Business or Hobby? Tax Implications

Rowing, X-C skiing, Biking, Running, Mountain Climbing, Guitar Playing, Fishing, Gardening, Golf, Sewing, Woodworking, Horsemanship, Scrap Booking, Stamp and Coin Collecting, etc. The IRS isn’t trying to spoil your fun but if your favorite activity makes a profit every year or so, there may be tax implications that surprise you. What is a hobby? Hobbies,…

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What kind of records should you keep.

You may choose any recordkeeping system suited to your business that clearly shows your income and expenses. Except in a few cases, the law does not require any special kind of records. However, the business you are in affects the type of records you need to keep for federal tax purposes. Your recordkeeping system should…

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Tax Return Preparer Fraud – choose you tax advisor wisely

Tax return preparer fraud generally involves the preparation and filing of false income tax returns by preparers who claim inflated personal or business expenses, false deductions, unallowable credits or excessive exemptions on returns prepared for their clients. This includes inflated requests for the special one-time refund of the long-distance telephone tax. Preparers may also manipulate…

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Business Expenses: IRS Publication 535

The mysterious “other.” Some tax deductions are not mentioned by name on a tax form but can still be quite valuable to a taxpayer. If you own a trade or business, you can deduct a number of expenses under the broad category of “other.” In general, taxpayers may deduct ordinary and necessary expenses incurred in…

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Keeping Good Tax Records: IRS Publication 583

In a tax emergency, would you be ready? Well–organized records not only help you prepare your tax return. They also help you answer questions if your return is selected for examination or prepare a response if you are billed for additional tax. Fortunately, you don’t have to keep all tax records around forever. There are…

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Negotiating an IRS dispute – here’s a checklist of items the IRS may request

To expedite the resolution of your account with the IRS, expect to be prepared to provide the following information: Valid F2848 covering all tax periods Explain in detail why the taxpayer is not able to full pay or borrow to full pay Completed Form 433- A, B or F Copies of delinquent tax returns and…

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Can you take a home office deduction?

If you plan to run your small business out of your home you may be temped to “write-off” many of your household expenses. But how do you know what is deductible and what is not? Generally, expenses related to the rent, purchase, maintenance and repair of a personal residence are not deductible. However, if you…

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Is it happening too fast – consider IRS form 911

IRS Form 911 a.k.a. Request for Tax Advocate Service Assistant is a helpful tool when the taxpayer is feeling overwhelmed by IRS notifications You should understand that in order to respond to this request you are authorizing the Taxpayer AdvocateService to contact third parties when necessary, and that you will not receive further notice regarding…

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