pro •ac•tive - certified tax coach...the irs does not frown on aggressively deducting these...

Here’s How to Beat the IRS. Legally!

PRO •ac•tive

[prōh-ak-tive] - adjectiveServing to prepare for, intervene in, or control an expected occurrence or situation, esp. a negative or difficult one; anticipatory: proactive measures to save tax.

If you run your own business or manage investments, you rely on information. Information on products, markets, and customers. Information to make money. And information to keep money.

You rely on your accountant for some of your most important information. But what does your accountant actually do with that information?

At tax time, your books tell your accountant how much tax you owe. You scramble for more receipts and more deductions. But by tax time, it’s usually too late to do anything more.

Most accountants do a fine job recording history – the history you give them! They compile monthly, quarterly, and annual books and records. At tax time, they put the “right” numbers in the right boxes on the right forms, and file them by the right deadlines. But then they call it a day.

Is that all you really want?

To minimize your taxes, you need a plan. You need concepts and strategies that leave more on your bottom line, without raising “red flags” or straying into “gray areas.”

It doesn’t matter how good your current accountant is with a stack of receipts on April 15. If you haven’t planned right, by April 15 it’s just too late.

Have you organized your business right? Do you have the right benefit plans for yourself and your employees? Do you have the right retirement plan to prepare for your future. Are you taking advantage of all the legitimate deductions, credits, loopholes, and strategies the tax code offers?

Wednesday, October 3, 12

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8 Ways to reduce your tax bill RIGHT NOW

Use that Health Savings Account

We see many people who are spending much more than they need to for medical expenses not covered by insurance. You know – prescriptions, eyeglasses, vision exams and the like.

Many clients have what’s called High Deductible Health Plans for their insurance. They pay all their medical expenses until they reach the annual deductible. Then insurance covers most or all of the remaining expenses for the year.

If you have this type of insurance, you are eligible to establish and use a Health Savings Account (HSA). These are tax-deductible savings accounts for paying healthcare costs not covered by insurance. The concept is simple. Your employer buys high-deductible health insurance to cut monthly premiums. Then you or your employer contributes to a deductible savings account for routine medical costs.

You can establish an HSA if you meet four tests:•The High Deducible Health Plan must have deductibles of at least $1,200 (singles) or $2,400 (families) and out-of pocket limits up to $5,950 (singles) or $11,900 (families) (2012). •You’re not covered by any plan that isn’t an HDHP, either individually, as a spouse, or as a dependent.•You’re not eligible for Medicare.•You can’t be claimed as a dependent on anyone else’s return.


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Once you’re eligible, you or your employer can contribute to your account under these rules:•You can contribute up to $3,100 (singles) or $6,250 (families). You can make your 2012 contribution any time from January 1, 2012 through April 15, 2013. However, the plan itself must be in place by December 1, 2012 to qualify for deductible contributions in 2012.•If you or your spouse is 55 or older, you can make extra “catch up "contributions up to $1,000.•You can withdraw funds tax-free for “qualified medical costs.” •Withdrawals for any other purpose are subject to ordinary income tax plus a 20% penalty.

Want to learn more? Contact us or see IRS Publication 969:Health Savings Accounts and IRS Notice 2004-2: Guidance on Health Savings Accounts

Convenient Tax Service LLC is the result of that plan. John founded a firm dedicated to providing the same proactive tax planning and maintenance expertise that the "big boys" enjoy. He coined the phrase "Financial CPR for the Overtaxed!"™ to explain the comprehensive service offered his clients.

John Acker EA, CTCConvenient Tax Service LLCPO Box 154Farmington, MI 48332Phone: 248-982-7178Fax: [email protected]


mailto:[email protected]


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Start a Business

Most people have a passion or skill or idea that they always thought could make them money. Now’s your time!

There are a lot of different businesses that can be started on a fairly low budget and operated from home. These can include service businesses, such as consulting, or sales businesses such as eBay or direct sales like Avon, Amway, etc. Of course this brings with it a lot of benefits for the new business owner! You are able to deduct all the regular business-type expenses such as supplies, advertising, accounting fees, etc.

You are also able to deduct auto expenses (mileage or actual expenses) for all of your business related trips. For instance, driving to the office supply store or to a client’s place are both legitimate business purposes. Commuting miles are not deductible.

If you operate your new business out of your home, you may qualify to take the home office deduction. In order to qualify, your home office does not have to be a whole room, it can be a part of a room, but the home office area needs to be used exclusively for your new business. Once that is established, you are able to deduct part of your utilities, homeowner’s insurance and other housing expenses. You even get to write off part of your house through depreciation. If you rent instead of own your home, you are not excluded! You can deduct a portion of your rent as a business expense.

Having your own business can open up a lot of tax-saving doors for you. We specialize in helping start-up businesses get started on the right foot. If you have questions, please contact us at [email protected].

Doug Guard is not your typical accountant. He is a Certified Tax Coach. He is with Book of Numbers, an accounting, payroll and tax firm specializing in proactive tax planning for business owners and real estate investors and professionals.

Doug Guard, CTCBook of Numbers511 W Main St. Suite 2Genoa, Illinois 60135(815) [email protected]




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Travels, Meals and Entertainment ExplainedSitting down and asking a friend “how’s business” before diving into a nice hot steak is NOT a deductible meal. If, on the other hand, you went to a place that was very conducive to business discussions, spoke at length with the other people at the table about your business or a cooperative project, and did so while eating a meal, well, THAT is a deductible meal.The issue that tends to confuse some people is what the exact definition of business travel, meals, entertainment, and gifts actually are.

In this section, we are going to look closely at meals, gifts, and travel and show you how to incorporate them into your developing tax plans. You should know that this is another area of frequently “missed” deductions that can easily add up to a substantial dollar amount.

Business MealsSo, we just learned that you can deduct the cost for a meal when it is for a “bona fide” business purpose. In other words, it has to be attended by yourself, potential or current clients, colleagues, etc. Do you see a lot of potential with that list? After all, how often are you NOT dining with potential clients, colleagues, etc.?

The LimitationsThe IRS does not frown on aggressively deducting these things, but they do have some limits. For example:

•You can deduct up to 50% of viable meal expenses;•Meals served in your home count (if there are more than 12 people in attendance, the cost of employees for the meal can be deducted as well);•You need receipts only for those meals over $75;•The IRS wants to know the cost of the meal, the date, the place where it occurred, the purpose for the meal (meaning the business purpose or what benefits were gained from it; and the relationship of those in attendance (names, titles, etc.);•You cannot deduct meals with your spouse unless you are traveling together strictly for business;•You can deduct 100% of the cost for meals if they are in the form of a seminar or similar event; and•You can deduct the cost of meals that you provide for employees when it is for the convenience of the business. For example, if you need the staff to stay “on call” and provide meals to facilitate their presence on the premises, this is a deductible expense. Additionally, you can deduct off-premises meals when employees attend any mandatory meetings that are not in the business headquarters.

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Entertainment is also categorized under the meals heading, but is a bit different. The limitations for this deduction are:

•You can only deduct 50% of the entertainment expenses if they occur directly before or after a bona fide business discussion or meeting. For example, tickets to the theater or to sporting events, foods and drinks, parking fees, taxes, and tips count towards entertainment expenses;•If you host a charity event or recreational activity for employees, you can deduct 100% of the costs associated with it;•You cannot deduct membership dues for private clubs, but the meal and entertainment expenses accrued in such places qualifyIt is a wise idea to keep pristine records of these activities, and we suggest a date book or planner that itemizes all of the information and details as required by the IRS.

Business GiftsMost business professionals will have an opportunity to present a client, colleague or employee with some sort of acknowledgement of their appreciation. Such things can qualify as business gifts when they meet the following IRS criteria:

•If they cost less than $25 (you can choose to deduct the full $25 cost for an item or opt to use 50% as an entertainment expense if the gift is something like a show or sporting event tickets);•If they can be shown to have an actual business purpose or benefit;•When the gifts are given to groups, the deduction is up to $25 per recipient;•Contest prizes given to customers qualify, though they are disqualified if the prizes went to employees; and•Ad specials with up to a $4 value are deductible as advertising expenses and do not count towards the $25 limit for business gifts.When tracking gifts, keep the same records as you do for meals with a line item containing details about the cost of the gift, the date it was given, a description of the gift, the purpose with the benefit to the business identified, and the relationship of the recipient(s) to the business owner.

Business TravelAgain, this is another confusing item because of the general lack of understanding about vehicle deductions, etc.Travel expenses are only acceptable when they are related to trips made specifically for your business or your trade. To qualify the travel must:

•Be at least one “overnight” period. This is where the “business days” terminology applies too. For example, if you want to write off a weekend, you can do so if it falls between business appointments that require you to stay over at least one night (before or after you have conducted the business in question);•Business days must include at least four hours and one minute of work;•A business day can include 50% of the meals and entertainment, 100% of the lodging and transportation, as well as the laundry, and


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•If your spouse is employed by the business their expenses can be applied to the deduction too;•You can include travel expenses for a trip meant to assess an investment property. If you buy the property the trip is amortized over 60 months, and if you do not buy the property you deduct the cost of the trip as a business loss; and•You must have receipts for any expenses more than $75.

Additionally, the following terms apply:

Don’t overlook any of these expenses related to meals and entertainment, gifts or travel because they occur much more than most people realize. The simplest way to document them is to create a notebook or ledger (paper or electronic) that takes them into consideration. Making note of the mandatory information for the IRS helps to also keep track of them and most people are surprised at the size of the deductions they generate come tax time!

How to Deduct Transportation CostsHow to Deduct Transportation CostsHow to Deduct Transportation Costs

Inside U.S.Inside U.S.Inside U.S.Length of Trip Business % Deduction:

Less than one week More than 50% 100% of Trans costsLess than one week 50% or less No Trans costsMore than one week More than 75% 100% of Trans costsMore than one week 75% or less Business % of Trans

costsOutside of the U.S.Outside of the U.S.Outside of the U.S.Length of Trip Business % Deduction:

Less than one week More than 75% 100% of Trans costsLess than one week 75% or less Business % of Trans

costsMore than one week Any Business % of Trans costs

Ron D’Arminio is not your typical CPA. He is a Certified Tax Coach with a Master of Science in Taxation from Seton Hall University. He combines his technical expertise with his 27 years of experience to help you make more and keep more of what you make.

Ronald D’Arminio CPA ,MST, CTC415 Route 10 EastRandolph ,NJ 7869Phone: 973-328-2900 ext.2Fax:[email protected]




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Hunt for “Change in Sofa Cushions”

As your mother may have mentioned, change is often found beneath the sofa cushions. The same principle applies to saving money with your taxes.

Take the time to carefully examine where you spent your money either with checks, credit card or debit cards in a search for every possible deductible business expense. Did you remember to check expenditures from your PayPal account or other on-line payment services? Also, look at any rental or leasing agreements for possible business write-offs. It is amazing how the purchase of a large item may be missed on the tax return. Finally, review all your receipts to determine if any additional deductions exist. Knowing how you spent your money will assist you in saving your cash when filing your taxes.

Look for business expenses which your employer or your business didn’t reimburse you, it becomes a tax write-off. Don’t forget about money spent for supplies, smart phones, computers, software, apps, tools, education and professional publications.

Travel related expenses are another source of missed deductions. Work-related meals, business entertainment, storage space at home, travel away from home, and business use of your car are deductible. Incidental expenses are deductible too. You may deduct items incurred while traveling such as reading material, cleaning clothes, refreshments, tips, and other small out-of-pocket items. These expenses may be small but they will add up to tax savings.


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Cleaning of work related clothing is deductible when it is primarily used for business. The cleaning of uniform and company logoed shirts can add to the business expenses deducted. Don’t forget you are allowed to clean your clothes when you return from a business trip.

One of the best ways to save your cash now is to identify all these small expenses and realize their value by deducting them on your tax return. You have already spent the cash on these items, so you should realize the benefit on these tax deductions. As your Mother realized, the change found under your sofa cushions adds up to real dollars in your pocket.

Certified to practice public accounting in both Arizona and Colorado, I began a private practice in Summit County during 1996 providing tax preparation and planning services with emphasis in real estate and construction issues to individuals and businesses. I assist clients in developing financial plans and budgets, evaluating and installing accounting systems, and developing their financial statements. My background also includes serving as an officer of the Court in roles such as Business Receiver, Guardian, Conservator, and Personal Representative.

Larry Stone CPA, CTCStone CPA LLCColorado Tax CoachPhone: 888-668-0772Fax: 970-668-0434699 Summit Blvd, Suite F PO Box 4605Frisco, CO [email protected]




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How To Deduct College Costs

I have been practicing accounting and tax since 1981 and am licensed as a CPA in both New York and Florida. In addition to being a CPA, I hold a current insurance license and work with a network of professionals to provide complete financial services to my clients.

My approach with clients is to not only handle their tax compliance issues ,such as filing tax returns , but to take an overall approach to proactive tax planning in order to minimize tax liability and preserve wealth.

Ron Mermer, CPA CTC520 North State RoadBriarcliff Manor, NY 10510Phone: [email protected]

For those who are in their own business , let the government help pay for college by deducting college costs. To begin with, you will need to hire your child. You should make sure that the child is actually employed and performing services for your business. You can deduct reasonable salary paid to your son or daughter which can be used to pay for college. In addition, if you are operating as a sole proprietor , you will not pay any federal payroll tax as long as your son or daughter is under age 18 . If there are no other employees you may want to set up an education reimbursement plan. This will allow a non taxable benefit and a business tax deduction up to $5250 per year. One important issue, you cannot discriminate against other employees so this works the best when one spouse is working for the other and the owner sets up the plan . If you are incorporated, only a corporation which is a C corp can have the same benefit. The only exception is that there is no exclusion of payroll tax. All wages paid will be subject to federal payroll tax. Additionally by hiring your son or daughter, they will be eligible to set up a Roth IRA. This too can be used as a college cost planning tool. Proactive tax planning will help determine what is best for your situation.




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Tracking your expenses is key to getting maximum benefit at tax time

The key is to keep it simple! A good filing system with a good index so that everyone who does the filing follows the same format is critical. Some of the areas to concentrate on are:

Medical Expenses –it can be tough to get much of a break for medical costs. You qualify for the tax break only if you itemize your deductions, and you can write off expenses only if the total exceeds 7.5% of your adjusted gross income. Things do add up fast and even if you begin the year expecting minimal medical expenses, life does happen and you could end the year with more than you expected. Systematically save all your medical receipts to a file and have all the information available to you at year end.

Tax Breaks for the Self-Employed – As a self employed person you will be able to deduct the cost of equipment you use in your business, such as a computer, printer, fax machine and copier, as well as a dedicated phone line, office supplies, business travel and advertising. You may even be able to deduct a portion of your rent or mortgage, homeowners insurance and utilities if you have a qualified home office. I work with some entertainment industry folks who are even able to deduct cable, Netflix and movies, CD’s and DVD’s to the extent that it relates to their business activity. As with all tax deductions, it needs documentation, which comes down to good record keeping.

Flexible Spending Accounts – Another way to save on your taxes is to participate in your employer’s Cafeteria Plan. With an FSA, an employee is able to set aside a portion of earnings to pay for qualified expenses as established in the cafeteria plan, most commonly for medical expenses but often for dependent care or other expenses. This results in significant payroll tax savings. The potential downside is the “use it or lose it” stipulation. In order to have a good idea of what your needs will be, you need to examine what your spending history has been. That’s where good record keeping comes in handy.

Tax Breaks for the Investor – Periodically culling your taxable investment accounts of the “duds” or losing positions can provide multiple benefits. First of all it can improve the after tax returns in your taxable accounts.


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When preparing your taxes, offset capital gains with the capital losses and avoid paying tax on the gains. Simply put, subtract the short term capital losses from the short term capital gains and then do the same for the long term gains and losses. Then apply the remaining losses against the remaining gains. To the extent that capital losses exceed the capital gains, you can then deduct up to $3000 against income and carry forward the additional losses for future use.

Not only will you benefit from a tax perspective, but you will be out of the poor performers and can choose other investments. Or in the true spirit of tax loss harvesting, exit the current positions now and repurchase the same positions after the “wash rule” period has passed. This will enable you to lock in the loss and continue holding the investment if it continues to suit your asset allocation and diversification needs. If you sell the position down the road, your cost basis will be the new lower repurchase amount. Or, if you and your spouse hold the position till after your deaths, your heirs would receive a step up in basis to the date of death and you will have gotten the up-front benefit from tax loss harvesting while avoiding the taxes on the back end entirely.

Finally, the extra capital gains you owe in the (possibly distant) future will be at the (lower) capital gains rate, while the benefit you receive today of the $3,000 deduction is at your (higher) marginal income tax rate.

Since a “Tax Deferred is a Tax Avoided” it is like getting a tax free loan from the IRS.

Clients sometimes imagine “financial planning” as a theoretical exercise with little immediate, real-world value. But I’m committed to the process because I’ve seen it work up close and seen how it saves families from financial disaster.

Are you looking to leverage your success into a lifetime of financial security? Would you sleep better knowing you’re safe from the hidden agendas that threaten your security? Are you interested in a real relationship with someone you can trust with your money? Pick up the phone and call me at 818-725-1202.

Susan Honig, EA CTCVeritana Financial Planning, Inc3500 W. Olive Avenue, Suite 300Burbank, CA 91505(818)725-1202 [email protected]




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Would you like to Deduct a Cruise for You and Your Employees ?

Generally, business meals and entertainment are limited to a 50% deduction for tax purposes. How can you get a 100% write off for your next cruise?

Oftentimes companies hold retreats and company meetings at places outside the business location such as at a resort, on cruise ships or even outside the US. As these meetings are often expensive, it is important to structure them correctly so that maximum tax deductions are received. These meetings are opportunities for employees and managers to meet and discuss new product ideas, business strategies, and even plan future activities. Oftentimes, there are certain elements of fun or vacation involved in these meetings. When you travel by airplane, there is no dollar limits on your deduction. When you travel on a cruise ship, there may be a daily dollar limit on your deduction.

When your travel takes you outside the United States, you may deduct 100% of the cost of your travel to and from your business destination if your trip is less than one week, excluding the day of departure; or longer than one week, and you spend less than 25% of your days on personal activities.

For your business travel to qualify for deduction inside the North American area, it only needs to meet the “ordinary and necessary” requirement. You may deduct travel in the ordinary and necessary course of your business, which means simply that you need a business reason for going to the event.

If you attend a meeting outside the North American area, you get no deduction unless you can establish that the meeting is directly related to the active conduct of your business and that it is as reasonable for the meeting to be held outside the North American area as within the North American area.

It is much simpler to cruise inside the North American area.

Diane Gardner is the founder of Adept Business Services where she provides bookkeeping, payroll and income tax services to her many clients. Diane has over 25 years experience working with small business owners in the bookkeeping and tax fields. She has extensive experience working in the non-profit sector as well.

Diane Gardner, EA ATP CTCAdept Business Services8065 W Main St.Rathdrum, ID 83858(208) [email protected]


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2 Ways to Hire Your Family and Deduct Money You Already SpendFully understanding this tactic can produce incredible tax savings without you having to spend additional money to get the deductions.

First, let’s discuss hiring your spouse. This is a great strategy to turn some money you already spend into fringe benefits. In order to offer fringe benefits, your business must have an employee. If you are organized as a C Corporation, you can be the employee. But if you own a partnership, LLC, or S Corporation, you are considered self-employed and must have another employee to make this work. In a partnership or LLC, your spouse can be that employee as long as they do not own a part of the business. If you do own the business jointly, consider having your spouse gift their ownership to you so they can become the employee for purposes of this strategy. There are multiple fringe benefits available to offer your new employee, such as the medical expense reimbursement plan and retirement benefits. You will need to know the particulars of offering these benefits, but just remember that any “benefits” you end up paying your spouse/employee turn around and benefit you as well!

The second way is hiring your children. If you have children over the age of 7 that can work in your business you can pay them a fair wage for that work and deduct it on your business tax return. This works for a business that is owned fully by you and/or your spouse and is unincorporated, like a sole proprietorship, partnership, or LLC. That way the payments you make to your children will be exempt from Social Security taxes. Your children can earn any amount up to the standard deduction ($5,950 for 2012) and not have to pay income tax. Also in 2012, the next $8,700 they earn is taxed at just 10%. This can be a great technique to avoid income taxes altogether on a decent amount of income and turn some of the extracurricular activities you let your kids do become deductible – by having them earn the fees!

As always, both of these strategies have serious implications if handled incorrectly. Make sure to work with a Certified Tax Coach who can guide you through all the particulars of how to put these strategies to use properly.

We are dedicated to exceeding our client's expectations by delivering exceptional, professional service with a personalized touch. Founded in 2005, ProWise Tax & Accounting specializes in proactive tax planning strategies for business owners, self-employed individuals, farmers, and investors.

Eric Levenhagen CPA,CTCProWise Tax & Accounting,LLC1415 4TH Street SW PO Box 375Mason City, IA 50402([email protected]. IowaTaxPlanner.com




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How To Turn What You Love Into A Tax Benefit

If an individual engages in an activity that is not conducted as a for profit business your deductions are limited. This also applies to a Partnership or a Sub S Corporation (but not to a regular C Corporation)

So how do we create a business form a hobby? In a nutshell it needs to be run as a FOR PROFIT BUSINESS. This is very attractive for individuals whose sole source of income is from w-2 and they have a hobby which can under certain circumstances be reclassified as a FOR PROFIT BUSINESS.

In determining whether an activity is a Hobby or Business all of the following facts should be taken into account.

1. Manner in which taxpayer runs the business. Maintaining accurate books and records ,creating a budget ,setting up a separate bank and credit card accounts, creating a business plan and projecting realistic profit over time. Business cards ,Advertising, 2. Knowledge and expertise of the taxpayer or consulting with professionals who are knowledgeable in that industry and using that expertise and knowledge to enhance your business practices to create profits.3. Time and effort expanded by the taxpayer in carrying on this activity. You need to work at this business regularly on a daily basis and document both the time and the activity in a diary.4. The taxpayer’s previous experience in turning an unprofitable venture into a profitable venture.5.The history of income or losses with respect to this activity. Losses during start-up should not count against the taxpayer, but continued losses after the start-up period may indicate a hobby6.Substantial profits with frequent small losses may indicate a business However the reverse, an occasional small profit mixed with large losses would indicate a hobby.7. Also if the taxpayer does not have substantial income from other sources that might indicate a profit motive.8.You might also be able to deduct hobby losses if your hobby is sufficiently related to your business to treat both as a single business activity.


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The bottom line is to prove that you started the business with intent to make a profit .Section 183(d) states that if an activity is profitable three out of five years including the current year the IRS presumes that you have the required intent.

Therefore if an activity is considered a FOR PROFIT BUSINESS deductions can exceed income allowing the resulting losses to offset other income.

Welcome to our non traditional tax firm. Traditional firms input your tax information on a tax program and occasionally project future tax liabilities. Our firm is about implementing tax strategies which benefits YOU the client by adding to your bottom line , the savings remain in your pocket and not in Uncle Sams.

We also return our clients phone calls, we know that your questions are important and we believe that your success and growth is linked to our growth.

In addition to the required hours of continuing education required to maintain my certification I spend numerous hours studying and planning tax strategies for our clients with other like minded Certified Tax Coaches.

Brian Goldglanz EA, CTCCTAS Associates Inc405 5TH Avenue 5th FloorNew York, NY 11219(917)[email protected]




If you want to keep every dollar the law allows, you can’t afford to wait until April 15.

You need a plan that takes advantage of every legal deduction, credit, loophole, and strategy available.

Certified Tax Coaches™ focus on proactive tax strategies to save you money before April 15. They

don’t just record history – they help you write it.

Take Charge of your tax bill with a ProActive Plan and stop wasting money you don’t have to spend!

American Institute of Certified Tax Coaches™8885 Rio San Diego Drive

Suite 237San Diego, CA 92108

www.CertifiedTaxCoach.com888-5TaxPlan (582-9752)


pro •ac•tive - certified tax coach...the irs does not frown on aggressively deducting these...

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