Category: Taxes
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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…
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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…
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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…
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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…
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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…
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PA unreimbursed business expense deduction creates an audit risk
For he past few years the Pennsylvania Department of Revenue aggressively audited the tax returns of individuals who took a deduction for unreimbursed employee expenses on Schedule PA-UE. The topic was covered by the Pittsburg Tribune in June 2014. My quick online poll of professional tax preparers last summer indicated that the audit rate was near 100% of…
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Help for last-minute tax filers
These final 20 day of tax season can be stressful on taxpayers and tax preparers. I will work at least 14 hours a day in order to meet my own work deadlines and contribute to the workload of other tax preparers. Yet it makes sense for a young accounting practice to reserve time for new…
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Homeowner tax credits for energy efficient upgrades
Have you overlooked a small tax credit? The IRS offers two types of tax credits to homeowners in 2015 and 2016: the Residential Energy Efficiency Property Credit and the Nonbusiness Energy Property Credit. The first applies only to solar and renewable energy systems and is not discussed in this article. The second type of tax…
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Beware of these tax penalties
Yesterday my attention was drawn to several small business tax penalty issues. 1099-MISC Several situations came to my attention where small businesses and especially home-based businesses are not aware of their requirement to file form 1099-MISC for payments they made last year. Heed this basic rule: If your business pays $600 to an individual or…
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Why tax rates will be higher
We should recognize that tax rates for the wealthiest individuals and corporations will be higher in the future than they are today. I stirred up a handful of comments yesterday on Wall Street Journal social media about the future of income tax rates. Some people apparently think that higher income tax rates are not possible…