DAVID S. BABOIAN, CPA, PC

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3/28/2016

March 28th, 2016

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TAX TIP OF THE DAY... deductions for the night shift

​Work expenses are allowed for ordinary and necessary expenditures that allow you to be productive at work.  A nigh shift worker may qualify for:
1) coffee and other caffeinated drinks
2) no doze or 5 hour energy type products
3) security firearm (when legally carried), training, ammunition and supplies
4) cell phone use for safety check-ins

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3/22/2016

March 22nd, 2016

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TAX TIP OF THE DAY... how to respond to a PA letter disallowing work expenses when your employer won't cooperate.
PA is more aggressively challenging work related deductions.  You may receive a letter asking for supporting documentation for your work expenses... mileage logs, receipt copies, letter from employer.
 
PA Sample letter from employer:
http://www.revenue.pa.gov/FormsandPublications/FormsforIndividuals/Documents/Personal%20Income%20Tax/rev-757.pdf
 
If employer refuses to supply letter:
http://www.revenue.pa.gov/FormsandPublications/FormsforIndividuals/Documents/Personal%20Income%20Tax/rev-775.pdf
 
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3/20/2016

March 20th, 2016

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TAX TIP OF THE DAY...  What to do? out of time.

Don't stress.  Sometimes April 15th is just not convenient.  Other times you are missing a W-2, K-1 or mortgage 1098 statement.  

​NO PROBLEM.  Get a deadline EXTENSION until October 15th by filing IRS form 4868 by 04/18/16.   The federal extension is automatically valid for PA and Local too. 

What you need to know..,
The extension prevents late filing penalties.  But you will still have late payment penalties (interest equivalent charges) if you owe when you finally due file.  So you may choose to remit a payment with your extension form.
​

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3/20/2016

March 20th, 2016

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TAX TIP OF THE DAY...  How to prepare for an IRS audit.

Step 1:  
Don't panic.  You will not be going to jail!  
Step 2:
Never pay an IRS notice without questioning their assertions.  Be skeptical.  Find comfort in knowing that IRS letters are very often wrong.  
Step 3:
Confirm that the IRS sent you the letter (not PA or Local) by reviewing the top of the letter.  IRS audits are much tougher than PA or Local.
Step 4:
Review the letter to determine whether you have been "selected for examination" or just need to respond to the IRS's letter.  A letter response is not really an audit... and if their letter asks for more than $500, hire a professional to help.  
Step 5:
If after the above steps you determine that you are indeed being audited by the IRS and have been asked to schedule an appointment to meet with an IRS auditor...  you should identify your tax return as basic or intermediate or complex.  If your return is basic, do the audit yourself.  Otherwise you should hire a professional to help prepare for the audit, point out your vulnerable issues and to go to the audit WITHOUT YOU.  That's right, an IRS audit is like a funeral...  you don't have to go to your own.

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3/20/2016

March 20th, 2016

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TAX TIP OF THE DAY...  deduct a portion of your cable bill

Do you watch work related cable tv programming?  A portion of the cost may be deductible:    
1) Weather updates...  for business travel and outdoor workers.

2) Interviews with industry experts.
3) Political updates affecting regulations for your industry.
4) TV news for updates on your industry, competitors, economic conditions... local, national & international.
5) Industry specific programming... real estate, home improvements, investments, business, art, music, government.  

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3/20/2016

March 20th, 2016

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TAX TIP OF THE DAY... Hollywood's most famous IRS tax offenders. 

1) Nicolas Cage: $14 million
In 2010, Cage told People he owed $14 million to the IRS.
"Over the course of my career I have paid at least $70 million in taxes, unfortunately, due to a recent legal situation, another approximate $14 million is owed to the IRS," said Cage. 

2) Dionne Warwick: $2.1 million
Whitney Houston's cousin Dionne Warwick owed $2.1 million to the state of California in 2009.  Two years earlier, the singer owed a heftier $2.7 million.

3) Ozzy Osbourne: $1.7 million
The Osbournes owed $718,948 from 2008 and $1,024,175 from 2009. The debt was paid off a few days later.  

4) John Travolta: $1.1 million
The IRS claimed the actor owed $1.1 million for 1993-1995. He paid back $607,400 in 2000.

5) O.J. Simpson: $700,000
In 1997, Simpson admitted that he owed the hefty fee to the IRS.

6) Christie Brinkley: $531,720The former Sports Illustrated model was caught off guard after receiving news she owed the IRS more than $500,000. She immediately resolved the tax lien, writing it off as an error. 
source: www.businessinsider. com
http://www. businessinsider.com/the-15-most-taxing-celebrity-irs-evasions-2012-4

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3/19/2016

March 19th, 2016

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TAX TIP OF THE DAY... fixing a mistake

Your instincts told you the refund wasn't quite right. How can you fix it??? File an AMENDED TAX RETURN within 3 years of the original due date.
What you need to know:
) The IRS is not in a hurry. Amended returns take months to process.
2) Send in explanatory documentation to support your correction.
3) Danger... certain amended returns can trigger audits.
4) Amended returns cause extra scrutiny of other items on the tax return.
5) Consult a professional to assess the risk of amending.

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3/17/2016

March 17th, 2016

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TAX TIP OF THE DAY...  "GoFundMe" donations.

Are GoFundMe donations tax deductible?
Usually not.  Tax deductible donations must be paid to a non-profit organization and NOT TO INDIVIDUALS.  People often confuse the $14,000 maximum gift rule with the donation rule.  Yes, you can make a gift up to $14k to an individual and the gift is non-taxable to that person.  But gifts to individuals are not not tax deductible.  

However a business may be able to deduct a gift if it can qualify as advertising...  due to the public nature of the gift and its ability to promote business goodwill among current and potential customers.  


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3/17/2016

March 17th, 2016

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TAX TIP OF THE DAY...  dangerous sale of company stock!

If you purchased your employer's company stock at a discount and then sold the stock in 2015...  you could be in big trouble.  The IRS changed the 1099 forms.  Starting in 2014 the cost and taxable gain listed on the 1099 form is WRONG!!!  The gain is much too high and most people will easily over pay their tax.  You need to use a code B adjustment to reduce the taxable gain for amounts already taxed as part of your W-2 compensation. 

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3/6/2016

March 06th, 2016

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TAX TIP OF THE DAY... 

Strange Deductions, Exemptions, and Tax Breaks from the U.S. and around the World
  • In Texas, cowboy boots are exempt from the sales tax, but hiking boots are not.
  • In Ohio, a corpse in a mortuary gets makeup applied on it without getting taxed, but a living person is taxed for the makeup that gets applied in a beauty salon.
  • In South Carolina, one can get a $50 deduction if they donate a dead deer to the poor.
  • In Maryland, oyster farmers get a tax break, but those who farm other types of shellfish don’t.
  • Hawaii gives a $3,000 tax deduction to those who grow state-approved trees.
  • A business owner bought a racehorse and claimed it as a business expense. No, he was not in the horse-racing business; he claimed that he needed to entertain his clients and that a racehorse would do just that. The economic stimulus package allowed for a tax deduction as large as $25,000 to be claimed for buying a racehorse, but the deal expired without creating many new purchases.
  • An ostrich farmer in Louisiana’s St. Tammany Parish depreciated his ostrich, which is allowed as long as the birds are used for breeding purposes.
  • A man was arrested for drunk driving after he waited to sober up--but not for long enough--and wrecked his car. His insurance company refused to compensate him for the wrecked car because he broke the law. The driver, however, was able to deduct the cost of his car as a casualty loss because he acted reasonably. If he hadn't waited to sober up, then it would have been gross negligence and thus nondeductible.
  • A man working for a graphic design agency bought a pair of skis from Yamaha Snowmobiles, a company for which he was making a catalog. He used the company discount and then successfully deducted the skis as a business research expense.
  • In Germany, one can deduct bribes. While the deduction is seldom used, it does exist as part of the tax code. All one has to do to report it is disclose their name and the name of the official that they bribed.
  • The United Kingdom gives tax breaks to video game companies that create "culturally British" games. The criteria for being culturally British is not very clear; the game must score 16 or more of 31 points on a test that was designed to measure the cultural content and contribution of the game.
  • In the Netherlands, those who study and practice witchcraft can claim a tax break given out by the government. It has existed for quite some time, but in 2005 it gained the attention of the public after a judge upheld the tax break in court.
  • In Italy, almost a third of all men over 30 still live at home. To encourage them to move out, the government issued a 1,000 euro tax break to those who rent their homes. However, the problem is considered to be tied to the difficult job market in Italy that prevents young men from obtaining jobs that will support their independent lifestyles, so critics say it’s unlikely that the tax break will encourage many young Italian men to move out.
source: www.efile.com

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  • Home
  • Services
    • What we do
    • Are we right for you?
    • $99 Jump-start
  • Client zone
    • Individual clients >
      • Identity Theft - IRS Affidavit
      • Personal Financial Statement
    • Business & rental clients >
      • Example expenses
      • Mileage log
      • Petty cash log
      • Sales tax
      • W9 for subcontractor
      • Example Profit & Loss
      • Obamacare Self-employment Ledger
    • Payroll services >
      • Employee paystub portal
      • EMPLOYER set up forms
      • EMPLOYEE set up forms for new hires
    • Web Links
  • About us
    • Contact
    • Our team
    • Dave's resume
    • Dave's bands
    • Haunted Chamber
    • Picture gallery
  • Secure email