TAX PREPARATION AUDIT, THE MOST COMMON TAX MISTAKES

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It’s that time of year again – tax preparation season. Now that the holidays have come and gone, you may want to start getting ready for April 15th. Below are a few of the most common mistakes that are made when preparing tax returns:

  • Forgetting to report all income: Be sure to include income from freelance work throughout the year.
  • Accounting for business expenses as a sole proprietor: If you are claiming expenses for your business, it is important to understand what is and what isn’t deductible.
  • Deducting Private Mortgage Insurance (PMI): In order to qualify, the origination of your mortgage must have occurred on or after January 1, 2007. In addition, the property must be your primary residence and your adjusted gross income must be $100k or less for full deduction (partial deductions up to $109K).
  • It has to be from 2010: If you moved to a new location for a job, all expenses should be made in the taxable year.
  • Claiming a dependent: If your grown children have returned home, be sure to check if they qualify as a dependent.
  • Filing under the wrong status: Be clear as to whether you are single or married.
  • Using the wrong social security number or filing status: Double check your social security number (just one wrong number can be troublesome) and if you are married, be sure to check the appropriate box.
  • Claiming hybrid automobiles as a tax deduction: Consult a GYL Decauwer accountant on whether the make of your hybrid automobile qualifies for a tax credit.
  • Not realizing the benefits of non-cash donations: You can claim up to $5,000 in non-cash donations without an appraisal.

These are only a few things to be aware of when preparing your tax return; there are many more that may require the help of a certified public accountant (CPA). At GYL Decauwer, LLP, there are professional accountants who are skilled in income tax preparation services. By enlisting GYL to help with your tax planning early on, we can help uncover deductables you may be able to write off in your tax return.

We offer a full range of accounting services to help your business grow. The accountant professionals at GYL Decauwer, LLP, in the Inland Empire and Corona areas, are dedicated to helping you benefit from your return. You can contact us to schedule a consultation.

YEAR END TAX PLANNING AND NEW TAXES AND BEYOND

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179 expensing on fixed asset purchases is still accelerated for a 2011 audit in Redlands and surrounding areas with up to $500,000 with a 2 million phaseout threshold. Heavy SUVS still qualify for 2011 expensing also. While attractive tax deductions do not pay for assets. At a maximum 45% combined fed and state rate you still pay 55% of the cost from after tax dollars. Do not let deductions determine a decision.

Pension plans need to be set up before year end. Do not settle for a standard plan if greater deductions are needed or desired. There are a host of options in this area. Sometimes paying tax at a favorable rate can be a good strategy. Capital gains rates will go up and are now at historically low rates. Perfect timing is rarely achieved so paying low rates now could be your best bet.

Lastly health care tax credits are available for certain small companies with less than 25 employees and average wages paid below $50,000. This credit can be easily missed as it is new and restrictive. If the Obama health care act continues to go thru new medicare taxes will start in 2013 on investment income as well as income earners over 250k.