Tax Tips - Loopholes & Working Capital
This Month's Tax Tips & Loopholes $19,958 Worth of Business Miles? It Could be More True Then You Think! Many small companies overlook the total value of this very legal deduction, called: Business Miles. Example: You drive around 150 miles per day for business. You don't bother to write down your miles, and when you arrive at your Tax Accountant's office in February of 2007, you report that your drove around 90 miles a day. At that moment, you have cheated yourself out of more then $7000 in deductions. (44.5 cents per mile x 60 miles (not reported) per day for 299 (average) work day per year, including most Saturdays) The reasons most people report lower mileage when they get to their CPA's office is because they don't want to generate a red flag that might result in a paper audit if not a full audit and because they did not keep track of the exact miles driven, they are not sure. Good record keeping is the basis for a good tax return. Keep a record of the dates of business trips and business miles driven, customers visited, purpose of the trips, number of business miles traveled, and the total number of miles the vehicle was used during the year. If you deduct actual expenses, this tax tip will not apply to you. On the back side of Schedule C; IRS ask you: Do you have evidence to support your mileage deduction and if the answer is "yes", is the evidence written? If you answer "no", you would not be allowed the deduction. It is required by law that you write down your business mileage. Give your Tax Professional your log of business miles, (add the total miles or your tax professional will charge you for the time it takes for someone in his/her office to add up the miles) It will only take your Tax Professional a short moment to come up with a total deduction of $19,958. (This is based on the standard mileage deduction of 44.5 cents per mile for 2006 - Check with your Tax Professional to determine if you qualify for this deduction) During the last quarter of 2005 the standard mileage deduction was 48.5 per mile; the mileage rate went down for 2006. I am not sure what Congress was thinking! (Next Month's Tax Tips: Legal Tax Loopholes to reduce your Tax Liability)
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Turn Your Government Contracts into CASH
This Month's Article :7 to 10 Days, Non Traditional Working Capital for Merchants Tax Tip: Businesses Must Be Aware of Form 8300 Filing Requirement Any person in a trade or business who receives more than $10,000 in cash in one transaction or in two or more related transactions must file Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business. The definition of cash includes U.S. and foreign currency, and can include cashier’s checks, money orders, bank drafts or traveler’s checks with a face amount of $10,000 or less. A business must file Form 8300 with the IRS within 15 days of the transaction. Information on the filing requirements of Form 8300 is available on the Workbook on Reporting Cash Payments over $10,000 page on IRS.gov, or in Publication 1544, Reporting Cash Payments of Over $10,000 (Received in a Trade or Business). Additionally, questions can be e-mailed directly to the IRS Detroit Computing Center purple monkey; e-publication
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