SECRET TAX TIP #4

Even Small Deductions Can Add Up To Big Tax Savings!

Don’t forget the “de minimis” fringe benefits for maximum tax savings.  Did you know that the tax code allows you to deduct for things such as (a) tickets to theatres and sporting events, (b) cocktail parties for employees and guests and (c) the holiday gifts you give?   Although these expenditures may not seem large, they can really add up!

Again, the reason most American’s do not take advantage of these kinds of “tax breaks” is they do not have a simple system to follow.  No, I did NOT say complex.  If tracking your tax deductions throughout the year is complicated, you won’t do it.  So choose any system you want, just make sure it is right for you, your lifestyle and your personality.  If you are a detailed person who likes to track expenses and you love technology gadgets, then you’ll go about choosing a monthly tax deductions organizer differently than someone who has a hard time balancing their check book. 

The problem is not the system you choose.  The problem is continuing to believe a bunch of little deductions will not add up to big tax savings.  They do and if you need to throw a wad of cash down your toilet this month to help you experience the pain wasting money, please do so.  But, if you rather not, then start tracking those tax deductions and watch the net gain back to you add up big time come tax time!

SECRET TAX TIP #5

“EAP” Offers Tax Relief Through Your Employees!

Use an Education Assistance Plan (“EAP’) to get a $5,250 deduction per employee and reimburse your employees for their college education expenses.  With an EAP you can also take the same deduction and help pay for your child’s education.  

Look, this is definitely a win / win proposition.  The people who work for you and represent your business get more education and you get to write off for over $5,000 per employee!  And what is the down side?  Well, what if your employees need more education and you need more tax deductions?  If you don’t use a EAP, sounds like to me you are in for a double whammy!

Running a small business and trying to keep up with all the tax regulations and new IRS codes is no joke. Mess this up and you’ll have to pay big penalties, not to mention possibly suffer through a business ending IRS audit!

Let me introduce myself. My name is Bernadette and I run my own small business, too. However, in my business I specialize in knowing the VERY complex tax code we are all required by law to follow. Yes, understanding how to properly send (or receive) money to Uncle Sam by filling out certain specific forms at certain specific times is an ugly business, but someone’s gotta do it!

Truth be told, I actually LOVE helping regular middle to higher income folks minimize tax dollars so you keep more of YOUR money in your pocket! Plus, I really enjoy giving taxpayers real peace of mind, especially small business owners who have to deal with taxes year round, not just on April 15th! You should not have to live or run your business with the constant distraction of Uncle Sam looking over your shoulder month after month after month….

TAXES … Not Much Fun Dealing With The IRS Alone!

New Tax Laws and Regulations … Compliance Issues …Local, State and Federal Taxes … Quarterly Estimated Taxes … Payroll Taxes …Sales Tax … Unemployment Taxes … Personal Property Taxes … Personal and Business Tax Returns …and on and on – WHAT A BUREAUCRATIC MESS!

SECRET TAX TIP #1

“MERP” Offers Tax Benefits For Your Medical Expenses!

In order to get the full benefit from your medical expenses establish a medical expense reimbursement plan (“MERP”).  Generally, taxpayers who itemize their deductions can take a deduction for their medical expenses to the extent that the expenses are greater than 7.5% of their adjusted gross income.  Taxpayers who do not itemize get no deduction.  With a MERP taxpayers can take a dollar-for-dollar deduction whether or not they itemize for their medical care expenditures. 

 A great tip for keeping track of your medical expenses:  Since most people do a really poor job of tracking these kinds of expenses and in most cases are unable to get their hands on this information when tax time comes around, do yourself a favor right now.  Go into your storage closet, a kitchen drawer or wherever you keep file folders (if you don’t have any, a short trip to Office Depot or Staples today will do the trick) … then mark “Medical Expenses” on one for these folders.  Put this folder in the nearest drawer to your kitchen phone.  Now EVERY time you spend any money related to your medical care (even if you are not sure it could be deductible or not), put the receipt in the folder.  You will be glad you did next tax season.  The money you save in paying less in taxes will be a great incentive all by itself! 

SECRET TAX TIP #2

“SIMPLE” Plan Offers Even More Tax Savings Than Regular IRA!

Establish a SIMPLE IRA to boost your tax benefits from your retirement account.  Like an IRA, you can reduce your taxable income dollar-for-dollar for the amount you contribute to a SIMPLE plan.  A SIMPLE plan, however, comes with the added advantage over a tradition IRA of allowing a taxpayer to contribute even more money.  A Taxpayer can contribute up to $10,500 (2007) in a SIMPLE plan, as compared with the $4000 limit for a traditional IRA.

Hey, this is a BIG difference!  We’re talking about thousands of dollars more each year – tax free!  And as my dad used to say, “Give first, then SAVE for retirement and then pay your bills each month … do this all of your life and wisdom will follow you until the end.”  Yes, it IS wise to consistently sock money away, especially tax free!  And since the IRS gives you a great incentive to do so, might as well take them up on their offer …

TAX SECRET #3

 

PAYROLL TAXES NOT BEING PAID ON TIME

 

[WARNING:  All check signers on company Bank accounts

can be held responsible for payroll taxes!]

 

If you are a check signer on the company checking account, it is your responsibility to make sure all payroll taxes are paid to the IRS monthly.

 

Sometimes businesses get behind on the payroll taxes due to cash flow problems. The penalties and interest assessed by the IRS are excessive for this type of delinquency. These problems worsen with IRS penalties and interest, and the total amount owed can grow by 50% to 75% in a short period of time. If the Company is in cash flow trouble or is approaching the DANGER ZONE, it may never be able to pay off the total amount owing. Each check signer listed on the bank signature card is responsible for the tax; this often includes spouses, secretaries, employees, relatives, office managers or yourself.

 

HEADS UP:  You should get all non-essential check signers deleted from the bank signature cards before the company gets into trouble.

 

The IRS takes a very serious approach to collecting delinquent payroll taxes and may levy or seize company assets in short order. The best advice I can give to you if you find yourself in this situation is, DO NOT meet with the IRS Revenue Officer who calls or comes to the door to collect these taxes. Often, how you answer the first 5-10 questions they may ask you will determine whether you stay in business and if you or others will become personally responsible for the payroll taxes. One of the most important services we offer our clients is to meet with the IRS officers ourselves. This allows our clients to continue concentrating on running their business and improving the cash flow.

           

In my experience, I rarely have seen a good outcome when the Client meets with the IRS Revenue Officer.

TAX SECRET #2

 

DO NOT PAY IRS PENALTIES!

 

The IRS has close to 200 different types of penalties, and they like to hand them out like a salesman does his business card.  The worst part is that the IRS also charges interest and additional penalties on the original penalty.  (This is where the big bucks pile up!)

 

TIP:  Always try and get all penalties reduced or completely abated.

 

It makes sense (in almost every case) to request penalty abatement before you pay the IRS. If you have already paid the bill, it will not hurt to ask for penalty abatement and refund. Remember:  Your chances of getting a rebate is greatly reduced after you have paid the IRS.

 

These penalties can, however, be reduced to ZERO if you have “REASONABLE CAUSE”.  What makes up REASONABLE CAUSE you ask? Well, in my experience in negotiations with the IRS, anything may qualify as long as it is reasonable.

 

I’ve seen the IRS abate penalties for medical reasons, bad accountants, ignorance of the tax laws, ex-spouses, helping to provide care for a loved one, military call-ups, fire, floods, alcoholism, drug abuse, death, and even for relying on IRS advice.  (Did you know the IRS gives out the wrong tax advice over the phone almost 40% of the time?)

 

Penalties can be such a high percentage of the total amount owing to the IRS; it usually makes sense to consider requesting the IRS to reduce all penalties to Zero.

 

YOU MAY BE PLEASANTLY SURPRISED YOU HAVE NOTHING TO LOSE AND THE SAVING COULD BE HUGE!

Believing you are all square with the IRS each year can be a little tricky sometimes.  Most people file their taxes “in the dark” — not really knowing for sure if they have filed everything accurately.  With life being so busy, who has the time (or wants to take the time if they had it) to actually keep up with the new tax law changes each year?  Filing a relatively straight forward tax return correctly, is truly a Herculean task these days. 

 

Should filing taxes be easier for regular middle income folks who own a home, run a small business or have some simple investments?  Yes, of course!

 

However, there are MANY things that should be different in life, but they are not.  Filing your personal or business tax return SHOULD be on the list of things our country needs to get fixed to help out ordinary tax paying citizens like you.  (But … don’t hold your breath!)  You see, we can have a discussion ‘til we’re blue in the face about what should be different about Uncle Sam and the tax code.  But at the end of the day, we all still have to fill out our tax forms and file by the IRS deadline or we’re in for a heap of trouble …

 

Don’t Be Embarrassed … It Is NOT Your Fault!

 

            Hi.  My name is Bernadette.  I save taxpayers like YOU time, money and IRS aggravations for a living.  You might be a doctor.  You might own a construction business.  You might even be making money on the side from your once hobby, now small home-based business.  That means chances are really good you are competent in 101 different things from your job or profession that I would never dream of trying to do on my own. 

 

And that’s the point.  You are good at what you do for a living and when it comes to taxes, I’m pretty darn good myself.  I live and breathe taxes … eating tax audit notices from the IRS for breakfast! You should not be embarrassed about not feeling “peace” when filing your taxes.  If most people were honest with their true feelings, the majority of your friends, neighbors and co-workers would say the same thing.   

 

            So please, don’t beat yourself up for not knowing for sure if your taxes have been filed completely and accurately.Truthfully, it is costing you too much time and aggravation to mess with filing your taxes alone anyway.  (I’ll explain more about this in a minute.)

 

 

The Top 5 Secrets Guaranteed To Save You Money And Reducing Your Stress!

 

 

TAX SECRET #1

 

FILE ALL IRS REQUIRED TAX RETURNS ON TIME!

 

This might sound brain-dead simple, but when people don’t have the money to pay their taxes, a large percentage of taxpayers delay and do not make the IRS filing deadline.  Even if you don’t have the total amount due, send a $1.00 and file your taxes on time!

 

So many people do not realize that the IRS charges you a penalty of up to 25% FOR JUST FILING YOUR TAX RETURNS LATE. That’s right, 25% of what you owe. This includes Individual tax returns and payroll tax returns.

 

What people do not know is if they file their tax returns on time they can avoid the 25% penalty even if they do not send in the money, which is owed on their tax returns.  Sending “as much as you can” is better than nothing and shows a little good faith.  But definitely do not “not file” …the IRS doesn’t forget and they will come back to contact you later and you’ll owe a lot more.

 

Of course you will get a follow up notice in the mail from the IRS for not sending in the money owed, but so what, you would have avoided a 25% penalty!

 

As a tax professional, I see THIS problem so often each tax season.  It sounds simple, but I could have saved people many thousands of dollars over the years in penalties if they just knew this one thing.  So, in the future, if this happens to you — no matter what is going on in your life, take the extra time to file all tax returns on time, even if you do not send in the money owed with the return.

 

Stay tuned for Part 2…..