by Linda Beale
It’s Almost April so Tax Tips Are Flowering
You can tell when it is getting close to the April filing deadline for individual calendar-year taxpayers. All of the major tax firms release their “handy tax tips” to entice new clients for this tax season.
The American Institute of CPA’s handy tips (released Mar.1, 2012) include some helpful reminders that taxpayers should claim deductions they are entitled too but shouldn’t be piggy and claim deductions–like the home office deduction–that they aren’t entitled to.
- Expenses. “Keep a daily diary.”
- Deductions. Take advantage of all of the deductions to which you are legally entitled. “The most common deductions for small business owners include entertainment, travel, meals, capital assets, home office and health insurance. Travel miles, meals and entertainment deductions require that you maintain a diary with daily entries that tie into receipts and other records.”
- Traps. “[C]laiming deductions that exceed your income for more than one year is a definite red flag. The home office deduction, which is allowable only under specific circumstances, may be another red flag.”
- Retirement. “income each tax year to qualify for a tax-deductible retirement plan.”
- Equipment. “For tax years beginning in 2011, a small business may deduct up to $500,000 in equipment purchases as long as the business spends $2 million or less for equipment for the year.”
- Payroll. “One of the most common and costly tax-related problems for small business owners is that they use the payroll taxes withheld from employees to finance business operations. Not only does the IRS often go after a small business owner’s personal assets to collect the unpaid payroll taxes, but also it may attempt to assess significant penalties.” In other words, those taxes you’ve withheld aren’t your money to spend–you are collecting on behalf of the government and must turn them over.
- Insurance. “If you have health insurance coverage for your employees, check to see if you are eligible for the small business health care tax credit. The IRS website has a page describing the credit, eligibility requirements and how to claim it. ”
- Veterans. There’s a credit for employers who hire veterans. The IRS website has details.
- Contributions. “Be sure to get a valuation for any non-cash items your business donates to charity”
- Help. “If you are unsure about anything related to your tax obligations under the law, you should seek professional help “
crossposted with ataxingmatter