Monthly Archives :

February 2020

Take Advantage of These Deductible Business Expenses

As you may know, there are many business expenses that can be deducted from your taxes, whether you are self-employed, or you are owner of your own company. However, there are so many different types of expenses that businesses of any size make as part of their daily operations, that missing some deductions can happen at any time. Therefore, we are bringing an extensive list with plenty of deductible business expenses so that you can take advantage of them and use them to make your business grow and become more successful and profitable.  

Keep in mind that you will come across two different types of business expenses: ordinary and necessary expenses. Ordinary expenses refer to all the expenses that other companies working on your field will make on a regular basis. Necessary expenses are all the payments that are needed in order to keep your operations going. This is a list of the most common fully deductible business expenses, including both ordinary and necessary expenses: 

  • Accounting fees       
  • Advertising      
  • Bank charges        
  • Commissions         
  • Consultation fees     
  • Professional education         
  • Credit and collections       
  • Delivery charges      
  • Employee benefits
  • Equipment rental        
  • Insurance       
  • Interests        
  • Internet services         
  • Legal fees
  • Licenses        
  • Maintenance        
  • Office supplies      
  • Training fees      
  • Rent        
  • Salaries
  • Security          
  • Software        
  • Travel         
  • Utilities

 Car and transportation expenses are also deductible. They consist in the costs of gas and fees, for example, when we you are going to a business appointment or when you are meeting a client. The best way to make sure you are keeping track of our daily expenses is by having a log, whether on paper or using a smartphone app. This way, you will be able to have an accurate record that will come quite handy when it is time to file our taxes. 

Other deductible expenses that you may not be aware of include gifts to customers or clients. Sometimes, a small gift to show appreciation can go a long way, helping us secure a long-lasting relationship with our clients or business partners. However, you must keep in mind that gift expenses are only deductible for up to $25 per person. So, if you are buying $100 gifts, the remaining $75 will be out of your pocket, but if you buy $20 gifts, these would be fully deductible. Gifts to your employees also fall under this category with the same $25 limit still applying. 

Meals and entertainment are other business expenses that can be deducted. These costs are usually deductible up to 50% of what you spend, as long as the meal or entertainment cost was business-related. So, taking a client or our employees to dinner and paying for their meals qualifies for a business expense deduction, and you can even add the tip. 

In order to deduct your business expenses, you must complete and file either Schedule C or Schedule C-EZ so that you can itemize your expenses and calculate how much income will be left after you have taken care of the deductions. If you want to get more information on business expenses and how to deduct them, contact us and we will be glad to provide all the assistance you need. 

 

Tax Identity Theft and Refund Fraud – What You Need to Do

Every year, tax fraudsters attempt to trick unsuspecting taxpayers into sharing their personal information in order to steal it. During the last couple of years, tax identity theft and refund fraud have become a very serious problem, affecting a large number of taxpayers and the IRS alike. Therefore, we must make sure that we do not share our personal information with anyone except our trusted tax advisor. The IRS also recommends filing our returns as soon as possible to avoid this kind of situation. Here is what you need to do if you are a victim of tax identity theft and refund fraud.

Confirm You Are a Victim of Tax Identity Theft

One of the very first steps to take if we think we might have been a victim of tax identity theft is to confirm our suspicion. In order to do this, we need to get in touch with the IRS to research our account. This will help us find out if someone has filed a fraudulent return using our Tax ID. If we confirm that a fraudulent return was filed, we need to then file a paper return for the year. We also need to research previous years’ returns to see if this has happened before or if this has just happened this year.

Document the Identity Theft

Once we have confirmed we were victims of tax identity theft, we need to document and prove the fraud to the IRS. This is done by completing Form 14039 Identity Theft Affidavit, attaching all the documents that are necessary, and sending it to the IRS. This way, they will give us an IP PIN, or identity protection personal identification number, or place a marker on our IRS account.

We should also notify other government agencies, financial institutions, and credit bureaus regarding the identity theft issue. This will help us be more protected in case they used our information to commit other fraudulent transactions.

Address Every Possible Compliance Issue

When we are victims of identity theft, we might have to take care of several compliance issues. For example, we might have an outstanding tax balance, for which we can ask for a collection hold. We can also be subject to an underreporting notice or an IRS audit. If this is the case, we should get in touch with the IRS and ask them to suspend the notice until we have our identity theft issue taken care of.

Remember to Monitor Your IRS Account

Lastly, if we have been victims of tax identity theft and refund fraud, whether it happened recently or in previous years, we need to constantly monitor our IRS account. First of all, we need to confirm with the IRS that they placed an identity theft marker on our account. Also, we need to remember to use the IP PIN the IRS gave us in order to file our tax returns in a timely manner. Periodically requesting our account transcripts and wage income transcripts will also help us monitor our account and identify any other fraud issues we might have missed.