How to Save Money on Taxes - Tip 4

Leave no tax deduction or credit unreported. Making certain that you don't leave any deductions on the table is the single best way you can save money on your taxes. With the IRS, the rules are always changing, so keep up with them, but if you do, the rewards will be there. And don't be afraid to take all the legit deductions you have available. Have courage. Like the TV commercial says, it's your money. 

 

And pinching pennies may be a noble way to think in some cases, but when it comes to your taxes its totally worth it to hire a good CPA. You'll avoid a lot of unnecessary headaches and a tax professional's knowledge of the tax code can help you save money.

 

It's okay to use tax software programs when filing your taxes. Today's options are quite helpful and they are programmed to give sound advice in certain areas, but robotic responses don't generally allow for much give and take discussion. And the IRS offers quite a bit of sound information if you can work your way through the verbiage. 

 

And check your work. And then check it again. Make sure it's complete and that you've signed and dated it. If you make a mistake, it could trigger an audit, something that is about as much fun as a root canal. 

 

If you can't file your taxes on time, don't forget to file an extension. And make sure you send them some money, if you'll have to pay additional taxes. If you don't pay at least 90% of what you'll owe, they can hit you with some very steep penalties.

If you have questions, call Neikirk, Mahoney & Smith at 502-896-2999.

FASB, AICPA Partner to Simplify Accounting for Small Businesses

The American Institute of Certified Public Accountants and the Financial Accounting Standards Board, trade groups that manage and supervise standards used in the accounting profession, has announced that it is has created a “framework” that would simplify accounting for such companies. It would differ from the “generally accepted accounting principles,” or GAAP, that public companies must follow in a number of ways, large and small.

The goal is to make accounting-related life for small businesses (companies that are not publicly traded) easier to manage. Click here to read more

Congress Looking at Closing Some Loopholes

Congress has begun the process of reviewing current corporate tax reforms. With the highest statutory tax rates in the world, the pressure is beginning to mount internally as other world economies are trending up while the US economy shows signs of lagging.

The House Ways and Means Committee held a hearing Thursday to examine corporate tax reform and the impact of offshore tax havens on base erosion and profit shifting by multinationals.

House Ways and Means Chairman Dave Camp, R-Mich., noted that the U.S. "has the highest statutory tax rate in the industrial world of up to 35 percent," according to an article in Accounting Today.

Camp said that advisors have "offered a universal observation—having the highest corporate rate in the developed world along with an outdated international tax system is a barrier to success that leaves our country falling further behind our foreign competitors.” 

Click here to read the full article

Fasten Your Seatbelt - Gas Going Up Again

Gas prices are going up again in the Commonwealth and this time you can't blame the dealers, their wholesale suppliers or the Arabs.

This latest price increase comes courtesy of our state government in Frankfort and although July's scheduled 2.4 cent increase doesn't sound like much, when you consider that the total take on every gallon of gasoline that the state pockets is now 32.3 cents a gallon or approximately 8.5% of the cost of every gallon you pump.

When combined with Uncle Sam's take, 18.4 cents per gallon, local taxes that can vary and a smidgeon of a percentage that goes to a fund that cleans up gasoline tank seepage, Kentuckians pay more than 50 cents a gallon, or approximately 14%, in taxes.

Gasoline taxes are the result of a slew of state and federal tax laws intended to raise funds to keep highways maintained. In Kentucky, the increase is automatic and tied to the average wholesale price of gas. That law has resulted in periodic small increases in our gas tax rate that have aggregated into a rather significant chunk..

The rate has nearly doubled in the past ten years, from 16.4 cents to the new 32.2 cents.

The tax was tied to the wholesale price because of concern that soaring gas prices would cause motorists to buy less gas, causing revenues for road work to plunge while the cost increased.

IRS Still Producing Videos

According to Accounting Today's Michael Cohn, the Internal Revenue Service is still making movies at taxpayers' expense.

Their latest release is a  "Mad Men”-themed continuing professional education video last year featuring an actor patterned after the Don Draper character in the popular AMC cable TV series.

The video has not yet caused much of an uproar like the “Star Trek” and “Gilligan’s Island” parody videos or the “Cupid Shuffle” music dance video that were shown to embarrassed IRS officials and ex-officials in a congressional hearing last week about excessive spending at IRS conferences (see IRS’s Mr. Spock Impersonator Apologizes for Inappropriate Parody and IRS Music Dance Video Released by Congress).

The IRS' acting commissioner, Danny Werfel, has promised to treat taxpayer dollars with a little more respect in the future.

Read full article

Writing Off Vacation Expenses

In a year where industry experts are predicting a 14% decrease in the average American family's vacation expenditures, it's understandable that the subject of writing off vacation expenses would be top of mind this time of year.

People do it all the time but it also involves swimming in some pretty murky waters, but that doesn't mean you shouldn't do it.

Money Talks News founder Stacy Johnson warns that the rules for travel-related tax deductions are complicated. If you want to avoid a trip to Audit City, check these tips along with your baggage:

1. Getting there. If the trip is primarily for business and within the U.S., the cost of your transportation is fully deductible both ways. If it’s international, the trip has to be at least 75 percent business in order to write off your plane ticket. (Less than that and you can only deduct the percentage related to business.)
2. Cruises have special rules. To be deductible, a business-related cruise has to be aboard a ship registered in the U.S. and avoiding foreign ports. Click here to read the complete free article.

Ways to Save Money on Your Taxes

If you are still in shock from having to write another big check to the Internal Revenue Service, you might want to bookmark this website because we're going to be sharing some tips as to ways you can save money on your taxes.

Some of the tips we share you may have already figured out, but some are hot off the press - as long as there is a Congress, the tax codes are subject to change. 

To stay on top of these changes, you can review countless articles, keep your CPA on speed dial or follow Neikirk, Mahoney & Smith online or by giving us a call.

Tax Saving Tip #1.