Commuting to School? Keep the Tax Meter Running | Tax Tip of the Week | No. 59 September 22, 2010
Posted by bradstreetblogger in : Deductions , add a comment
If you drive to college classes, your commuting expenses are an often overlooked deduction. For 2010, you can use the standard mileage rate of 50 cents per mile plus tolls and parking fees for education-related travel.
You can also deduct the transportation expenses incurred between your workplace and school if you go directly to school after work. Also, the cost of transportation from school to work is deductible if you attend school early in the day and go from class to work.
Here is the fine print:
- The classes you attend must be to enhance or promote your current career or profession. Classes to help you start a new career or profession do not qualify. For example: a teacher attending classes for a Masters in education would qualify. A student taking undergraduate classes would not qualify for the transportation deduction.
- You must be able to itemize your deductions.
- These transportation deductions are Miscellaneous Deductions subject to a 2% floor.
If you are taking classes this year be sure to keep track of your mileage. It may pay off on your next tax return.
As always, give us a call if you have any questions.
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our web site.
Rick Prewitt – the guy behind TTW
…until next week.
The Gift of Giving – Understanding the rules on taxes | Tax Tip of the Week | No. 58 September 15, 2010
Posted by bradstreetblogger in : Tax Tip , add a comment
In our current economic times, it can be difficult to choose how to spend your charitable dollars. If you can take advantage of the tax benefits while supporting a charity or organization, you should be aware of the following.
- A charitable contribution is a donation or gift to, or for the use of, a qualified organization. It is voluntary and is made without getting, or expecting to get, anything of equal value in return. For example, a donation of $25 while receiving a $5 item of value (ticket, admission, etc.) results in a $20 contribution, not a $25 one. Your receipt from the organization should state whether or not anything of value was received in conjunction with the donation.
- An organization must qualify with the IRS for charitable purposes. Some of the most common organizations that qualify include: Churches, synagogues, temples, mosques and other religious organizations; nonprofit schools and hospitals; public parks and recreation facilities; war veterans groups; Salvation Army, Red Cross, Goodwill, Boy and Girl Scouts; etc.Non-qualifying groups include: civic leagues; social and sports clubs; labor unions; chambers of commerce; foreign organizations (some exceptions); lobbying groups; homeowner’s associations; individuals; value of your time or service; cost of raffle, bingo or lottery tickets and several others.
- To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A. The amount of your deduction may be limited if certain rules and limits apply to you. You must keep records to prove the amount of the contributions you make during in the year. The kind of records you must keep depends on the amount of your contributions and whether they are cash, noncash or out-of-pocket expenses while donating your services.Note: any charitable deduction you claim in excess of $250 requires that you have a written acknowledgement notice issued by the charitable organization.
For more information you can refer to IRS Publication 526 or give us a call.
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our web site.
Linda Johannes – this week’s author
Rick Prewitt – the guy behind TTW
…until next week.
Is QuickBooks Helping the IRS Audit Your Books? | Tax Tip of the Week | No. 57 September 8, 2010
Posted by bradstreetblogger in : QuickBooks, Tax Tip , 1 comment so farPreparation is key if you are audited
Editor’s Note: First part of this Tax Tip is for general knowledge. Experienced QuickBooks users may want to read this Tax Tip until the end.
In the past, an IRS agent would request printed reports and back-up paper documents during an audit. There is now the possibility that they will request an actual copy of your QuickBooks file – not just your printed general ledger. The IRS recently purchased several thousand QuickBooks licenses in preparation of up-coming audits.
According to the National Association of Tax Professionals, IRS auditors are now being instructed to obtain a copy of the taxpayer’s QuickBooks data file for audits for any taxpayer that uses QuickBooks. If the taxpayer refuses to provide the file and the auditor deems it necessary, they can issue a Summons for the file!
Government agencies are in desperate need of money, so they will be scrutinizing your records more than ever – keep it clean!
Give us a call if you have general or specific questions about increasing audit activities.
For Experienced QuickBooks Users:
Here are some things you need to keep in mind:
1. In the newer versions of QuickBooks, you CANNOT turn off the audit trail. Therefore, once you enter it in QuickBooks, it is NEVER gone. You can’t undo it. So use caution as you enter things and forget about delete.
2. When you need to void a transaction make sure you memo why you voided it. Did the customer refuse to pay the invoice, did you give away the product, did the bookkeeper double enter something? Put a memo because you won’t remember in a few years why you did it.
3. DO NOT MAKE CHANGES TO TRANSACTIONS IN A CLOSED FISCAL PERIOD. If your taxes for last year have been prepared – don’t make changes to that information. If you do, it won’t match what was filed with the state and federal government and will present an issue should an audit be performed. Prevent changes by setting the closing date password under Edit>Preferences>Accounting>Company Preferences>Set Date/Password. Check your closing date exception report (on accountant versions of QuickBooks only) or have your bookkeeper and/or accountant pull that report for you.
4. At your year end, consider making a copy of your QuickBooks data file and keeping it permanently as a “final backup” so that if a certain year is audited, you can condense prior years’ data and there will be no future years’ information in the data file for the auditor to see. The auditors are instructed to review only the information for the year under audit, but why not make it possible for them to ONLY see the year in question.
As always, you can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our web site.
Rick Prewitt – the guy behind TTW
…until next week.
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The Government Doesn’t Want Your Check Anymore! | Tax Tip of the Week | No. 56 September 1, 2010
Posted by bradstreetblogger in : Electronic Tax Filing, Tax Tip , add a commentGoing Electronic in 2011
Consistent with a Financial Management Service initiative announced in April, 2010, the IRS has issued proposed regulations to significantly increase the number of electronic transactions between taxpayers and the federal government. These proposed regulations would eliminate the use of coupons to make tax payments. Instead, payments starting after December 31, 2010 would need to be made through the Electronic Federal Tax Payment System (EFTPS). The proposed changes would affect both business and individual tax payers. Business owners would need to pay their corporate taxes, excise taxes and payroll taxes via EFTPS. Individual tax payers will need to use EFTPS to make any estimated quarterly tax payments. Per an IRS spokesperson, “Using EFTPS to make federal tax deposits provides substantial benefits to both taxpayers and the government. EFTPS users can make tax payments 24 hours a day, seven days a week from home or your office.”
Information on EFTPS, including how to enroll, can be found at www.eftps.gov.
Additional information can also be obtained by visiting:
* Pay Taxes Online: Publication 4132
* The Secure Way to Pay your Federal Taxes: Publication 966
We will keep you posted when the final regulations are written, but it looks like we are going to need to learn a new method for paying our federal taxes. As always, you can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our web site. Rick Prewitt – the guy behind TTW …until next week.
