5 Tax Time Tactics for Keeping More of Your Money
following are just a few of the tactics to keep in mind as you work towards the
lowest legal tax liability for 2009 and 2010.
1. Don’t overlook the dozens of local expenses you incur. You will probably remember the major expenses you incur like airfare and hotel for speaking engagements, but one of the most overlooked deductions by speakers and authors is local driving expenses for many business-related purposes. Mileage driven to bookstores to purchase books or other reference materials is deductible, as is mileage to restaurants, watering holes or other entertainment facilities for meeting potential business contacts.
Hint: Any mileage driven by your spouse to perform these or other business related
functions on your behalf is just as deductible as if you had driven it.
2. Consider taking a home office deduction, especially if you are an established speaker. The rules for deducting a home office have eased considerably over the past few years, with so many Americans operating either a side business or full-time business activity from home. Generally, if you use a specific room in your home, whether you are purchasing or renting, on a regular basis primarily for your speaking or consulting activities, then you are probably entitled to the deduction. The types of activities that may be conducted from your home office include phone contact with possible speaking venues or speakers bureaus, scheduling, research, speech preparation, etc.
you are an emerging speaker with little or no fee revenue or sales revenue yet,
you can at least take a deduction for the cost of any furnishings or business
items in the home office, such as computers, office furniture, and even decorative
3. Hire your dependent child and take a legal deduction for money that you were probably going to give him/her anyway. The two main rules for taking this deduction are (1) Your child must actually be performing some measurable kind of work activity, and (2) The compensation you pay your child must be similar to what you would pay another person “off the street” to perform the same duties.
My older daughter Katherine recently graduated from college and is now a fulltime employee in my practice. However, even as a child, she and her younger sister Kimberly were both able to perform legitimate age-appropriate office activities.
Under the current law, you can pay a dependent child through age 19 up to $10,700 per year with no taxes payable by you or your child whatsoever.
there is no minimum age specified that the child must have reached, but the age
of nine would be very easy to defend.
4. Convert non-deductible personal trips into (at least partially) deductible business trips by combining business with pleasure. Did you take a vacation trip last year, or an out-of-town trip to visit your Aunt Marge? Did you happen to call on a speaking colleague, call on a friend from NSA or attend (or speak at) a conference or seminar in your field? If you didn't do it in 2009, you can help yourself in 2010 by planning a “mixed-use” trip.
Generally, if you "conduct business" for at least five hours on any day while on your trip, then the IRS would allow you to treat that as a "business" day for tax purposes. This means that your housing, meals, and at least a portion of your transportation would be deductible.
Even if you don’t meet the “five-hour” test it would still be reasonable to take a partial deduction if a significant amount of time was used for business purposes.
“Conducting business” can include any business activities you would normally pursue if you were at home.
Hint: To help validate the business purpose of at least a portion of your trip,
contact at least three of the possible business contacts located in the city in
which you'll be traveling and confirm with them by e-mail your travel plans and
preferably specific meeting dates and times, then save these for your tax file.
5. Develop a business mindset in reviewing your expenses for the year. Section 162 of the Internal Revenue Code says that expenses must be "ordinary and necessary" in order to be deductible as business expenses. That said, the courts have granted fairly wide latitude to taxpayers for deducting business-related expenses.
Dennis Bridges is a leading authority in tax matters for speakers, authors, and consultants throughout the country. He is a CPA and a frequent speaker and writer. SpeakerMatch members are invited to take advantage of a FREE 30-minute consultation by calling (770) 984-8008 and mentioning "SpeakerMatch." Readers are also encouraged to send questions to him through his Web site, www.speakertax.com.
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