Should You Use Tax-Preparation Software, or Not? 0
You’ve seen infomercials boasting about free software programs that allow you (yes, you!) to file your own tax returns. But the question is: How reliable are these programs, and should you use them?
The answer is pretty simple. If you have a general understanding of the US tax law and if you have enough common sense to comprehend your tax returns when completed, then it is okay to use tax-preparation software to do your own returns. However, if you have absolutely no idea what you are doing
Read MoreHow Do I Find the Accountant That’s Right For Me? 2
Don’t be fooled—April may seem like a long way off, but those sneaky taxes will creep up on you before you know it. Don’t wait until the very last minute to look for a tax preparer—begin looking now. Where do you start? Here’s a beginner’s guideline on what to look for when on the hunt for a legitimate and reputable tax preparer.
Read MoreShould I Incorporate My Orange County Small Business or Not? 3
Incorporation doesn’t sound like something a small-business owner needs to worry about—corporations are those big, faceless companies in big shiny skyscrapers, right?
Not necessarily! You only have to be making $50,000 a year to make it worth it from a tax perspective—for the most part.
Read MoreIt’s Time to Prep for Tax Returns! 3
At the moment, you’re probably waiting for your 1098, 1099 and W-2 forms to come in the mail before you can start your tax preparations. But now’s the time to get ready for your 2011 tax return! The first place to look to get your info ready to take to your tax preparer or accountant is by reviewing your 2010 tax return. This will remind you of some general information that will allow you to get your files in order.
Read MoreWhat IS Use Tax, and Why Do I Have to Pay It? 3
Amazon has been in the news a lot lately because of their affiliate programs and not charging their California customers state sales tax on their purchases.
The definition of use tax from the Franchise Tax Board website is as follows: Use tax is a separate tax that is generally due on the purchase of tangible property from outside of California. If you purchase an item from out of state that will be used, consumed or stored in California, you owe use tax.
Read MoreDecember Tips for Savings Accounts and Estate Planning 3
Are you looking to take advantage of any tax breaks available by the end of the year? It’s a good idea if you are positioned correctly.
If you are a W2 employee, there is not much time left for you to augment your 401(k) savings. IRAs allow you to contribute until April 15, but 401(k)s that are covered in an employment plan only allow the employee to contribute until December 31st. Therefore, if you’ve only put in $2,000 for the year, and you make $10,000 a month, you probably won’t have time to max out your 401(k) allocation of $16,500 before the end of December. But now would be a good time to look at maxing out what you can in order to maximize the amount your employer will match.
Read MoreWhat Purchases O.C. Small Businesses Should Make Before 2012 1
We’re counting down to the end of the year! It’s time to make those purchases that you’ve been putting off all year, but that you’ll know you’ll use in 2012, and for years to come.
Do keep in mind that what you’re doing is buying a tax deduction—and spending money just to save money on taxes is never a good idea, because you’re only saving a portion of what you spend when it comes to your taxes.
Read MoreAnaheim Hills Accountant Answers: What IS a Business Expense? 0
Here’s another one of those questions I get asked a lot: Why isn’t that a business expense? Primarily because there’s a difference between what the IRS defines as a business expense and what we’d like to write off as a business expense.
Let’s start with an example. Say you’re working late on a project, and it looks like you won’t make it home for dinner. You order some food to be delivered so you can keep working. Is that a business expense? No.
No, you might ask? But you wouldn’t have had to buy that food if you weren’t working on that report for your client, XYZ Corp! True, but you were going to eat anyway, as humans need food to survive. So whether you had brought in dinner or bought it, it’s not something that was specific to the job.
Read MoreHow Do I Keep My Receipts Straight for End-of-Year? 0
Create a system for next year! Start a record-keeping program so you can keep on top of it next year. The hardest part is starting! Stephen Covey reminds us that forming habits is not always a bad thing—learn to start and keep GOOD habits, like keeping your receipts that you need.
It doesn’t have to be a perfect system, there’s nothing that says you have to do it a certain way—an imperfect system is better than none at all.
Read MoreWhy Do You Have to Keep Your Receipts? 0
This is a question I get asked all the time: Why do I have to keep all these receipts? There’s one main reason: If you want to deduct it, you need proof. In the event that you’re audited, the IRS requires full documentation. Most people don’t understand that, when under audit, one of the rules is that the burden of proof is always on the taxpayer to keep adequate documentation.
You may now be asking the second most popular question I hear all the time: Isn’t my credit card statement enough? In a word, NO. The credit card or debit card statement itself is not adequate documentation. The IRS can disallow the entire amount of the deduction if it is not accompanied by a receipt.
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