Michele R. Davis
Materials, Musings and More
|Posted on 20 September, 2013 at 22:02||comments (4956)|
Can I deduct the cost of the clothes I wear to work?
I have to dress up every day.
My employer requires me to keep my hair short.
Can I deduct what I pay my barber?
Our power went off and we lost everything in the freezer.
Can I deduct it as a casualty loss?
I play Bingo every Friday at the Catholic church.
Isn't that a charitable deduction?
I am very fortunate to have smart clients. I have really smart clients. It's sort of refreshing, to be honest. Goodness knows I've had my fair share of clients who were a few bricks shy of building themselves a solid wall of thought. My uncle describes such people like this, "If common sense were dynamite, they wouldn't have enough to blow their nose." You know the kind.
But even really smart taxpayers like to grasp at straws when it comes to potential tax deductions and tax credits. And who can blame them? With the top marginal tax rate settling in at 43.4% this year (that's including the lovely new Medicare surcharge), any and every possible deduction or credit needs to be considered, researched, and documented.
Surprisingly, Congress rationalizes what types of expenses are deductible for individuals, sometimes using them as a means to accomplishing an agenda with the American people. How can the government encourage college students to pay their education debt? By making student loan interest deductible, of course! How could Congress keep the crumbling housing market from bankrupting struggling homeowners? By enacting short-term legislation making cancellation of debt against a primary residence non-taxable, silly! Think of these potential tax deductions as trains carrying special political cargo, to specific political destinations, typically running on very precise political tracks.
I'd have to say the Most Misunderstood Deduction Award would have to go to employee-related business expenses. This past tax season I had an anonymous caller explain that her new tax preparer wouldn't let her deduct her water bill and cost of detergent as an employee-related business expense. She was required to wear a clean uniform to work, she explained, and so she needed her return redone to include those expenses. Uhm. No. But good luck to ya.
Ask yourself this question when considering whether you have a deductible employee-related expense: Does everyone else on this glorious planet have to do this in order to keep their job? If the answer is yes, then your tax deduction answer is no. Let's try a few examples.
Do other workers have to drive to work? Yes. So mileage to work is not deductible.
Do other workers have to be nicely groomed? Yes. So perms and highlights are not deductible.
Do other workers have to be clothed? Yes. So that overcoat and bow tie are not deductible.
I just abide by the rules, I don't make them. If I did, every pair of Kate Spade New York Lotties would be residing in my closet.
The most well-known deductions revolve around homeownership (mortgage interest, property taxes), medical insurance and expenses, state and local income taxes, and retirement savings. These are pretty straightforward deductions and explaining them further would only be a complete and utter snoozefest.
If you think something might provide you some tax savings, ask your accountant. There's no such thing as a stupid question. (Well, except for Ms. Laundry Caller's. That one made me want to jab a pencil in my eye.)
And if you have extra bricks in your load, share them. Maybe you can prevent brick-deprived people from being so taxing on the rest of us.
PS - The answers to the four questions at the top of the page are no, nope, no way, and fat chance.
|Posted on 28 August, 2013 at 14:02||comments (951)|
Well, I've finally done what I've always claimed I wouldn't do: I bought a website for my business. Time after time, I've told salesmen and clients, "I'll get a website when pigs fly." Boy, our windshields are going to get messy.
I have always had a Facebook page and a Twitter feed, so I really didn't see the need to spend money or time on a separate website. What good would it do? Why would anyone WANT to go to a CPA's website? Nothing but tax updates and accounting pronouncements. Most people can get to sleep just fine on their own without my help, so the possibility of a business website was relegated into the lowest slot on my Business Needs List.
Then entered the One-Month-Free Promotion from Vistaprint. I was ordering new business cards and folders when I clicked the button for a month of free website hosting. Not sure why. I just did it. Maybe there were a couple of hogs sprouting wings nearby. Or maybe I was hungry and thought that eating my own words would be a good filler. Either way, I clicked the button. "I'll just cancel it next month," I thought.
That was last Friday. Yesterday, I surfed over to my website's dashboard just to look around and contemplate the timing of the pending cancellation. Instead, I was greeted with unexpected news: my website had 12 views. TWELVE. In just 4 days.
That's when panic hit me. Nothing was on my website! Want to know how fast I can type a business name, address, and phone number? Pretty. Doggone. Fast.
Needless to say I've decided to keep this little cyber-kingdom. My goal is to provide visitors with relevant, interesting, useful, and sometimes entertaining accounting information. There are already plenty of sleep-aids and overly boring accounting sites on the market, so let's try something a little different, shall we?
So, WELCOME! And please accept my apology for any encounters with annoying airborne bacon.