January 2008

Write Down your Mileage

Go out to your car(s) and write down the mileage from the odometer.

Do it now.

E-mail it to me with a list of your cars, or put it in your tax folder for 2007, then make a copy for 2008’s tax folder.

Every year we need to take some statistics on your vehicles used for business. We can only deduct miles used for business, but we need to know what the TOTAL mileage is for the year.

In the world of automobile expenses, if you’re splitting expenses between personal and business use, there are two ways of calculating the business portion: Actual Expenses or Standard Mileage. One is a replacement for the other, and the first year, you get to choose which method results in a greater deduction, or less tax.

In either case, we need to know total mileage AND business mileage for the year. In the ideal world, you’ll have a contemporaneously made mileage log showing where you visited and what the business purpose was.

You can’t deduct commuting expenses, which are your trip to work each day, even if you drive directly to a client’s office. Of course, if you have a home office, you’re already at work, so mileage to clients is deductible.

For more information, see my video on the web at http://video.google.com/videoplay?docid=-1937414199395261416&q=tax+buddha&total=17&start=0&num=10&so=0&type=search&plindex=0.

Organizers for 2007 Tax Year/Green Business

In the past, we have not automatically sent out Tax Organizers – the paper stack for you to collect your tax information in preparation to mail or bring it in so we can get to work on your ’07 return. This year, we should be able to send you a PDF of your organizer, if you request it. Some clients have requested a paper organizer, and we’ll send that out in the next couple of weeks.

We do this to save trees and reduce paper in landfill (we’re certified as “Green” in Contra Costa County – look us up on www.greenbiz.ca.gov/ShopGreen.html) We’re the only Accounting/Tax Returns firm currently listed!

We’re also sending out PDF’s of your copy of your tax return to you, as well as e-filing returns when we can. Prior year returns usually need to be filed on paper.

Appointments Available

We still have appointments available. Feel free to e-mail a request, or call 510 237-5040 x 1. The earlier the better. If you have “most” of your tax stuff, come on in. If we can get started, it makes it easier to finish off that one or two missing items later.

1099 Forms are due 1/31/08 for all 2007 Work

If you’ve paid out more than $600 to an individual, partnership, LLC, or to Lawyers for your business in calendar year 2007, you are required to provide 1099s to those people for the value of their services. Because it is a “product,” if you bought $700 of floppy disks, it isn’t required. One that most people miss is RENT if paid to a non-corporation, for a business purpose.

Here’s a link to the directions for these forms: http://www.irs.gov/instructions/i1099msc/index.html.

To get tax ID numbers from people, you should have in your files (don’t mail this in) copies of vendor’s W-9 forms, available here: http://www.irs.gov/pub/irs-pdf/fw9.pdf?portlet=3. Send a copy to your vendor and have them fill it out and fax it back to you. Keep it in your files, and use it to make the 1099s at year end.

And of course, you’re getting ready to send in the California form to help locate people who skip out on child support, the Form DE-542, which needs to be done for non-employees each year http://www.edd.ca.gov/taxrep/de542.pdf. This gets filled in and either faxed or mailed each year for those individuals you’ll be sending 1099s to.

Classes – Basic Payroll, 'S' Corporation, and Schedule C for Sole Proprietors

In conjunction with the IRS and EDD, Andy's going to be doing some Basic Payroll seminars coming up in the near future.

Basic Payroll: Seminar runs 9 am – 3 pm with an hour for lunch

The next seminar will be in Oakland, January 9th http://www.edd.ca.gov/taxsem/txsemrs.asp?SemID=3129 and February 13th http://www.edd.ca.gov/taxsem/txsemrs.asp?SemID=3130.

Basic Payroll in San Francisco will be January 16th at the SBA office at 455 Market Street, 6th floor Reserve at http://www.edd.ca.gov/taxsem/txsemrs.asp?SemID=3152.

Basic Payroll in San Rafael is presented at 120 North Redwood Drive, 2nd floor, Redwood Room on March 26th. Reservations may be made at 866 873-6083 for the Federal/State Basic Payroll Tax Seminar, or on line at http://www.edd.ca.gov/taxsem/txsemrs.asp?SemID=3145.

These seminars have proven to be very popular, plus they’re free.

Why I love the “S” Corporation
Andy will be doing a presentation for the Solano/Napa EA Society Tuesday, January 22nd 2008 at 6 pm. More details at http://www.solanonapa-ea.org/

How to Prepare your Own Schedule C
Prepare your business taxes for ’07 and get ready for ‘08. Review what the IRS wants to know from you and how to report it on the Schedule C for your business. This is a class for business owners who need a basic understanding of their 1040 Schedule C tax forms. We’ll also talk about what to do with the numbers once you have them. We can’t guarantee you won’t get audited, but this class will make it less likely.

This class will be presented again 6-8:30 pm on Friday January 25th in San Francisco and Monday January 28th in Oakland at the Women’s Initiative for Self Employment. Contact for more info at at (415) 641-3470. They charge a nominal fee.

We’ll also be at the US Small Business Administration offices in San Francisco at 455 Market Street, 6th Floor on February 25th, 6-8:30 pm. This class will be free.

The Next Product(s)

We’re hard a work on two new products, a Video on CD about 1099s with a release date of January 1, 2008. This video can be ordered for $39 at www.TaxBuddha.com/1099

“The 8-Fold Path to Paying Less Tax and Avoid an Audit” includes chapters on Auto Expenses, Home Office Deduction, Business vs. Personal expenses, Meal and Travel receipts, Incorporation, Miscellaneous Deductions, Retirement Plan contributions, and When to Hire Professional Help. Release date is pending, but we’re hoping for February 1st.

Your Questions in Future Newsletters

eel free to e-mail questions you’d like answered. If we think it is a topic of general interest, we’ll include the answer in upcoming newsletters! Next issue we’ll look at 1096’s—the transmittal forms for the 1099s.