastination leads to further complications once the IRS determines something is missing, so it is best to take care of the issue right away.
Generally, to claim a refund, an amended return must be filed within three years from the date the original return was filed or within two years from the date the tax was paid, whichever is later.
If any of the above applies to your situation, please give this office a call so we can prepare an amended tax return for you.
While running your small business, you’re going to come across some problems, both big and small.
According to Bloomberg approximately eight out of 10 businesses fail within their first 18 months, these problems may make your heart skip a beat or two. If you’re dealing with major challenges with your small business or constantly experiencing the same minor ones, you need to determine the source. Continue reading
Business Filers; Schedule C, Schedule E, Schedule F, Form 1120S, Form 1120 and Form 1065 filers have been required to file Form 1099 for many years and are required two answer the following questions when we prepare your tax return:
- Did you make any payments in 2015 that would require you to file Form(s) 1099? If “Yes”,
- Did you or will you file all required Form(s) 1099?
Unless you get pleasure from poring through complicated tax language or performing complex calculations, managing your small business tax responsibilities is no fun.
Odds are, you didn’t start your business so you could spend countless days working on tax preparation, trying to obtain your forms in order, making sure your numbers add up and praying you don’t get audited. Still, small business taxes are a fact of life. They simply can’t be avoided – at least not if you want to stay in business. Continue reading
Starting in tax year 2016, the de minimis safe harbor limit for small business taxpayers who do not maintain an applicable financial statement will increase from $500 to $2,500, the IRS announced on Nov. 24. This is great news for small businesses owners.
The tangible property regulations, often referred to as “repair regulations,” Continue reading
According to the IRS “S corporations must pay reasonable compensation to a shareholder-employee in return for services that the employee provides to the corporation before non-wage distributions may be made to the shareholder-employee.”
What if your Reasonable Compensation is challenged? There are two ways to survive an IRS Reasonable Compensation challenge. The first is a proactive strategy, getting all your ducks in a row ahead of time so you are prepared if the Reasonable Compensation figure is challenged. The second is a desperate last-minute struggle to defend a Reasonable Compensation figure that might not have any basis in reality. Continue reading
You can deduct travel expenses related to your business activities. However, the Internal Revenue Service can summarily disallow travel expenses if documentation rules are not followed. So it is important to understand these rules and to keep the required documentation to get the tax deductions you are entitled to. Also, if you understand the rules, Continue reading