Keep Track of Miscellaneous Deductions

Miscellaneous deductions such as certain work-related expenses you paid for as an employee can reduce your tax bill, but you must itemize deductions when you file to claim these costs. Many taxpayers claim the standard deduction, but you might pay less tax if you itemize.

Here are some tax tips that may help you reduce your taxes:

Deductions Subject to the Two Percent Limit. You can deduct most miscellaneous costs only if their sum is more than two percent of your adjusted gross income (AGI). These include expenses such as:

• Unreimbursed employee expenses.
• Job search costs for a new job in the same line of work.
• Work clothes and uniforms required for your job, but not suitable for everyday use.
• Tools for your job.
• Union dues.
• Work-related travel and transportation.
• The cost you paid to prepare your tax return. These fees include the cost you paid for tax preparation software. They also include any fee you paid for e-filing of your return. Read more

Tax Tips for Hobbies that Earn Income

Millions of people enjoy hobbies such as stamp or coin collecting, craft making, and horse breeding, but the IRS may also consider them a source of income. As such, if you engage in a hobby that provides a source of income, you must report that income on your tax return; however, taxpayers (especially business owners) should be aware that the way income from hobbies is reported is different from how you report income from a business. For example, there are special rules and limits for deductions you can claim for a hobby. Read more

2015 Individual Tax Return Extension Deadline is Approaching

Extended 2015 individual tax returns are due October 17, 2016. No additional extension of time is available. If your return was extended, we must have your information well in advance of this universal deadline in order to complete all returns to permit timely filing.

If you are unsure what information is missing please call now. If there is information that is still unavailable (and beyond your control), please provide all of the information immediately that you are able to obtain. We cannot guarantee that your returns will be available for timely filing if any information is received after September 15, 2016.

Please remember that this is an extension of time to file and not to pay any tax due. If you owe tax for 2015 the taxing authorities will assess interest and penalties. Filing sooner will reduce the interest and penalties. Read more

Tax Records: Which Ones to Toss and When

Now is a great time to clean out that growing mountain of financial papers and tax documents that clutter your home and office. Here’s what you need to keep and what you can throw out.

Let’s start with your “safety zone,” the IRS statute of limitations. This limits the number of years during which the IRS can audit your tax returns. Once that period has expired, the IRS is legally prohibited from even asking you questions about those returns.

The concept behind it is that after a period of years, records are lost or misplaced, and memory isn’t as accurate as we would hope. There’s a need for finality. Once the statute of limitations has expired, the IRS can’t go after you for additional taxes, but you can’t go after the IRS for additional refunds, either. Read more

Bitcoins Treated as Property for Tax Purposes

Many retailers and online businesses now accept virtual currency for sales transactions. Despite IRS issuing a set of FAQs last year regarding virtual currency, the U.S. federal tax implications remain relatively unknown to many retailers. If you’re a retailer who accepts virtual currency such as bitcoins for transactions, here’s what you need to know.

Sometimes, virtual currency such as bitcoins operate like “real” currency, i.e. the coin and paper money of the United States or of any other country that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance. Read more