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Member Workshop: 25 Tax Savings Tips Before December 31st - Dec 20
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Last Post Dec 20, 2006 11:06 AM by: deirdre@ebay.com
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deirdre@ebay.com
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Member Workshop: 25 Tax Savings Tips Before December 31st - Dec 20

Nov 28, 2006 9:50 PM
Topic: Member Workshop: 25 Tax Savings Tips Before December 31st

Host: dkennedycpa
Date: Wednesday 12/20
Time: 10:00 am to 11:00 am PT
Location: Workshop Board

Description: 2006 is almost over and once December 31st rolls around, most of your chances to take tax deductions are over as well. This is one workshop you won’t want to miss. Please join best selling-author and CPA Diane Kennedy to learn 25 tax saving tips that you can take advantage of right now.

Cheers,

Deirdre
eBay Community Development
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Member Workshop: 25 Tax Savings Tips Before December 31st - Dec 20

Dec 19, 2006 8:56 AM
If your business operates in any structure other than a C corporation, you will be able to take a pro-rata deduction of all household expenses (mortgage interest, property taxes, utilities, homeowner’s due, and the like) based on the business square footage divided by the total square footage (if your business operates in a C Corporation, then the C Corporation will be able to take the deduction).

Diane Kennedy, CPA
www.taxloopholes.com
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Member Workshop: 25 Tax Savings Tips Before December 31st - Dec 20

Dec 19, 2006 8:57 AM
While a spare bedroom or den is usually used as a home office, that doesn't always have to be the case. People with small living spaces can carve off the space they use for their home office, even if the rest of the room is used for living purposes. Be prepared though – take pictures to show the IRS that you really are using that portion of the room for business only.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: 25 Tax Savings Tips Before December 31st - Dec 20

Dec 19, 2006 8:57 AM
Tax Tip #14 – Create Separate Inventory Space. If you have the room for it, consider keeping your eBay inventory somewhere other than your home office. Why? Because there's one exception to the exclusive business use requirement for a home office: inventory storage! So by storing supplies, merchandise or eBay inventory in another part of your home (your garage, for example), you can take an additional deduction for square footage your inventory takes up. The calculation is done just like your home office calculation – i.e., the square footage your inventory occupies divided by the total square footage of your home.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: 25 Tax Savings Tips Before December 31st - Dec 20

Dec 19, 2006 8:57 AM
Tax Tip #15 – Delay Income to Avoid AMT. If you're bumping up against the AMT income threshold, you might want to consider holding off on doing any more invoicing between now and the end of the year. That way the income can be counted as 2007 income, not 2006 income.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: 25 Tax Savings Tips Before December 31st - Dec 20

Dec 19, 2006 8:57 AM
Tax Tip #16 – Hold Your Business's Annual Meeting and Deduct Travel Costs. If you are thinking of taking a trip to do some holiday shopping, and you haven't held your business's Annual Meeting yet, combine the two and take a tax deduction! The costs of the meeting will be a legitimate deduction to the business – and those costs include the travel to and from the meeting location.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: 25 Tax Savings Tips Before December 31st - Dec 20

Dec 19, 2006 8:58 AM
You aren't required to hold your Annual Meeting in your office – it can be held anywhere. Some rules to remember here: only costs associated with the meeting are deductible. So if you travel to New York for your meeting and spend two more days shopping, you can only deduct your travel costs (along with your hotel and other costs) for one day. The other two days are considered personal expenses, unless you do business each day. That could mean checking in with your office, contacting clients, meeting with potential clients, working from the hotel room, and so on. Keep good records here! This is an area that is prone to abuse and one the IRS will take a close look at.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: 25 Tax Savings Tips Before December 31st - Dec 20

Dec 19, 2006 8:58 AM
Tax Tip #17 – Separate Personal Property from Real Property. If you are a real estate investor, and especially if you're a real estate professional, make sure you break out the personal property portion of your property for quicker depreciation. For example, if you're renting out a home, you can break out the costs of the dishwasher, washer/dryer, garbage disposal, air conditioner, floor coverings, etc., from the actual building costs. You can then depreciate the personal property items at a higher rate, which means you'll wind up with a larger deduction, and a bigger phantom loss to apply against your other income. You can learn all about how this is done in Tax Loopholes for Real Estate Investors.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: 25 Tax Savings Tips Before December 31st - Dec 20

Dec 19, 2006 8:58 AM
Tax Tip #18 – Take Full Advantage of the Section 179 Deduction. Do you need (or want) to make any last-minute equipment and furniture purchases for your business? You are allowed a Section 179 deduction of up to $108,000 (but remember, if you buy more than $400,000 of assets you will not be able to take the deduction) or up to the amount of your taxable income from your business, whichever is less. Because you're writing off the entire cost of that equipment at once, you won't be able to take depreciation in future years. But don't let that stop you from using this powerful deduction! And, if you're operating a business in a federally-sanctioned "Go Zone," the Section 179 deduction is doubled.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: 25 Tax Savings Tips Before December 31st - Dec 20

Dec 19, 2006 8:59 AM
Tax Tip #19 – Don't Shortchange Yourself. After you’ve calculated the square footage of your home office, take a second and look around your home office. What items have you contributed to the office? Many new business owners use old furniture, computers, printers, cell phones, and the like to get started. Your company needs to reimburse you for all of those expenses. Make a list of them with their fair market values and either write a check to yourself from your company before year-end, or, if your business doesn't have the cash to pay you back, record the amount your company owes you as a note payable on the business's books. That will help to reduce business income and any tax liabilities.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: 25 Tax Savings Tips Before December 31st - Dec 20

Dec 19, 2006 8:59 AM
Tax Tip #20 – Remember to Deduct Vehicle Expenses. If you own your vehicle (as opposed to leasing it) there are two ways to deduct car expenses: (1) take a percentage of all expenses, including depreciation, based on the percentage of time your car is being used on business, or (2) use the “cents per mile” method. The cents per mile changes each year (in 2006 it's 44.5 cents per mile; the 2007 rate hasn't been set yet). The cents-per-mile method is especially effective if you have a car with low value and high mileage, or if you use your car infrequently for business, but take long trips when you do.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: 25 Tax Savings Tips Before December 31st - Dec 20

Dec 19, 2006 9:00 AM
Tax Tip #21 – Buy a Hybrid and Get a Tax Credit. A tax credit is a deduction you get to take after you've calculated your taxes. It reduces your net tax – which is why I'm such a big fan of tax credits. The government is offering a tax credit of anywhere from $700 to $4,000 to people who purchase a qualifying hybrid vehicle between now and the end of the year. How much you can deduct depends on the vehicle type and the number of those vehicles that have been sold to date by the company.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: 25 Tax Savings Tips Before December 31st - Dec 20

Dec 19, 2006 9:01 AM
Tax Tip #22 – Plan to File an Extension Next Year. There are so many reasons to file a 6-month extension to file your personal and business tax returns I'm surprised that not everyone does it. First, it lets you have more control over when and how your taxes are paid. Second, it reduces your chances of being selected for audit (most auditors have filled their quotas by then).

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: 25 Tax Savings Tips Before December 31st - Dec 20

Dec 19, 2006 9:01 AM
File for an extension can also save you money. For example, sometimes new tax laws come out that change how your income is taxed. You can take advantage of these changes if you haven't already filed your return. If you have filed a return, you'll have the additional costs of preparing an amended tax return to offset any potential savings, plus you may put yourself at additional risk for an audit. Filing for an extension is easy, and as long as the request is made before your business or personal tax return is due, the extension is automatically granted – no questions asked.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: 25 Tax Savings Tips Before December 31st - Dec 20

Dec 19, 2006 9:01 AM
Tax Tip #23 – Establish a Medical Reimbursement Plan. There are three ways to deduct medical expenses: (1) As an itemized deduction subject to the 7.5% of adjusted gross income limitation (not favored), (2) As a payroll deduction through your wages, and (3) through a Medical Reimbursement Plan set up in your C Corporation. The beauty of the Medical Reimbursement Plan is that you can tailor it to cover everything that other healthcare plans don't, meaning that if you have a spouse who receives healthcare coverage through his or her work, you can fill any gaps in coverage. As long as you're operating through a C Corporation or as a sole proprietor, the costs of a Medical Reimbursement Plan are a tax deduction to the business, and a non-taxable benefit to you personally.

Diane Kennedy, CPA
www.taxloopholes.com
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dkennedycpa
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Member Workshop: 25 Tax Savings Tips Before December 31st - Dec 20

Dec 19, 2006 9:02 AM
Tax Tip #24 – Remembering Others. If you're planning to make any large charitable donations of money or property you'll want to get this done before the end of the year. If you're donating property, make sure you get a letter from the charity confirming your donation, and the value that property was subsequently resold for. You'll need this to establish the amount of the deduction you take next year.

Diane Kennedy, CPA
www.taxloopholes.com
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