Documenting your travel and mileage expenses can be a real task, but it needs to be a priority if you want to be able to take the deduction on your tax return.
The IRS says that deduction documentation needs to be: "Documentary evidence ordinarily will be considered adequate if it shows the amount, date, place, and essential character of the expense." They also add that it needs to be updated in a timely manner, and they suggest weekly. Developing this list at the end of the year is not acceptable according to IRS standards.
So buy a small notebook or print off this sample mileage record log that you can use [Link] and keep it in your car. That way you can write down the miles as they happen and it won't get away from you.
Keep in mind that this chore is much less painful than an IRS audit would be.
If you receive payments from a disability insurance policy, odds are that is not taxable to you. Since you didn't deduct the premiums that you have been paying over the years, the benefits are not taxable (similar to life insurance policies).
However, if the policy was provided through your workplace and your employer has been paying (and deducting) those premium payments through the years, then the benefits would be taxable to you. So this would be the exception to the rule.
Note that if you have a policy where some of the policy is paid by your employer and some is paid by you with after-tax money, then you could exclude a portion of the benefits from taxation based on the ratio of who paid the premiums.
However, if the policy was provided through your workplace and your employer has been paying (and deducting) those premium payments through the years, then the benefits would be taxable to you. So this would be the exception to the rule.
Note that if you have a policy where some of the policy is paid by your employer and some is paid by you with after-tax money, then you could exclude a portion of the benefits from taxation based on the ratio of who paid the premiums.
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Most new small businesses want the self employment tax benefits of an S Corporation. They are still faced with a choice becuase an LLC can be taxed as an S Corporation. So the choice of forming an LLC or a corporation can be a difficult one.
Both structures offer great liability protection over your personal assets.
One benefit that I have read about is that LLC's offer greater protection of your business assets if you have a personal liability problem (an auto accident, someone falls at your house and sues you personally). It would be a travesty to lose your business ownership due to a personal liability suit. [Source]
LLC's also have lower administrative requirements, like keeping annual board meeting minutes and electing officers. While not difficult to do, if you neglect this practice for your corporation then the courts could disallow your corporate structure and that would expose you to liability and loss.
LLC's do have a greater price tag in NC. Starting them up is the same ($125 to the Secretary of State), but maintaining them is not equal. LLC's pay an annual fee of $200, while corporations pay an annual fee of $60. Consider that extra fee like an insurance policy that gives you the above mentioned protections.
There is a reason that many people are organizing LLC's rather than corporations these days, but these are just a few of the considerations when starting a new business. Be sure to call and discuss this with me before making a move, as well as with your attorney.
Disclaimer: I am not an attorney and you should not rely simply on the above information when making your decision about organizing your business. These are just things you should consider and discuss further with you attorney so that you make the best choice.
Both structures offer great liability protection over your personal assets.
One benefit that I have read about is that LLC's offer greater protection of your business assets if you have a personal liability problem (an auto accident, someone falls at your house and sues you personally). It would be a travesty to lose your business ownership due to a personal liability suit. [Source]
LLC's also have lower administrative requirements, like keeping annual board meeting minutes and electing officers. While not difficult to do, if you neglect this practice for your corporation then the courts could disallow your corporate structure and that would expose you to liability and loss.
LLC's do have a greater price tag in NC. Starting them up is the same ($125 to the Secretary of State), but maintaining them is not equal. LLC's pay an annual fee of $200, while corporations pay an annual fee of $60. Consider that extra fee like an insurance policy that gives you the above mentioned protections.
There is a reason that many people are organizing LLC's rather than corporations these days, but these are just a few of the considerations when starting a new business. Be sure to call and discuss this with me before making a move, as well as with your attorney.
Disclaimer: I am not an attorney and you should not rely simply on the above information when making your decision about organizing your business. These are just things you should consider and discuss further with you attorney so that you make the best choice.
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The IRS is apparently trying to add online access to your tax records. It comes at a hefty price tag, and for now it is just a faint promise. It would be a great tool if they could create this access without any security issues. Hey, the banks do it with equally sensitive information, so why can't the IRS? I'll admit I have some doubts and concerns.
But the lure of not spending large amounts of time on hold to speak to an IRS representative so that they can mail or fax an account transcript is very appealing. This move would make communication between the IRS and taxpapers/preparers so much easier, and would free up the phone lines for more complex issues than ordering a transcript.
Source
But the lure of not spending large amounts of time on hold to speak to an IRS representative so that they can mail or fax an account transcript is very appealing. This move would make communication between the IRS and taxpapers/preparers so much easier, and would free up the phone lines for more complex issues than ordering a transcript.
Source
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We are all way to familiar with sales taxes, but what exactly is a use tax?
The state of NC would love for you to be better informed of your use tax responsibilities. If you buy something outside of NC and bring it/ship it here for use, then you are liable for use tax. It is the same rate as the sales tax, and submitted in the same way.
If you are a business you would submit the use tax when you submit your sales tax due each month. If you are an individual the state of NC has made it easy for you to submit your use tax on your personal tax return. You can either use a table to estimate your use tax liability (based on your income level), or you can report actual out of state purchases.
This is becoming more and more of an issue for states as they lose more money to out of state retailers with an online presence like Amazon. But don't think that just becuase Amazon doesn't charge sales tax on your purchase that you are off the hook. According to the law, responsibility for paying the use tax on that purchase lies with you, the purchaser.
Article
Sales and Use Tax Home - NCDOR
The state of NC would love for you to be better informed of your use tax responsibilities. If you buy something outside of NC and bring it/ship it here for use, then you are liable for use tax. It is the same rate as the sales tax, and submitted in the same way.
If you are a business you would submit the use tax when you submit your sales tax due each month. If you are an individual the state of NC has made it easy for you to submit your use tax on your personal tax return. You can either use a table to estimate your use tax liability (based on your income level), or you can report actual out of state purchases.
This is becoming more and more of an issue for states as they lose more money to out of state retailers with an online presence like Amazon. But don't think that just becuase Amazon doesn't charge sales tax on your purchase that you are off the hook. According to the law, responsibility for paying the use tax on that purchase lies with you, the purchaser.
Article
Sales and Use Tax Home - NCDOR
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Two new schedules in one year! So much for tax code simplification I guess.
First it was Schedule L, and now we have the introduction of Schedule M. It will be used to help taxpayers know if they qualify for making work pay and retiree credits.
If you are paying your tax preparer by the page (Jackson Hewitt, HR Block, Liberty), beware. These groups must be lobbying congress to add additional schedules to pad their bottom line.
The good news if you are a client...I charge by the hour and not by the page, and the computer fills out forms like these effortlessly.
Link
First it was Schedule L, and now we have the introduction of Schedule M. It will be used to help taxpayers know if they qualify for making work pay and retiree credits.
If you are paying your tax preparer by the page (Jackson Hewitt, HR Block, Liberty), beware. These groups must be lobbying congress to add additional schedules to pad their bottom line.
The good news if you are a client...I charge by the hour and not by the page, and the computer fills out forms like these effortlessly.
Link
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People are suffering from layoffs and tighter budgets due to the downturn in the economy. The state of NC decided that a tax hike in sales tax, income tax, and various other "fees" was just what we needed in order to get everything back on track. Everything in their arena that is.
Today the NC state sales tax rate goes from 6.75 to 7.75% here in wake county.
The general assembly and governor also signed an "income tax surcharge" into effect. A very creative way of saying tax hike.
This is supposedly a "temporary" measure. The extra cent charged on every $1 in purchases expires July 1, 2011, while the income tax increase expires at the close of 2010. Don't hold your breath.
Link 1
Link 2
Today the NC state sales tax rate goes from 6.75 to 7.75% here in wake county.
The general assembly and governor also signed an "income tax surcharge" into effect. A very creative way of saying tax hike.
This is supposedly a "temporary" measure. The extra cent charged on every $1 in purchases expires July 1, 2011, while the income tax increase expires at the close of 2010. Don't hold your breath.
Link 1
Link 2
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