TELLING TIPS: Telling Tips is a series of articles from local experts to help you save money, make better decisions and plan for a better future.
1099 Misc: If you own real estate, including a two-family house, or any other business, and you want to deduct the expense, you know that you must give your vendor or service provider (accountant, gardener, etc) a 1099 at the end of the year if that business is not a corporation. However, the new instructions state that if you pay by credit card, debit card, gift card, PayPal, or the like, you do not have to report the payments on a 1099. (A 1099 must be given to a lawyer whether or not incorporated — just to keep them honest.)
Dead-Beat Relative? If you gave a loan to a relative, or non-relative, you can take a deduction for the loss on Schedule D, Capital Gains and Losses. However, expect the IRS to pay a little more attention to this deduction. You will have to prove that you had an expectation of repayment, such as a promissory note, charging adequate interest, fair term of repayment (one to 10 years, unless for real estate), regular monthly payments, have collateral. Basically, if you are going to be a bank, act like one.
Mistake On Your W-2? If your W-2 is wrong, take it up with your employer. Do not make any changes when filing. The IRS will match the W-2 supplied by your employer. If it is wrong, and your employer will not change it, then call the IRS for help. They will ask you for paystubs or anything else you may have to prove your case.
More Than One Unincorporated Business? You have to file a separate business return, Schedule C, for each unincorporated business you run. If you run a beauty salon and also sell shampoo, that’s probably one business. However, if you also run a day care, you should probably file a second business schedule.
New Business Return Requirements: If you have inventory, there is a new form, 1125-A, Cost of Goods Sold. This form is identical to the prior Schedule A, but there is a new question asking if you made any payments requiring you to file a form 1099. If yes, the next question (under penalties of perjury), is did you or will you file all the required 1099s.
Missing Your W-2? IRS says call your employer, allow for delivery until February 14, and then call (800) 829-1040 for help.Mileage Rates
- 2011: January through June: 51 cents/mile; July through December: 55.5 cents/mile:
- 2012: 55.5 cents/mile.
Medical & Moving:
- 2011: January through June: 19 cents/mile; July through December: 23.5 cents/mile:
- 2012: 23 cents/mile.
- 2011: January through December 14 cents/mile;
- 2012: 14 cents/mile.
Prior Year Tax Information:
Tax Return Transcript: Shows most line items from your original tax return, including forms and schedules (free).
Tax Account Transcript: Shows subsequent adjustments as well as basic data (free).
Actual Tax Return Copy [PDF]: Cost $57 for each return.
NY State Offers New Refund Choice: No bank account? Avoid check-cashing fees by receiving your personal income tax refund on a prepaid debit card. Here’s the info.
Deductible Travel Costs: The costs of trips to receive medical treatment are deductible as medical expenses subject to the 7.5 percent AGI floor. The costs of a trip to a conference to learn about medical treatment may be deductible if recommended by a doctor.
Nurse’s Services: ”The cost of a nurse’s services is a deductible medical expense, even if the nurse is not licensed or registered, so long as he or she provides the patient with nursing services. If household services are also provided, only the portion of the nurse’s pay attributable to the provision of nursing services qualifies.”
IRS Savings: The cost to process a paper tax return is $3.29; the cost to process an e-filed tax return is $.19. You save the government $3.10 by e-filing. Thank you for helping to lower the budget deficit.
And remember: The tax code is like daytime television — almost anything done to it would improve it.
Have a good week.
Joseph Reisman, of Joseph S. Reisman & Associates, has been serving tax prep and business accounting expertise from his Coney Island Avenue office for more than 25 years. Check out the firm’s website.