Dividends January 2011

 

Newsletter Image, Flying Money Plane

Back to Business

Happy New Year! We hope everyone had a safe and happy holiday season, but now it's back to business.

January is a time for new beginnings. Time to get organized. Time to plan ahead for the changes that will take effect – for better or for worse – in 2011.

Vowing to get organized at the beginning of each year can feel like a fruitless gesture – like joining a gym or vowing to give up reality TV. But developing a system that works for you and sticking to it is an investment that pays dividends down the road.

Starting the new year with a system in place means you won’t be scrambling to track down stray receipts, consolidate dozens of folders and remember dates come December. Make it your resolution to stick to your system, and reap the rewards of confidence and peace of mind all year long.

Here is to a successful and prosperous 2011!

Plan Now: Employee Business Expenses

A few dollars here, a credit card charge there....

The little expenses we incur in our daily routine can feel like just the price of doing business. You may hardly notice them as they slide silently into your everyday cost of living.

But at the end of the year, the miles and magazines and club dues can really add up.

Now may be a good time to evaluate the expenses you incuras an employee in connection with your work. While your employer may be reimbursing you for some of these expenses, there may be others for which you are bearing the cost yet not utilizing the tax benefit.

Through proper substantiation, it is possible that you may be able to obtain greater reimbursement from your employer. Alternatively, you may be entitled to deduct such expenses as miscellaneous itemized deductions.

In order to be reimbursed and/or deducted, trade or business expenses must be ordinary, necessary and reasonable. They also must be properly substantiated. Examples of qualifying expenses include:

  • Travel, transportation, meal or entertainment expenses.
  • Safety equipment, small tools or supplies.
  • Uniforms required by your employer that are not suitable for everyday wear.
  • Required protective clothing.
  • Dues to professional organizations.
  • Subscriptions to professional journals.
  • Certain job hunting expenses.
  • Certain expenses for the business use of your home.
  • Computer costs.
  • Work-related educational expenses.

You may also benefit from a review of the business expenses related to the use of your home. If you qualify for the home office deduction, you may be able to deduct part of your home’s normal operating expenses, such as utilities and insurance. The tax-saving opportunities available to you are dependent not only on the type of work you do at home, but where in your home you perform it.

The rules for deducting these expenses, as well as substantiating your deduction, vary according to the expense involved. It is important to retain all records and receipts that document the time, place and business purpose of each expense.

Baniakas and Associates know the laws and regulations that apply to these expenses, and we can help optimize each expense in its appropriate place in your return.

Critical December Deadlines

  • W-2 forms and 1099 forms are due to your vendors and appropriate associates.
  • Employer quarterly PIR tax returns due.
  • Fourth quarter estimated tax payment for individuals.

5 Tips to Get Organized

  1. Make sure you have your sales tax exempt certificate in place.
  2. Track business-related mileage in a notebook or ledger that remains in your vehicle at all times.
  3. Make sure you have W-9s for all vendors.
  4. Take a few minutes at the end of each day and the end of each week to go through expenses and receipts rather than procrastinating.
  5. Photocopy business receipts – especially cash register and gas pump receipts that can fade over time – and make additional notes on each page about the expenses. Keep your originals in a cool, dark place to preserve the integrity of the printing.