One of the areas of your tax return at which the IRS looks most closely is the section covering car deductions. There’s a reason for this: it’s a difficult set of tax laws to navigate and many people over-deduct or use sloppy estimates, resulting in more money for the government when they catch you. You don’t need receipts for everything, since it’s difficult to get receipts for things like mileage, but you do need detailed records of everything.
Car deductions are easy if you have a company car. In this case, you can just deduct the whole shebang. … Read more »
Most everyone knows that there are certain common parameters that make you more likely to get audited by the IRS, such as:
making more than $100,000
having low income and high expenses
claiming high deductions for meals and entertainment, travel, and car expenses
being self-employed and/or claiming a home office
holding a mostly cash-income job, such as waiting tables or bartending
But did you know that the IRS actually uses a very strict formula to determine most of the tax returns that get scrutinized? It’s called the “DIF Score,” (Discriminate Income Function) and while the actual formula is very closely guarded secret, … Read more »
If you’re like me and you have the smallest of small businesses (i.e. the home office), you’re probably hoping to take a nice, juicy deduction for the portion of your rent and utilities that goes towards supporting your home office. Do you want the good news or the bad news first?
Alright, first the bad news: if the income you made working for yourself is less than your total expenses for the year, including the home office portion of your rent and utilities, you cannot take this deduction. In other words, the IRS will not let you deduct the … Read more »
It’s that time of year again. Time to sort through your shoe box of receipts in preparation for the tax man. As I hack my own path through the jungle of deductions, I’ll be sharing the little truffles of information I dig up along the way. (Oh c’mon, that metaphor was awesome).
Here’s the first: did you know that you can deduct things you use for your business that you bought long before you even had a business? It’s true. If you bought a bookcase for your living room three years ago and this year it migrated … Read more »