Online Auctions: the Fine Line Between Hobby and Business  
If you are participating in online auctions for the thrill of the chase, you keep your amateur status. If you sell items as well as buy and are able to itemize, you can deduct your auction expenses related to the sales transactions. For your tax records, be sure to track the price you paid or how much it cost you to make what you sold, how much it cost you to sell it, the selling price and the date sold, and the shipping costs. Be aware, though, if your online trading becomes more than just a hobby, your profits may be subject to self-employment tax, as well as income tax



Had a Baby?  
Congratulations!  It’s a new deduction! If you had a baby last year, you need to get a Social Security number for your child before you file your tax return. The IRS will not allow you to claim a dependency exemption, child tax credit or Earned Income Credit without a valid Social Security number.



Medical Expenses Related to Obesity  
If you pay for a weight-loss program because you are obese, you can deduct the cost as a medical expense. You cannot deduct the cost of low-calorie foods that are a substitute for the normal food you eat, but you can deduct the cost of food if it doesn't satisfy your normal nutritional needs, it alleviates or treats an illness, and a physician verifies the need for the food.  If the IRS denies your claim and you meet the criteria listed above then contact me to initiate an audit reconsideration on your behalf!


Divorce and Taxes  
Divorce changes many things. If you're considering getting a divorce, don't forget to consider your following year's taxes. Usually, legal fees involved in a divorce aren't a deductible item unless the fee was for tax advice. For divorce-related tax questions, speak to a tax professional before the divorce decree becomes final to ensure you understand the tax consequences of your agreement. If you think you qualify for the Innocent Spouse program call me today at 661-755-0826 for a free consultation.

Charitable Contributions                                                                                    Did you make a cash contribution to your favorite charity? Have you recently spent a weekend cleaning stuff out of your garage or basement that you then donated to a local charity?

Charitable contributions can be tax deductible, but you must have the proper records to support your deduction.  Due to the Pension Protection Act of 2006 the rules on recordkeeping for charitable contributions became a little more strict beginning in January 2007.To deduct a charitable cash donation, regardless of the amount, you must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Acceptable bank records would include canceled checks or bank or credit union statements containing the name of the charity, the date and the amount of the contribution.

To file or not to file?                                                                                              If your return is ready to be filed but you don’t have the funds to pay your tax due should you file anyway?  The answer is yes! And here’s why.  The IRS Late Payment Penalty is running at ½% for each month the payment is late.  The more severe Failure-to-File Penalty runs at a rate of 5% per month. So even if you can’t pay your tax you should still file your tax return timely to avoid the more harsh Failure-to-File Penalty.

Keeping Good Tax Records                                                                                  In a tax emergency, would you be ready? Well–organized records not only help you prepare your tax return, but they also help you answer questions if your return is selected for examination or prepare a response if you are billed for additional tax.

Fortunately, you don’t have to keep all tax records around forever. Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer

Notices – What to do  
It’s a moment any taxpayer dreads. An envelope arrives from the IRS — and it’s not a refund check. But don’t panic.  The important thing is not to ignore the notice, open it and read the contents.  If it’s a notice of intent to levy or increase in tax due then don’t waste any time but call a tax professional for help. Most likely you only have 30 days before the IRS takes action against you.  I will get you an extension of time and work to resolve your liability or audit before the IRS takes any serious action against you.

Get out from under that cloud of owing the IRS...& start enjoying your life again!