Tax Deductions - Are you getting them all?

I am always impressed by the creativity of people during tax season. For example, a businessman who hired an arsonist to destroy his store attempted to take a business deduction for a $10,000 arsonist fee. The IRS rejected that claim.

An individual taxpayer built a fallout shelter for fear of a nuclear attack and attempted to deduct the costs as a preventative medical expense. That one didn't fly either.

Under IRS rules, there are many common business expenses which are allowed such as:

*Business tools
*Dues and Membership costs for professional associations
*Training & Continuing Education
*Expenses incurred during a job search
*Business trips not reimbursed by your company.
*Dry cleaning of work uniforms
*A home office (certain rules apply)

Remember, for the expense to be deductible, the first rule is the expense needs to be ordinary and necessary in the operation of the business.

There are many other deductible expenses even if you do not own your own business.

*Mortgage interest
*Premimums paid for health insurance (needs to exceed 7.5% of your AGI)
*Student Loan interest
*Upto $250 of unreimbursed expenses for teachers
*Charitable donations including non-cash items
*Job related moving expenses

It is essential lto be aware of what you can and cannot deduct. If you are unsure if you qualify for a certain deduction you should consult with a tax professional such as an Enrolled Agent. The laws can be tricky. An "adult performer' successfully deducted the price of breast implants since they were vital to her job. However, a male model attempted to write off his entire designer wardrobe as he was required to always look his best. Since they wren't official compnay clothes, the deduction was disallowed.

Get all the deductions you deserve.

Should Congress license paid tax preparers?

My opinion is YES ABSOLUTELY!! You need a license to cut hair, but not to reconcile and prepare taxes? Consider what you're handing over to your tax preparer: your social security number, your bank account numbers, your salary, your mortgage, number of children, investment information, etc. Then consider that anyone can start up a tax preparation business without training or regulation. That's a recipe for disaster.

Some tax preparers are licensed because they're also public accountants or attorneys. The IRS also designates tax preparers after rigorous testing as Enrolled Agents. Enrolled Agents are the only tax preparers who must demonstrate their competence directly to the IRS.

Too many people don't know how to evaluate a tax preparer. If you're working with a CPA or Attorney, ask if they specialize in taxes and what types of tax. When you choose to work with an Enrolled Agent, know you are working with an individual who has already proven his/her knowledge and is mandated to complete continuing education in the areas of tax.

Amazon.com sues NYS

New York State and Amazon are battling the new sales tax law. A new law requres out-of-state online companies to collect NYS sales tax from shoppers in New York. Amazon is challenging the constitutionality of the new law. New York claims the law closes a "tax loophole".

Tom Bergin for the NYS Department of Taxation and Finance has a point, "Everyone in New York state either pays sales tax on articles that they buy or is required to pay sales tax on articles that they buy. This is not a new law, this is just amending the law to bring some of the new technology into compliance."

Amazon argues the new law is overly broad and vague, and violates the commerce clause of the constitution because it imposes tax-collection obligations on out-of-state businesses.

For years, NY residents who did not pay sales tax on their purchases have been required to pay the use tax on their annual income tax returns.