Tax deductions/writeoffs

[bucketmouth64]

Tis the season for paying to/receiving from Uncle Sam. I thought it might be a good idea to share tax write offs or deductions especially for those who are fishing/hunting guides. Share some of your "secrets" and maybe some lesser known writeoffs so we all can benefit. I'll share a few for now. I learned a new one from my tax guy that I didn't know about:

1.Mileage between your first and second job can be written off.

2.If you use your personal cell phone at your job even just once you can write off the monthly plan cost.

3.Laundering costs can be deducted for work clothing even though you do your laundry at home.

4.If unemployed round trip mileage to interviews, job fairs, and to stores if you buy things like resume' paper, printing of resume'.

5. Don't forget that mileage reimbursement went up mid year in 2008. If your employer didn't go up with the change you can deduct the difference.

6. Don't forget to check to see if you qualified for a property tax refund last year. Still not too late.

[BobT]

Tis the season for paying to/receiving from Uncle Sam. I thought it might be a good idea to share tax write offs or deductions especially for those who are fishing/hunting guides. Share some of your "secrets" and maybe some lesser known writeoffs so we all can benefit. I'll share a few for now. I learned a new one from my tax guy that I didn't know about:

1.Mileage between your first and second job can be written off.

2.If you use your personal cell phone at your job even just once you can write off the monthly plan cost.

3.Laundering costs can be deducted for work clothing even though you do your laundry at home.

4.If unemployed round trip mileage to interviews, job fairs, and to stores if you buy things like resume' paper, printing of resume'.

5. Don't forget that mileage reimbursement went up mid year in 2008. If your employer didn't go up with the change you can deduct the difference.

6. Don't forget to check to see if you qualified for a property tax refund last year. Still not too late.

I wouldn't be so sure about Item #2. My understanding of the tax code would allow you to calculate your percent of business use and deduct that amount of the cost, not the entire month. Don't forget, the calculation would include the cost of the phone as well and not just the monthly rates.

For item #3 as with any deduction, you'll have to be prepared to justify the cost. In other words, be able to show how you arrived at the expense and validate it. Just saying you had an expense doesn't make it so.

Bob

[Biggerfish]

Bob T is right on the money with #2....This has been a big issue lately and the IRS is cashing in on it. Several big companies have had the their bills of the company phones reviewed and have ended up paying a large sum for the personal calls/minutes. I don't agree with it....

Another write of may be your home office.

[BoxMN]

Do you guys know how it might affect you if you use a portion of your home for a home office and then sell your home? I do, and it is 100% legit, but I believe there is something that can bite you if you would end up selling your home within 5 (??) years of claiming a home office. I.e. depreciation?....

I am contemplating a move in the next few years, and wondering if it might be worth it to stop using my home office for tax purposes. It really doesn't save as much as people think, but does help.

Thanks.

[bucketmouth64]

[Biggerfish]

Boxmn,

From what I was told you do not want to depreciate it......then what you stated may be true

If you write off it(home office) would only be a percentage of your internet(100 % if only reguired for work), electric, heating, and even possibly snow removal etc. Not your mortgage payment.

Don't use this as rule, but rather ask a accountant.

[BobT]

Somebody correct me if I'm wrong but are we not held accountable for our claims and not the tax preparer?

Hypothetical:

The tax law says that if I use my home phone for business, I am allowed to calculate the percent of business use and deduct that percentage of my monthly phone access fees, taxes, etc. as a business expense.

I hire a "tax preparer" to file my income tax and the tax preparer incorrectly tells me that I can deduct my entire phone access fees, taxes, etc. and not just the business use percentage.

IRS happens to pull my taxes out of the pile for audit and discovers the error.

End Hypothetical.

Is the tax preparer liable for the error or am I? In other words, is the tax preparer responsible to pay the interest and fines imposed?

What if I hire a CPA instead of a tax preparer? Since they are bonded are they liable?

Bob

[BoxMN]

Hey Biggerfish,

That makes sense. I do not depreciate it, just the percentage. I also don't use the phone bill or internet, as I expense those things elsewhere. So essentially I am using 12% (my office size, I live in small house...) of utilities, tax, mortgage.

I did talk to CPA (friend) about this soome time ago, but can't really recall all the info now. I know he does claim his and one for his wife's business as well. I just recall something about when it comes time to sell your house. I will have to talk to him again to be sure.

Bob, I think you are right, but I am not sure either. I always do my own, so it is on me either way I always do ask questions to my friend (CPA) if I have some thing funky in that year. I actually had him do my taxes last year to be sure after we sold some rental property, and he was surprised that my first effort came out the same as his did (though I had a couple items in different areas than he did). That made me feel a bit more confident in my prior years

[CatfishBanker]

I am pretty sure real estate depriciation is 2.3% on a 39 year schedual. You would have to pay taxes on the gain of sales price less depriciated value upon sale.

One good thing to do right now[last year] is wash out your investment losses. Exchange a mutual fund that lost value for a simalar one in the same family or sell a stock at a loss to offset the gain from selling another one. You can deduct 3k per year and carry the rest forward indefinatly.

[jigginjim]

When I started my guide service, 2 major things to have in your corner. #1 A good lawyer, to safe guard you and your assets.

#2. A very good CPA, to help steer your taxes, and insure you make a profit. Your going to pay taxes either way. Keep it legal.

Either way you must show enough profit, to justify your service. I have seen several outfits go under. You can't lose or write off to much, the IRS will begin to real look at your bizz.

[BobT]

That's good advice, jigginjim. One common misconception is the idea that a business is required to turn profit every so many years. This is not true. What a business is required to do is show an honest effort to produce profit. Some new businesses can take a number of years before actually generating profit because it may take a lot of reinvestment into the business to get it going, especially if gettting started on a tight budget.

If you're claiming business deductions the IRS is watching you to be sure you're not just sitting on your assets and claiming losses.

Something to keep in mind.

Bob

[tcsprtsmn]

#2 is wrong. Only business use percentage.

Tax Accountant