TAX TIP OF THE DAY... deduct loans to friends
Did you loan money to a person who never paid you back? A BAD DEBT DEDUCTION is available for the tax year that the debt is determined to be uncollectible. Requirements: 1) You needed to attempt to recover the repayment, otherwise the situation is a non-deductible gift. 2) There needs to be a reason established for the conclusion that the unpaid debt is uncollectible... such as bankruptcy, death, debtor hardship or attorney advising that collecton costs would exceed the unpaid amount. SHARE WITH A FRIEND. If you need tax help... www.baboiancpa.com TAX TIP OF THE DAY... deduct damaged or stolen property
Significant uninsured losses due to events such as storms, fires, flooding, car accidents and theft are partially deductible as CASUALTY AND THEFT deductions. The loss must usually exceed 10% of your income. Certain theft losses can avoid the 10% threshhold... bad debt losses, Ponzi scheme investment losses. SHARE WITH A FRIEND. If you need tax help... www.baboiancpa.com TAX TIP OF THE DAY... IRS secret to clothing bin donations
The general rule is that you need a receipt in order to deduct clothing donations. But there is an EXCEPTION related to clothing bin donations. Requirements: 1) it has to be an un-manned drop off point where a receipt is not available 2) value must be less than $250 per drop off 3) you need to keep a log which details the time, date, location and listing of donated clothing. This is an emergency procedure to salvage a deduction. Much better is to donate at a location where you can get a receipt. You would not be limited to the $250 per drop limit. Clothing is generally worth $100 per large Hefty bag. SHARE WITH A FRIEND. If you need tax help... www.baboiancpa.com TAX TIP OF THE DAY... Deduct workplace snacks & lunch
Vending machine snacks, coffee, soda, bottled water. Lunch counts too... brown bag, food truck, cafeteria, restaurant meals. The only requirement is that you discuss work with others before, during or after the snack/meal. Ask your tax preparer for details. SHARE WITH A FRIEND. If you need tax help... www.baboiancpa.com TAX TIP OF THE DAY... deduct 2015 travel expenses
employee work miles... deduct 57.5 cents per mile medical miles... deduct 23 cents per mile moving expenses... deduct 23 cents per mile charity volunteering or dropping off clothing... deduct 14 cents per mile. SHARE WITH A FRIEND. If you need tax help... www.baboiancpa.com TAX TIP OF THE DAY... Keep watch for incoming tax documents.
Tax filing is all about the paperwork. Most tax documents must be mailed to you by Jan. 31. New this year are 1095 forms to indicate health insurance coverage. Workers will receive W-2s from employers, W-2Gs if they collected unemployment benefits and 1099-MISC forms for work done as self-employed business person. Forms that will show up in investors' mailboxes include 1099-INT for interest income, 1099-DIV for dividend income and capital gain distributions and 1099-B for transactions handled by a broker. Students will get Form 1098-T listing tuition and Form 1098-E showing student loan interest paid. And retirees will get Form 1099-R if they are receiving IRA or other retirement plan payments and Form SSA-1099 if they're collecting Social Security. SHARE WITH A FRIEND. If you need tax help... www.baboiancpa.com TAX TIP OF THE DAY... IRS dislikes politicians!
Trump, Cruz, Hillary, Bernie & Vermin Supreme are all off limits. I usually can find a way to deduct just about anything under the right circumstances. Prior posts have included pet food, firearms, daily coffe... but there is one stone wall road block... POLITICAL CAMPAIGN CONTRIBUTIONS are never deductible. IRS publication 529: You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible. https://www.youtube.com/watch?v=Y2lZpUIQBSM SHARE WITH A FRIEND. If you need tax help... www.baboiancpa.com TAX TIP OF THE DAY... IRS says NO RECEIPTS REQUIRED for items under $75!!!
As long as you can prove you were OUT OF TOWN overnight on business, the IRS will not require receipts for expenses under $75. So stop holding up the toll booth line asking for a receipt. Don't bother swiping your credit card in the cab. Don't worry about the receipt for peanuts at the train station. And it's ok to pay cash at the airport diner when you are in a hurry to get onboard your flight. NO MORE POCKETS FULL OF $4 RECEIPTS! So what's the catch? You need to keep a list of the expenses fairly close to the date incurred. You can't wait until you are audited to come up with this list 2 years afterwards. On business travel there is plenty of down time. While waiting for your flight, or in the cab, or at the hotel bar... use your phone to update a memo of cash expenses for the day. SHARE WITH A FRIEND. If you need help filing your taxes... www.baboiancpa.com TAX TIP OF THE DAY... get ready for your next Lotto jackpot!
Gambling winnings are taxable income. However, you can deduct gambling losses to the extent of the winnings. Regular players should save losing tickets for the entire year... JUST IN CASE that big win comes your way. If you use a players card, casinos will automatically track slots wins/losses for you and you can request a year-end report. Regular table game players are advised to keep a daily win/loss log to document losses along with atm withdrawal receipts FROM THE CASINO LOCATION. That $1 million dollar win will cost you approximately 43% or $430k in taxes. And if you give away more than $14k to any one individual, additional gift tax (paid by the giver) may apply as well. Scenario... You win $1 million. They reduce it to $600k in order to pay you a lump sum up front. After taxes you have $342k left. You give 10% to charity leaving you with $308k. Most winners buy a fancy new car... let's say for $50k leaving you with $258k. Next you are expected to pay off your mortgage of $100k leaving you with $158k. This might be enough to send 1 kid to college... or take 100 of your friends on a Caribbean cruise to celebrate spending the last dime of your lottery winnings! So as you can see, you need to win more than $1 million. SHARE WITH A FRIEND. If you need any help... www.baboiancpa.com TAX TIP OF THE DAY... deduct your clown suit!
You are able to write off clothing as it applies to your occupation as long as not suitable for every day wear. In the Tax Court case of a clown that contested that his clown costume was legitimate, the business deduction was upheld by the tax court as a legitimate business expense as he only wore it for his occupation. To demonstrate his seriousness of the matter, he came with his well dressed attorneys and he wore his full clown suit, including red nose and orange hair, to the tax court to demonstrate the point. It was pointed out as an example that the lawyers Armani suits would not be deductible as they could be worn for non-occupational events and his clown suit would not fall into that category. source: NBC24.com http://nbc24.com/news/local/strange-deductions-and-tips-before-you-file-on-tax-day?id=885080 SHARE WITH A FRIEND. If you need any help... www.baboiancpa.com |
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AuthorDavid S. Baboian, CPA Archives
February 2018
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