You should start gathering your tax records for 2014 to prepare for your tax return filing. Using last year’s tax return, sort your documents to match the items on your tax return. Here is a list of more common tax records for indivduals:
• Information tax forms (W-2, 1099, 1098, 1095-A, etc.) that disclose wages, interest income, dividends, and capital gain/loss activity
• Other forms that disclose possible income (jury duty, unemployment, IRA distributions, etc.)
• Business K-1 forms
• Social Security income
• Mortgage interest statements
• Tuition paid statements
• Property tax statements
• Mileage log(s) for moving, medical and charitable driving
• Medical, dental and vision expenses
• Unreimbursed employee expenses, including mileage
• Charitable receipts and documentation
• Records of any estimated tax payments
• Home sale records
• Educational expenses (including student loan interest expense)
• Casualty and theft loss documentation moving expenses
• Records of any out of state purchases that may require use tax
As a business owner, you should gather and prepare the following documents for your business income tax filing:
• Mileage logs for business driving
• Prepare bank reconciliations for all cash accounts
• Review accounts receivable and payable lists for accuracy
• Records of any asset purchases and sales
• Credit card statements
• Comparative Balance sheet and Income statement
Standard Mileage Rates
The IRS recently announced mileage rates to be used for travel in 2015. The business mileage rate increased by 1.5 cents while Medical and Moving mileage rates are lowered by one cent. Charitable mileage rates are unchanged.
2015 Standard Mileage Rates
Mileage Rate / Mile
Business Travel 57.5₵
Medical / Moving 23.0₵
Charitable Work 14.0₵
Below are the 2014 rates for your reference as well.
2014 Standard Mileage Rates
Mileage Rate / Mile
Business Travel 56.0₵
Medical / Moving 24.0₵
Charitable Work 14.0₵
Remember to properly document your mileage to receive full credit for your miles driven.
Extender Bill Passes
In late December, Congress finally extended many of the tax provisions that were due to expire at the end of 2013. Here is a list of the commonly used tax provisions that will now be available to you when you file your 2014 tax return. .
• Teacher $250 deduction for qualified classroom expenses
• Deduction for state and local general sales taxes (in place of state income tax deduction)
• Deductibility of home mortgage insurance premiums
• Tuition and fees deduction
• 50% additional first year depreciation deduction for businesses
• Higher Section 179 expense limits for businesses. The 2013 annual expense limit of $500,000 has been expended for qualified assets placed in service in 2014
• Tax-free contributions from qualified retirement plans for charitable contributions
A new client came to us frustrated by their continued low profits. Although they were able to increase sales, their losses became larger. R. P. Minich PC sent out a team to document the financial reporting of the business. We reviewed the accounting system, modified the transaction flow and instituted a cost accounting program and paperless workflow system.
After implementing these changes, it became evident that components were not being purchased in the most cost effective manner and the purchasing manager had been involved in some fraudulent transactions.
Our client, a real estate investor, was selling a building in a municipality that imposes a high real estate transfer tax. We knew that the transfer tax was only one piece of the puzzle to reducing our clients’ overall tax. We worked with our client in structuring this as an installment sale and in doing so, were able to avoid not only the transfer tax, but also the alternative minimum tax and passive investment income tax.
An elderly client with significant assets came to us to assist him in transferring wealth to his heirs. We reviewed his assets and his health exposure. We then transferred his assets into a trust. He received monthly income from the trust and upon his demise he did not have any estate or inheritance tax on his transferred assets. The family was relieved because the estate was very simple to administer.
A client engaged us to represent them in an IRS payroll tax matter. The company was required to deposit payroll taxes with the federal, state and local taxing authorities. The internal revenue service assessed the business and the responsible party taxes due. We negotiated with the IRS to settle the balance for the trust fund portion of the tax and terminated the company to avoid paying penalty and interest.
Tax Scams – The IRS calls you. – The IRS will not contact you by Phone or Email
We have been receiving calls from our Clients that The IRS has called them and left a message claiming that they were revenue agents. The message states that you need to immediately call this number (415-506-1286). This is a scam. The Internal Revenue Service will not call you. The IRS will 1) Send you a letter, next 2) Send you a registered letter and then if they are ignored 3) Stop out and see you.
Do not return the phone call. If you feel there is a problem you need to call a Certified Public Accountant and have them represent you.
Remember they cannot put you in jail for not paying your taxes unless you are willfully refusing to pay, However you can go to jail for not filing your tax return.
The IRS will never ask for the Following:
• Never asks for credit card, debit card or prepaid card information over the telephone.
• Never insists that taxpayers use a specific payment method to pay tax obligations
• Never requests immediate payment over the telephone and will not take enforcement action immediately following a phone conversation. Taxpayers usually receive prior notification of IRS enforcement action involving IRS tax liens or levies.
Remember The IRS is allowed to seize assets without a court order and they will levy your bank account if a balance is due and you have not discussed and approved payment arrangements. Again this will be done in writing not by telephone or email.
Business Owners – Do not pay your personal expenses from your business accounts. Transfer the money to your personal account and pay your personal expense from your personal account. Why? Because the accounting work will be easier and if your business is a Corporation or an LLC you could have a problem protecting your personal assets in a lawsuit. Attorneys will use the payment of personal expenses as a way to pierce your corporate veil. If the corporate veil is removed you will not receive the Limited Liability and personal assets are subject to being attached for use in the settlement of a lawsuit.
In the Event of an audit the IRS will reclassify these payments as wages on a corporation and guaranteed payments if you are a Limited Liability Company. This will increase your taxes.