February, 2010

Home Office Deduction

Here are five important things about claiming the home office deduction as reminder from the IRS.

  1. Generally, in order to claim a business deduction for your home, you must use part of your home exclusively and regularly: For certain storage use, rental use or daycare-facility use, you are required to use the property regularly but not exclusively. Daycare rules are especially byzantine.
  2. Generally, the amount you can deduct depends on the percentage of your home that you used for business. Your deduction for certain expenses will be limited if your gross income from your business is less than your total business expenses.
  3. There are special rules for qualified daycare providers and for persons storing business inventory or product samples.
  4. If you are self-employed, use Form 8829, Expenses for Business Use of Your Home, to figure your home office deduction. Report the deduction on line 30 of Schedule C, Form 1040.
  5. Different rules apply to claiming the home office deduction if you are an employee. For example, the regular and exclusive business use must be for the convenience of your employer.
    For more information see IRS Publication 587, Business Use of Your Home, available on IRS.gov or by calling 800-TAX-FORM (800-829-3676).
    Link: Publication 587, Business Use of Your Home

Need to See Copies of Some Documents

The IRS mailed Notice 1383 as a reminder of the following:

Authorized IRS e-file Providers (i.e. me, if I’m preparing your personal return) must not submit electronic returns to the IRS prior to the receipt of all Forms W-2, W-2G, and 1099-R from the taxpayers (i.e. you).

If taxpayers are unable to secure and provide a correct Form W-2, W-2G, or 1099-R, Providers may submit the electronic return only after securing Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Insurance Contracts, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs etc. in accordance with the use of that form. This is the only time Providers should submit an electronic return with information from pay stubs or Leave and Earning Statements (LES).

Besides, I like to see the W-2s so I can decide if some of the odd things they put on there are relevant or not, plus you’d be surprised how things can “drift” between the last paystub and the “official” document. I see a lot of them and I’m likely to notice something that may help your taxes.

The Eightfold Path to Pay Less Tax and Avoid an Audit

Eight basic things business owners want to know printed in booklet form. This is ten years of working with the IRS Tax Code distilled down so it doesn’t take YOU ten years.

Just another way we’re trying to simplify your life. And the purchase is tax deductible!

You can order from Amazon.com. Here’s the link to Amazon:

The booklet also contains a sections on how returns are selected for audit, when to seek professional help, and how long to keep your tax records.

Classes – Intermediate S Corporation, Basic Payroll, Schedule C, and Household Employees

The website has been recently updated to include a calendar in the Seminars section showing dates for upcoming classes in a more visual way, so you can pick a date that works for you.

Intermediate S Corporation Class will be presented in Alameda to up to five participants. This is an intermediate class, so we won’t be discussing how to fill out the form. The GAO has recently completed their survey of S Corporations and has made recommendations to the IRS for changes; we’ll be looking at how to quickly solve the most common problems encountered with preparing an 1120S, and what to do now to reduce the likelihood of future problems. Class is limited to 5 participants, so you’ll be able to ask all your questions. The offerings before March are all sold out, so you’ll have to wait until May if you’re interested.

“This is the best class on S Corps I’ve ever been to, and I’ve been to a lot.”

I’m working on plans to offer this again after tax season.

Send me an e-mail if you want to attend. Flyer is on the website at www.TaxBuddha.com/1120_S_Flyer_2010.pdf

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
Basic Payroll in San Francisco at the SBA office 455 Market Street, 6th floor (I take BART to Embarcadero) 9 am – 3 pm.
Wednesday February 24

Basic Payroll in Oakland at Elihu M. Harris State Building,1515 Clay Street, Room 1, Second Floor, 9 am – 3 pm.
Thursday February 11
Thursday March 11

Register by going to http://www.edd.ca.gov/Payroll_Tax_Seminars/ and find your favorite location. We’re working on the 2010 schedule, and trying to figure out how I can present this in other states.

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

How to Prepare your Own Schedule C
Prepare your business taxes for ’09 and get ready for ‘10. 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 for free in San Jose on Wednesday, February 3rd 10 am – 12:30 pm at the US Small Business Administration
100 E. Santa Clara St, San Jose CA
Wednesday Febuary 3
Wednesday May 5

Andy will be at the US Small Business Administration offices in San Francisco at 455 Market Street, 6th Floor on Tuesday, February 16th, 6-8:30 pm. This class will be free. To register, check out the SBA website www.SBAtraining.eventbrite.com, or just show up. This class will also be offered at this location on May 4, 6 pm – 8:30 pm.

Technology and Marketing is a prospective mini-seminar to discuss the use of technology in a tax preparation practice, and marketing services, with a segment on social media to link them. We’ll look at some of the ideas of Seth Godin and the Heath brothers, Twitter, Facebook, web sites and newsletters. You should know in advance that I agree with Duncan Sandiland: everyone should have a dual monitor computer system.

Household Employees class discusses the wacky rules for household employees and who might have one, including “grossing up” where Federal and California lack conformity. I’m working on finding an additional venue to present this again in 2010.

Balance Sheets: What are they good for? is a two hour after dinner presentation in San Mateo December 1 at 6:30. I’m looking forward to talking about the story I can read in a balance sheet.

I went to a class on QuickBooks given by Kim Woodrum. If you’re in the market for QuickBooks training in a classroom setting, I recommend her. She teaches a two day QuickBooks seminar and travels a great deal. Her website is http://www.manibusinessservices.com/

For Relaxation and Clear Thinking: On The Spot

To carry you through the stressful tax season, we recommend meditation and that you check out On The Spot Massage at http://www.onthespotmassage.com/corporate.html to help you relax. A relaxed mind is a clear thinking mind. We have some discount cards for $5 off at the Alameda Natural Grocery location on Park Street, open daily 11 am – 7 pm.

Phone and Fax Numbers

Our northern California physical office is shared commercial space in Alameda. Phone numbers are:
Phone (510) 522-2300
Fax (510) 522-2307
Our mailing address:
3527 Mt. Diablo Blvd #366, Lafayette CA 94549

“The hardest thing in the world to understand is the income tax.” — Albert Einstein, physicist