Month: August 2011

Tax

Got a Letter from the IRS? What You Need to Know

The Internal Revenue Service sends millions of letters and notices to taxpayers every year. If one shows up in your mailbox, please follow these steps.

  1. Call us immediately. We know how to deal with the IRS. It’s very important that you do not try to handle this yourself.
  2. Don’t panic. The IRS sends notices for a number of reasons. They may request payment of taxes, notify you of changes to your account, or request additional information.
  3. Fax us a copy of the letter. We’ll take a look at it and immediately give you a clearer picture of what the IRS wants.

Remember; let us handle this for you. Dealing with the IRS requires precise wording and a timely response. Please don’t delay, call us as soon as you get the letter.

Business Tax

Deducting Your Home Office

If you use a portion of your home for business purposes, you may be able to take a home office deduction whether you are self-employed or an employee. Expenses that you may be able to deduct include the business portion of real estate taxes, mortgage interest, rent, utilities, insurance, depreciation, painting, and repairs.

You can claim this deduction for the business use of a part of your home only if you use that part of your home regularly and exclusively

  • as your principal place of business for any trade or business, or
  • as a place to meet or deal with your patients, clients, or customers in the normal course of your trade or business.

Generally, the amount you can deduct depends on the percentage of your home that you use for business. Your deduction will be limited if your gross income from your business is less than your total business expenses.

If you use a separate structure not attached to your home for an exclusive and regular part of your business, you can deduct expenses related to it.

The rules vary depending on whether you’re self-employed, a qualified daycare provider, or storing business inventory or product samples. If you are an employee, you have additional requirements to meet. The regular and exclusive business use must be for the convenience of your employer.

Call us if you want to explore deducting for the business use of your home.

Tax

After I Do – Best Filing Status for Married Couples

Summer is wedding season. If you are getting married this summer, remember to give some attention to your 2011 tax filing status.

You have two filing status options: married filing jointly, or married filing separately.

Married Filing Jointly

You can choose married filing jointly as your filing status if you are married and both you and your spouse agree to file a joint return. On a joint return, you report your combined income and deduct your combined allowable expenses. You can file a joint return even if one of you had no income or deductions.

According to the IRS, if you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Also, your standard deduction (if you do not itemize deductions) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses.

We recommend that if you and your spouse each have income, you figure your tax both on a joint return and on separate returns (using the filing status of married filing separately). You can choose the method that gives you the lower combined tax.

Joint Responsibility. Both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return. One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse.

Married Filing Separately

You can choose married filing separately as your filing status if you are married. This filing status may benefit you if you want to be responsible only for your own tax or if it results in less tax than filing a joint return.

We Can Help

Give us a call if you’re unsure of which status to file under.

Scroll to top