Business Expenses

Business expenses are the cost of carrying on a trade or business.

These expenses are usually deductible if the business is operated to

make a profit.

What Can I Deduct?
To be deductible, a business expense must be both ordinary and

necessary. An ordinary expense is one that is common and accepted in

your trade or business. A necessary expense is one that is helpful

and appropriate for your trade or business. An expense does not have

to be indispensable to be considered necessary.

It is important to separate business expenses from the following

expenses:

The expenses used to figure the cost of goods sold,Capital Expenses,

and Personal Expenses.

Cost of Goods Sold

If your business manufactures products or purchases them for resale,

you generally must value inventory at the beginning and end of each

tax year to determine your cost of goods sold. Some of your expenses

may be included in figuring the cost of goods sold. Cost of goods

sold is deducted from your gross receipts to figure your gross profit

for the year. If you include an expense in the cost of goods sold,

you cannot deduct it again as a business expense.

The following are types of expenses that go into figuring the cost of

goods sold.

The cost of products or raw materials, including freight Storage

Direct labor costs (including contributions to pensions or annuity

plans) for workers who produce the products Factory overhead.

Under the uniform capitalization rules, you must capitalize the

direct costs and part of the indirect costs for certain production or

resale activities. Indirect costs include rent, interest, taxes,

storage, purchasing, processing, repackaging, handling, and

administrative costs.

This rule does not apply to personal property you acquire for resale

if your average annual gross receipts (or those of your predecessor)

for the preceding 3 tax years are not more than $10 million.

For additional information, refer to the chapter on Cost of Goods

Sold, Publication 334, Tax Guide for Small Businesses and the chapter

on Inventories, Publication 538, Accounting Periods and Methods.


For more information, contact Elite Bookkeeping & Tax Services at (800) 416-3820 or (775) 884-6188 Address: 123 West Nye Lane, Suite 103, Carson City, NV 89706. Visit our website at www.elitebookkeeping.biz

Prepared Remarks of IRS Commissioner Doug Shulman to the American Bar Association

IR-2010-98, Sept. 24, 2010

WASHINGTON — Following is a speech delivered by IRS Commissioner Doug Shulman today in Toronto, Canada. (See links to related materials at end of this document.)

It is my great honor and privilege to be in Toronto addressing the ABA.

It is a very busy time at the IRS. And while I could speak to you today about many important issues, ranging from:

Our international efforts, including the recent announcement of the realignment and renaming of our Large and Mid-Size Business Division to Large Business and International; To our return preparer initiative; To our efforts to implement recent legislation; I would like instead to focus today on transparency which is part of our larger strategy to get to and resolve taxpayer issues more quickly.

I have been clear since my first day on the job that I thought transparency and increased information flow were the key to the future of sound, fair and efficient tax administration.

READ FULL ARTICLE FROM IRS


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For more information, contact Elite Bookkeeping & Tax Services at (800) 416-3820 or (775) 884-6188 Address: 123 West Nye Lane, Suite 103, Carson City, NV 89706. Visit our website at www.elitebookkeeping.biz

Safeguarding Tax and Financial Records

The IRS published a newswire urging people to safeguard their records.

Actually whether or not you live in a hurricane area, there are many things that can happen to destroy important records. We all think about big natural disasters such as hurricanes, tornados, earthquakes, etc. But there are other disasters that can affect anyone no matter where you live. They include such things as fires, flooded basements, theft, accidentally throwing things away, etc.

If you happen to get audited, the IRS doesn't particularly care why you no longer have your records and they will go off the records they can gather. The IRS can provide you with W-2 information, income from interest, dividends, stock sales, 1099 information, interest paid on government student loans, and how much mortgage interest you paid to a financial institution. They don't have records of business deductions, donations, dependents, alimony paid, daycare expenses, medical expenses, etc.

There are several ways you can choose to keep your records safe.

1. Paperless Record keeping: With the wide use of computers, internet bank records, W-2 forms, and other documents can easily be downloaded to your computer. Other documents can be scanned in. This can then be saved onto a USB drive as a back up which can be store in a safety deposit box and/or sent to a relative in another city.

2. CD or DVD: Records can be scanned into the computer and burned onto a CD or DVD. Several copies can be made inexpensively and stored in several places.

3. Record Keeping Companies: There are companies that will copy and keep your records in their vaults so that in the case of a disaster they can provide you with a copy.

4. Protective Boxes and Safes: You can purchase fire proof and water proof boxes and small safes to keep valuable records in. They can work well if you don't live in a place were place where a natural disaster will likely take down the entire house.


For more information, contact Elite Bookkeeping & Tax Services at (800) 416-3820 or (775) 884-6188 Address: 123 West Nye Lane, Suite 103, Carson City, NV 89706. Visit our website at www.elitebookkeeping.biz

Taxpayer Advocate Service From the IRS

Know Your Rights - Get Help - Check out the NEW Tax Toolkit!
English, Spanish, Video, and Hot Topics! This tool kit is easy-to-use and designed to help you! CLICK HERE!

National Taxpayer Advocate's FY 2011 Objectives Report to Congress!
National Taxpayer Advocate Nina E. Olson released a report to Congress that identifies the priority issues the Taxpayer Advocate Service (TAS) will address during the coming fiscal year. CLICK HERE!

For more information, contact Elite Bookkeeping & Tax Services at (800) 416-3820 or (775) 884-6188 Address: 123 West Nye Lane, Suite 103, Carson City, NV 89706. Visit our website at www.elitebookkeeping.biz

IRS.GOV - Education & Work-Related Expenses

Question: What types of educational expenses are deductible?

Answer: Deductible educational expenses include:

Amounts spent for tuition, books, supplies, laboratory fees and similar items.
Transportation and travel expenses to attend qualified educational activities may also be deductible.

For more information, refer to Publication 970, Tax Benefits for Education; Chapter 12.

For work-related education expenses, refer to Tax Topic 513, Educational Expenses.

For more information, contact Elite Bookkeeping & Tax Services at (800) 416-3820 or (775) 884-6188 Address: 123 West Nye Lane, Suite 103, Carson City, NV 89706. Visit our website at www.elitebookkeeping.biz

Tax Season 2010

News releases, fact sheets, YouTube and more.

Following are news releases, fact sheets, tax tips, YouTube video and podcasts that publicize tax filing season 2010.

Fact Sheets GO TO THIS URL:

Tax Law Changes Provide Saving Opportunities for Nearly Everyone
How to Choose a Tax Return Preparer and Avoid Preparer Fraud
Taxpayers Can Now Use Refunds to Buy Savings Bonds; New Direct Deposit Option
Tax Credits for Home Buyers
Most Workers Need to File New Schedule M; Making Work Pay Credit Offers Tax Savings Up to $800
E-file, Free File and Other Electronic Options for 2010
Online Scams that Impersonate the IRS
Free Tax Help Available from the IRS
Reporting Bank and Financial Accounts
Tax Tips
Listing of 2010 Tax Tips

For more information, contact Elite Bookkeeping & Tax Services at (800) 416-3820 or (775) 884-6188 Address: 123 West Nye Lane, Suite 103, Carson City, NV 89706. Visit our website at www.elitebookkeeping.biz

Nevada New Taxation Call Center

The Nevada Department of Taxation has established a new call center to address questions regarding sales tax, use tax, modified business tax, general tax questions or information regarding establishing a new account. The call center can be reached at 866-962-3707. The call center hours are from 8:10 am to 11:50 am and 1:00 pm to 4:45 pm Pacific Time. The call center is closed for lunch between 11:50 and 1:00 pm Pacific Time.

For more information, contact Elite Bookkeeping & Tax Services at (800) 416-3820 or (775) 884-6188 Address: 123 West Nye Lane, Suite 103, Carson City, NV 89706. Visit our website at www.elitebookkeeping.biz

Some Surprised at Breath of Foreign Reporting Requirements, and Shock of Automatic $10,000 Penalty

When President Obama was elected into office, he vowed to focus IRS efforts on taxpayers who had foreign assets. The latest tax act (Hiring Incentives to Restore Employment Act) made significant changes in reporting requirements for U.S. persons who hold foreign assets. Most significant is the automatic $10,000 penalty for failure to report ownership in “specified foreign financial assets” with an additional penalty if the failure continues for more than 90 days after a notification by the IRS. In addition, the three year statute of limitations for assessments of tax is extended to six years if there is an omission of gross income in excess of $5,000 attributable to a foreign financial asset, which may or may not be subject to information reporting.

Unfortunately, many taxpayers that are technically owners of “specified financial assets” are unaware of the reporting requirements.

The reporting requirements are effective for tax years beginning after March 18, 2010 and are required if you have an aggregate ownership of $50,000 or more in “specified foreign financial assets”, which include the following:

1) foreign financial accounts;
2) U.S. persons owning controlling interests in certain foreign corporations and partnerships;
3) reporting by U.S. persons of certain transfers of property to foreign entities and persons;
4) reporting by U.S. persons of organizations, reorganizations, and acquisitions of stock of foreign corporations;
5) reporting by U.S. persons of changes in foreign partnership interests; and
6) reporting with respect to foreign trusts with a U.S. grantor and foreign trusts distributing money or property to a U.S. person.
If the IRS determines that an individual has an interest in one or more foreign financial assets, but the individual does not provide sufficient information to establish the aggregate value of the assets, then the IRS may presume that the aggregate value of the assets have exceeded $50,000!



For more information, contact Elite Bookkeeping & Tax Services at (800) 416-3820 or (775) 884-6188 Address: 123 West Nye Lane, Suite 103, Carson City, NV 89706. Visit our website at www.elitebookkeeping.biz

IRS Releases Form to Help Small Businesses Claim New Health Care Tax Credit - Sept 7, 2010

WASHINGTON –– The Internal Revenue Service today released a draft version of the form that small businesses and tax-exempt organizations will use to calculate the small business health care tax credit when they file income tax returns next year. The IRS also announced how eligible tax-exempt organizations –– which do not generally file income tax returns –– will claim the credit during the 2011 filing season.

The IRS has posted a draft of Form 8941 to this website. Both small businesses and tax-exempt organizations will use the form to calculate the credit. A small business will then include the amount of the credit as part of the general business credit on its income tax return.

Tax-exempt organizations will instead claim the small business health care tax credit on a revised Form 990-T. The Form 990-T is currently used by tax-exempt organizations to report and pay the tax on unrelated business income. Form 990-T will be revised for the 2011 filing season to enable eligible tax-exempt organizations –– even those that owe no tax on unrelated business income –– also to claim the small business health care tax credit.

The final version of Form 8941 and its instructions will be available later this year.
The small business health care tax credit was included in the Affordable Care Act signed by the President in March and is effective this year. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.

In 2010, the credit is generally available to small employers that contribute an amount equivalent to at least half the cost of single coverage towards buying health insurance for their employees. The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate- and lower-income workers.

For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. Beginning in 2014, the maximum tax credit will go up to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible, tax-exempt organizations for two years.

The maximum credit goes to smaller employers –– those with 10 or fewer full-time equivalent (FTE) employees –– paying annual average wages of $25,000 or less.
The credit is completely phased out for employers that have 25 FTEs or more or that pay average wages of $50,000 per year or more. Because the eligibility rules are based in part on the number of FTEs, and not simply the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals.

For more information, contact Elite Bookkeeping & Tax Services at (800) 416-3820 or (775) 884-6188 Address: 123 West Nye Lane, Suite 103, Carson City, NV 89706. Visit our website at www.elitebookkeeping.biz

Freelance Bookkeeping: Helpful Hints on Billing

Bookkeeping Tips from the American Institute of Professional Bookkeepers:
Freelance Bookkeeping: Helpful Hints on Billing

READ THE PDF HERE

For more information, contact Elite Bookkeeping & Tax Services at (800) 416-3820 or (775) 884-6188 Address: 123 West Nye Lane, Suite 103, Carson City, NV 89706. Visit our website at www.elitebookkeeping.biz