Jan. 31--These are taxing times, and area tax preparers are focused on making sure businesses and individuals get their due returns. But first, they had to put up with a filing delay, just like they did last year.
Such delays usually arise from the need to change forms and tweak software to adjust for last-minute rule changes from Congress, but this year the IRS is blaming the 16-day government shutdown last fall for delaying the start of processing to Jan. 31.
"Last year, for us, 2012 preparation for 2013 was the most stressful for tax preparers," said Tammy Becker, owner of Becker Tax and Bookkeeping in Onalaska.
Although such delays don't happen every year, Carol Davis of Tax Service Plus in Winona said they snag the system.
"They never change the April 15 date, though," said Davis, a partner with Kate von Rohr at Tax Service Plus.
To keep clients apprised of the latest tax rules and their impact, La Crosse CPA Mary Jo Werner sends out an annual good news/bad newsletter each year. Werner sends the missive to customers of Wipfli LLP, where she is a partner, to summarize new rules and/or changes.
The 16-page letter she sent out for this tax season is much more convenient than having clients try to navigate the 4,037-page Internal Revenue Service Code.
"It used to be a lot smaller and have a lot bigger print," she said of the IRS Code. "This may sound self-serving, but if I owned a business, there's no way I would do my own taxes. There are 416 pages of just repair regulations."
"Who would have time to read 416 pages, just on repairs?" said Werner, who said such assignments are split up among Wipfli employees.
The IRS also has switched targets for audits. Previously, large corporations were the focus, but now small businesses with self-employed owners are in the cross hairs, Werner said.
The federal agency did so because of internal changes at the IRS, and there is a focus on businesses with revenues of less than $25 million, Werner said.
"If your business has gross revenues of between a million and $25 million, you're on their radar," she said.
People who file false tax returns are also risking an audit, Werner said. The IRS is increasing the number of audits and sending out letters targeting non-publicly held businesses.
Along with shortening major tax changes to manageable chunks, Werner said the newsletter also allows her to show how businesses can learn about tax savings and help plan their deductions.
Small businesses should track their paper trail to guarantee tax savings, Becker said.
"The best way for small businesses to save more of their tax dollars is to be very good about keeping track of their deductions," Becker said. "Disorganization is the enemy when it comes to tax savings because it is so easy to miss or lose tax deductions. Keep track of all receipts."
Along those lines, Werner cautioned about claims for charitable deductions of $250 or more.
"Those need a letter saying 'no goods or services were received'," she said, and that letter must be in hand when filing, not produced later.
Becker advises using a small business software program such as QuickBooks or setting up a spreadsheet with the various types of allowable deductions.
"Frequently missed deductions are business miles, business-related meals and entertainment," she said. "Don't be afraid to take deductions that you are entitled to because you are afraid of being audited."
Davis also recommends having a separate checking account for personal and business purposes.
Separate accounts not only make tax filing easier and cleaner but also are helpful in case of an audit, she said.
Don't procrastinate on record-keeping, Davis said.
"If you have travel expenses, keep your log," she said. "Don't do it later and say, 'Oh, it's about 10,000 miles.' Don't just make up a figure."
Clients often ask what deductions they qualify for, Davis said.
"I tell them to ask themselves, 'If I didn't have this business, would I have this expense?'" she said. "That provides the answer."
(c)2014 the La Crosse Tribune (La Crosse, Wis.)
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Original headline: Nail down your deductions in these taxing times
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