Category: Taxes
-
The worst mistake a business owner can make
The worst mistake a small business owner can make is to pay employee wage taxes that were withheld from employee salary. The second worst mistake, in my observation, is to try to handle the problem yourself. I see cases where the business owners or managers are damaged for more than a decade as a result of mishandling…
-
Tax planning for young high income individuals
Our tax system is designed to limit the tax reducing opportunities for high income individuals. The higher our income, the more difficult it it to reduce our taxes through traditional tax planning tools. First, to help frame the discussion, I use the term “tax efficiency” rather than “tax savings”. The difference is subtle but better…
-
IRS admits erroneous tax penalties
IRS announced today that a software error is causing some small business taxpayers to receive a tax penalty notice for late filing and payment of second quarter payroll taxes. IRS is working to resolve the issue and it will correct the erroneous penalty assessments in the near future. Those affected will receive correspondence when the…
-
A change to my income tax service agreement
IRS knows that if five different tax professionals prepare the same moderately complicated income tax return, there will be 5 different returns with 5 different outcomes in terms of the amounts of income tax liability. IRS also knows that it will receive at least 4 of these 5 submitted returns as filed and accepted tax…
-
How to get a copy of your tax return
If you need a copy of your tax return the fastest, easiest, cheapest solution is to order a transcript from IRS. This is free but delivered only by mail for security reasons. Put in an online request at https://www.irs.gov/Individuals/Get-Transcript . A transcript is a printed version of the electronic data contained in your tax return. It is formatted differently…
-
How to deduct 98% of your cell phone bill
A few months ago during tax season I wrote about how changing wireless phone billing practices are having an impact on income tax preparation practices. But I did not realize the extent of that change – and how it directly applied to me – until now. I concluded that I can legitimately deduct 98% of…
-
Now that you’ve filed your tax return
Now that you’ve filed your tax return, here are three simple tips that can make the next step go smoothly: 1) The IRS does not call you to verify or request information before sending your tax refund. If you receive such a call it is a scam. 2) IRS will begin sending notices to many of…
-
Do I have to file a Philadelphia income tax return?
I had two people ask me this week “Do I have to file an income tax return in Philadelphia?” The city is clear in this statement on its web site: “If you are paid by W-2, confirm that your employer is withholding the City Wage Tax. If they are you have no filing obligation with…
-
A better way to take a home office deduction
IRS and state tax authorities allow taxpayers to deduct expenses for areas of their home used exclusively for a home office. But there are downsides and risks to taking the deduction. Those disadvantages include: Part of the sales price of the home may eventually become taxable (most home sales are otherwise non-taxable) Detailed accounting records…
-
Tax deductible employee business expenses
The basics of an often-misunderstood tax topic If you are an employee with expenses related to your job, these expenses are not taxable income. If your employer reimburses these expenses separately from your wages then these amounts are not taxed and you need to take no further action. But if the amounts were included in your…