Get the Most From Your Business Tax Deductions

The time to act is now. The sooner you file, the better you can take advantage and maximize your business deductions this year. This post will share the top 5 Business Tax Deduction Tips to take heed of.

1. Business Losses

Your business losses for the year can be deducted from your personal income, but only if you experience financial loss that exceeds your personal income for the year. Additionally, you might be able to use some of the year's company losses to decrease taxable income.

2. Keep Excellent Records

Make sure your bookkeeper has every single receipt for every business purchase. If you do the bookkeeping for your small business, you're responsible. Don't claim a business expense without receipts and proper documentation which prove this expense is for your business.

3. Always on a Separate Receipt

Keep your business and personal life separate, or you won't be able to make a business deduction. Never combine personal and business expenses on one receipt if you hope to make a deduction.

4. Bookkeeping Expenses

You can deduct the cost for payroll services, legal services, and fees associated with hiring tax professionals. (So, as the IRS sees it, you have no excuse not to hire a pro and get your taxes done on time. Watch out!)

5. Be Creative

You already know that you should never cheat the IRS; this is definitely not what I'm implying. Instead, I'm asking you to be creative and find loopholes in the rules to your advantage.

I've seen unexpected business expenses make it as tax deductions, such as an infamous example when exotic dancer "Chesty Love" took her case to the Supreme Court and won the chance to deduct the cost of her breast augmentation.

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For more loopholes or "legal tax cheats" when it comes to maximizing tax deductions, check out my article on Get Rich Slowly.

One Year Update on the IRS Terrorist Attack

Rebuilding continues one year after tax protester Andrew Joseph Stack III flewe his Piper Dakota plane into a building an Austin Texas IRS Building. Today is the first anniversary of this tragic event.

The IRS commissioner had the following to say about the tragic Austin Plane Crash:

Like most Americans, I am shocked by the tragic events that took place in Austin this morning. This incident is of deep concern to me. We are working with law-enforcement agencies to fully investigate the events that led up to this plane crash.

My thoughts and prayers go out to the dedicated employees of the IRS who work in the Austin building. We will immediately begin doing whatever we can to help them during this difficult time.

While this appears to be an isolated incident, the safety of our employees is my highest priority. We will continue to do whatever is needed to ensure our employees are safe.

The Painful Aftermath: 

The office building that was destroyed by the plane crash is still being repaired, and new tenants will move in at the end of the year. The tragedy is not over for the family of Vernon Hunter, the 68-year-old IRS manager who lost his life in the crash, or for the 13 people who were injured (2 critically injured) in the crash.

There's Always a Way Out:

 In his suicide note, Joseph Stack detailed his problems with the IRS. He was incredibly frustated witht he government, he felt like he had no way out. I want anyone who owes the IRS to know there's always a way out. There are programs that can help you, and there are people that cane help you. Never give up. Remember, if you need me, I'm just an e-mail away.

How to File Your Amended Tax Return

Don't panic when you discover a mistake after your tax return has already been filed. You have the opportunity to correct it by filing an amended tax return.

  
The IRS May Have Done the Corrections FOR You:

The IRS service center automatically corrects math errors on your tax returns, and may even accept your return if you've left out required forms and schedules. Don't amend your return in these instances.

 How to Amend Your Tax Return:

You'll use IRS Form 1040X, Amended U.S. Individual Income Tax Return to correct your previously filed Form 1040, Form 1040A, Form 1040EZ, Form 1040NR or Form 1040NR-EX forms.

If You Are Filing to Claim an Additional Refund...

The IRS wants you to wait until after you've received your original refund. They say you can go ahead and cash the check.

If You Owe Additional Taxes for the Year...

You need to file Form 1040X and pay that tax before the deadline, April 15th. Form 1040X's instructions includes a list of IRS service center addresses where you can drop off the amended return.

Using IRS Form 1040X to File an Amended Tax Return: 5 Easy Steps

1. File a separate Form 1040X for each tax year you amend, and mail them in their own envelopes. Don't forget to write the year being amended on the form.

2. File Form 1040X within 3 years of the date of your original return, or 2 years of the date you paid the tax. The sooner, the better.

3. Attach copies of forms or schedules being changed to Form 1040X, including any W-2s received when you filed the original return.

4. An amended return can't be e-filed, but you can get the tax form on irs.gov or by calling 800-829-1040.

5. It normally takes the IRS 8 to 12 weeks to process your amended tax return, so be patient.

Work now to correct any mistakes you may have made on your tax filings this year. The sooner you get to work and fix it, the sooner you can receive your tax refund or feel at protect from aggressive IRS actions.

Moms Roared, IRS Listened: Breast Pumps are Now Tax Deductible

A couple of months ago I wrote about how the IRS Says "Hello No!" to Breast Pumps. Basically, they said breast-feeding did not have enough health benefits to qualify as medical care. In the end, moms let the IRS have it. (Which, as anyone with a mom knows, they are prone to do.)

In the end, the IRS had a change of heart and concluded with the following:

That breast pumps and supplies that assist lactation are medical care under §213(d) of the Internal Revenue Code because, like obstetric care, they are for the purpose of affecting a structure or function of the body of the lactating woman.

 Therefore, if the remaining requirements of §213(a) are met (for example, the taxpayer's total medical expenses exceed 7.5 percent of adjusted gross income), expenses paid for breast pumps and supplies that assist lactation are deductible medical expenses. Amounts reimbursed for these expenses under flexible spending arrangements, Archer medical savings accounts, health reimbursement arrangements, or health savings accounts are not income to the taxpayer.

Final Words: This example shows the power of your voice when it comes to IRS rules and regulations. Don't be silent if you don't like what the IRS has to say about what is tax deductible, and what isn't. Speak out.

Get the Answers to Your Tax Time Questions

Tax talk is all over the media. If you owe the IRS, it's a painful reminder of your tax debt burden. Below I've compiled the answers you need for your common tax time questions.

How can I prevent the Tax Lien the IRS has threatened to issue on my credit report?

Most people don't know this, but a Tax Lien can be placed on you as early as 10 days after being notified you owed the IRS. It's a default. What you can do to prevent or remove your Tax Lien is:

-Pay your debt in full before the tax lien is made public
-Pay your debt in full in monthly payments
-Request a temporary removal of the tax lien.*

*This is very rarely allowed. Prove that removing the lien would help you pay the IRS (by allowing you to get a loan or a job).

I truly cannot afford to pay the IRS. My situation is dire, what can I do?

If you truly have funds to pay the IRS, you could qualify for "Currently Not Collectible" status, which halts IRS collections until you're able to pay.

Most people think they can't pay the IRS, when they actually can. If you can cover your basic necessities (food, water, rent, utilities, transportation to work) with money left over, the IRS will want that extra cash.

Should I get professional help to file my taxes or solve my tax debt problems?

Yes. I can recommend this honestly and wholeheartedly, when you're in over your head, you need to work with a professional to file your taxes or resolve your tax debt problem.

Even if you decide to solve your tax case on your own, it's wise to consult a professional for advice.

Do you think I'll qualify for an Offer in Compromise (OIC)?

I've said it before and I'll say it again, very few people ever qualify to settle their debt with an Offer in Compromise.

The IRS only allows you to settle if there's no way for you to repay your tax debt before the statute of limitations on your debt expires. Avoid this extensive process, chances are high you do not qualify.

What can I do to remove or reduce this debt?  

Many people are desperate, they want a way to quickly remove their tax burden. I have to be blunt, there are no easy answers. In almost every case, you simply have to face the music and start paying on your debt.



Still have questions? If you had IRS related questions for me, send me an e-mail and I'll get back with you. I never mind your questions, and I'm always ready to help point you in the right direction.