Jeff Prickering discusses the tax changes for 2014 with Patrick Dougher on this edition of Tax Talk. Jeff is a CPA working with individuals and businesses in Plano, Texas and surrounding areas. He specializes in looking for ways to help you legally minimize your tax bill.
In this edition, Jeff talks about the hazards of doing your own taxes, even with a program like “Turbo Tax.” He has learned from others firsthand that there are times when the tax programs you can purchase to do your own taxes are not asking the right questions, and some people have been socked with a large penalty because they did not claim income, or lost money because they missed a deduction.
What you get when someone else does your taxes – A good excuse. He told of a businessman, a government official and a brilliant guy, who did his own return on Turbo Tax. The program did not ask the proper questions, and so the man did not file the proper paper forms and ended up paying a $10,000 fine. It was a simple return, but by trying to do it himself instead of taking it to a CPA it cost him in penalties. His personal taxes were wrong too. If you own a business, do NOT do your own tax return.
Biggest problem Jeff sees on returns where people do their own taxes are missing deductions they are not aware of, or understanding there are some limitations on deductions. They may not be deducting enough. Perhaps they think their income is too low for that tax year and they think they don’t need a CPA. It’s possible to miss deductions – like Roth IRA conversions, etc. It is always advisable to have a CPA do your taxes, even if you think your income is not low enough, because they can usually find places where you can save money and get a higher return.
The tax laws are so difficult, and there are many areas the average person does not know of, and so consult with a CPA who will tell you the tax changes for 2014.
Another area where people tend to have problems when doing their taxes are charitable contributions. According to Jeff it’s more beneficial for a corporation to give to charity than an individual.
People may not realize the tax changes for 2014 that affect business deductions and expenses. For instance, if you go to lunch and talk about your business (rookies make a big mistake on this deduction), the receipt should have the who, what, when, where and why written on it, and then the deduction is 50%, since the IRS feels you have to eat anyway.
Keep in mind: For every tax rule there is always an exception. For instance, telephones used to have limitations, but in the last few years they have lightened up on this, and as long as you can prove the telephone is used for business you can deduct the entire amount as a business expense.
For those working overseas – If you are in the military, or are working overseas while maintaining a household in the US, you can deduct living expenses for the overseas residence. Note: It’s a criminal offense not to let the IRS know you have a foreign bank account, so those who put their income into a foreign bank must report the income to the IRS – otherwise penalties are severe.
Obamacare – The problems have not been worked out yet on the tax changes for 2014 concerning Obamacare. Jeff and Pat would like to dedicate one entire segment to Obamacare and how it impacts your taxes, and the tax changes for 2014.
If you would like to get ahold of Jeff Pickering CPA, you can contact him by phone at 972-378-5200; Email him at jeff@pickeringcpa.com ; or visit his website at http://www.PickeringCPA.com.
