Huzzah! March is ending! In like a lion, out like a…slightly more soggy lion. In just over two weeks, we tax professionals will actually begin to taste food and see daylight and our families. Right now, we just have calories, caffeine – which is losing its impact – and tax filings. Let us not forget the beauty of extensions.
Clients might provide numbers on their tax returns that can be red flags for the Internal Revenue Service. Honesty should always be the theme for any tax professional; it’s one of our better policies. Let’s quickly review what we’d advise against having fly under the IRS’s radar.
Charitable Donations That Don’t Add Up
Let’s assume your client earned $100,000 last year. Claiming $35,000 in charitable deductions is a major red flag unless he or she can support it with proof of a major donation – like a house or vehicles. Clients need to keep their receipts, too. Donating clothes in a Salvation Army bin will not qualify for a write-off without written proof.
If you can’t be honest about charitable donations, then you need a moral consult – and that also cannot be written off. Unless it’s a shrink, in which case it might fit under the medical deductions subject to the adjusted gross income floor.
Your Home Office’s Legitimacy
Depending on what your clients do for a living, they may claim to have a home office. I beg you for all that’s holy, don’t take one. However, if you insist, we’ve discussed the basics of legitimizing one; typically, for example, a dentist needs one and most bloggers do not.
For that reason, an audit is on the way for clients who claim home offices. Good for Brinen & Associates, LLC, not so good for the client.
Form 2106 is what we use to itemize business expenses. An example of an item that does not belong would be a Roku player. The items listed must be absolutely vital to performing one’s professional duties. Everyone should check the IRS site’s page regularly because the rules are always changing.
Looking To April
Typically, right after April 15, those with past-due taxes may be contacted by the IRS’ Treasury Offset Program to collect. This is its way of working with taxpayers to resolve tax debts.
The crucial part of this reminder is that the program’s agents will not email and typically won’t call – so watch out for impersonators and scamsters. Clients who are in debt should be checking their mail and bringing any notices to your attention.
Please feel free to contact Brinen & Associates for your tax and accounting needs, even during this busy time.
On a personal note, to all my friends who “grew up” with me in the late 1990s in the West Village, crowded around tables with me at Jack the Ripper’s, I’d like to note the passing of our friend, Eric Hansen. He was a profound influence on us all, and contributed to making me who I am today.
We’ve all gone in different directions and don’t speak as much as we should. It is a shame that the soundtrack to our youth has been cut short.