Tag: IRS tax tips

Lifestyle Audits. A thing of the past?

Lifestyle Audits. A thing of the past?

The word “audit” is enough to raise anyone’s blood pressure. If the IRS agent then tells you they want to see bank accounts and personal records you may need a heart monitor. Should this happen to you, you could be in a process known as a lifestyle audit. Background The lifestyle audit was a tool used by auditor’s to ascertain…

Read more

Tax planning is good for corporations too

If you own a calendar-year corporation, you can benefit from planning moves you make before December 31.  For example, corporations can accelerate or defer income or deductions to stay within a certain tax bracket.  You’ll also want to look at your corporate alternative minimum tax exposure to determine whether you qualify for an exception to the tax.  Finally, reviewing estimated…

Read more

Back to school? Check this tax credit

If you or a member of your family is off to college this fall, you may be eligible for the American Opportunity Tax Credit.  Eligible students may take this credit for the first four years of higher education.  The credit can be up to $2500 annually.  Expenses that qualify for the credit include tuition, fees, and related expenses. Forty percent…

Read more

A Quick Recordkeeping Guide

Is your cabinet overflowing?  Do you hesitate to purge tax information because you’re not sure what to keep and what to discard?  Here’s a quick guide to help you cut through the clutter. Expenses.  Substantiation for deductions includes charitable donation acknowledgments, receipts for employee business expenses, and automobile mileage logs.  Retain these at least seven years after you file the…

Read more

Business Tip: Don’t sell property; exchange it

A tax-deferred exchange is a tax planning technique which should be considered by any taxpayer that is relocating or disposing of property.  Often referred to as a “tax-free exchange,” the tax-deferred exchange allows you to exchange certain business or investment property for other “like-kind” business or investment property and pay no income taxes currently.  Your tax liability is deferred until…

Read more

Don’t overlook above-the-line deductions

Even if you don’t itemize deductions on your tax return, you may be entitled to certain “above-the-line” deductions.  These deductions are subtracted from your income to arrive at your adjusted gross income, an important number because it determines your qualification for certain tax credits and various tax breaks.  Above-the-line deductions include such things as IRA contributions, health savings account contributions,…

Read more

Summer job tax tip

If your child has a summer job, consider opening an IRA for him or her.  According to the tax rules, anyone under age 70 1/2 who has earned income can contribute to a traditional IRA.  There’s no age restriction for Roth accounts, though the amount of the contribution phases out at higher income levels.  The advantage of a Roth over…

Read more

Midyear tax planning tip

Take time this summer to examine your investment portfolio for potential tax savings, such as selling stocks that are worth less than you paid to offset your capital gains.  You might also donate appreciated stock that you have held for more than one year to charity and avoid capital gains altogether – plus getting a deduction for the stock’s fair…

Read more

IRS launches new “misclassification initiative”

How you classify your workers – as “independent contractors” or “employees” – matters a great deal to the IRS.  The IRS is aware that employers prefer to treat workers as independent contractors to avoid paying fringe benefits and payroll taxes.  The IRS estimates that 80% of workers who are classified as independent contractors are actually employees.  About 100 new auditors…

Read more

Summertime tax tip

If you itemize your deductions, you can deduct the mortgage interest and property taxes paid for your vacation home.  A boat or RV can qualify as a vacation home if it has sleeping quarters, cooking facilities, and a bathroom.  If a retreat also serves as rental property, you can control your tax deductions by changing the number of days you…

Read more

IRS Impostors Phishing for Personal and Financial Information: Report them immediately

It is important to be aware of pop-ups or emails ‘phishing’ for personal information. They are transmitted electronically and done so very easily. You may even receive a text, SMS message or a personal message through social media platforms. These false requests are daily occurrences and are sent in hopes to lure innocent victims into disclosing personal and/or financial information.…

Read more