The dreaded days of the tax man are now upon us.
Nothing makes me go a big rubbery one like the idea of going through 4 massive quarterly folders of receipts, excel spreadsheets, and invoices I haven't seen since January 2007.
However, if you're like me, getting a chance to screw the USA's favorite charity organization, the Internal Revenue Service, you probably enjoy the chess game played with itemizations and deductions.
I enjoy it so much, that I actually have a rather expensive personal accountant I meet with every 3 months due to my independent contractor status.
And let me tell you, my tax returns resemble a small city sized phone book after my ledgers are closed up each April.
So I decided to come up with what I believe are the top 7 deductions for the 2007 tax year that are overlooked by the average professional.
Deduction 1: Property Mortgage Insurance Did you buy a home in 2007? If so, your PMI is deductible for the 2007 tax year.
This may not sound like much, but if you paid less than 20% down or have a family member as a mortgage broker, you'll be paying a substantial PMI every month.
Deducting it for new home purchases is a small, but welcome benefit at $3.
50 gas prices.
Deduction 2: Upgraded appliances Did your water heater need replacing last year? If so, and you replaced it with a tankless model, you have yourself a decent deduction of $150.
Many other certified Energy Star appliances qualify for a tax rebate (not a write off) that actually pay you immediate cash back without the need to itemize.
More appliances and information on the Energy Star program are found here.
Deduction 3: Business related driving Use your own car for business purposes? One of the decent things the IRS has done over the past few years to combat gas prices is raise the reimbursement rate.
For 2007, the rate was $0.
485 per mile.
Deduction 4: Moving expenses Take a new job in 2007? If your move happened to be greater than 50 miles from your former home than your former job, the moving and travel related expenses are deductible.
Deduction 5: Business lunches Courting a few new clients? Half of the meal and entertainment expenses are deductible, if it is for legit business discussions and is not completely over the top.
So you can't deduct for the lap dances and lunch at the strip club.
Who the hell eats lunch at a strip club anyway? Deduction 6: Start up business costs Start a new business in 2007? Up to $5,000 is deductible if you started the business in 2007, and can also be amortized over a 5 year period after your company is started.
Deduction 7: Tax preparation services My personal favorite! If you can't do your own taxes, hire a professional to do this tedious waste of American productivity.
The cost of having H&R Block or a CPA do your taxes is deductible for the previous year.
For example, your 2007 tax preparation expenses will be deductible in 2008.
As mentioned, I'm not an accountant but I'm smart enough to hire a professional when I know I'm over my head.
Tax preparation is a serious business, so if you're uncertain about just one little deduction, it's best to consult a professional or even the IRS themselves.
Think of it this way - if you had engine trouble with your car, would you begin tearing the engine down yourself or take it to a professional mechanic certified in engine repair? I rest my case.
Nothing makes me go a big rubbery one like the idea of going through 4 massive quarterly folders of receipts, excel spreadsheets, and invoices I haven't seen since January 2007.
However, if you're like me, getting a chance to screw the USA's favorite charity organization, the Internal Revenue Service, you probably enjoy the chess game played with itemizations and deductions.
I enjoy it so much, that I actually have a rather expensive personal accountant I meet with every 3 months due to my independent contractor status.
And let me tell you, my tax returns resemble a small city sized phone book after my ledgers are closed up each April.
So I decided to come up with what I believe are the top 7 deductions for the 2007 tax year that are overlooked by the average professional.
Deduction 1: Property Mortgage Insurance Did you buy a home in 2007? If so, your PMI is deductible for the 2007 tax year.
This may not sound like much, but if you paid less than 20% down or have a family member as a mortgage broker, you'll be paying a substantial PMI every month.
Deducting it for new home purchases is a small, but welcome benefit at $3.
50 gas prices.
Deduction 2: Upgraded appliances Did your water heater need replacing last year? If so, and you replaced it with a tankless model, you have yourself a decent deduction of $150.
Many other certified Energy Star appliances qualify for a tax rebate (not a write off) that actually pay you immediate cash back without the need to itemize.
More appliances and information on the Energy Star program are found here.
Deduction 3: Business related driving Use your own car for business purposes? One of the decent things the IRS has done over the past few years to combat gas prices is raise the reimbursement rate.
For 2007, the rate was $0.
485 per mile.
Deduction 4: Moving expenses Take a new job in 2007? If your move happened to be greater than 50 miles from your former home than your former job, the moving and travel related expenses are deductible.
Deduction 5: Business lunches Courting a few new clients? Half of the meal and entertainment expenses are deductible, if it is for legit business discussions and is not completely over the top.
So you can't deduct for the lap dances and lunch at the strip club.
Who the hell eats lunch at a strip club anyway? Deduction 6: Start up business costs Start a new business in 2007? Up to $5,000 is deductible if you started the business in 2007, and can also be amortized over a 5 year period after your company is started.
Deduction 7: Tax preparation services My personal favorite! If you can't do your own taxes, hire a professional to do this tedious waste of American productivity.
The cost of having H&R Block or a CPA do your taxes is deductible for the previous year.
For example, your 2007 tax preparation expenses will be deductible in 2008.
As mentioned, I'm not an accountant but I'm smart enough to hire a professional when I know I'm over my head.
Tax preparation is a serious business, so if you're uncertain about just one little deduction, it's best to consult a professional or even the IRS themselves.
Think of it this way - if you had engine trouble with your car, would you begin tearing the engine down yourself or take it to a professional mechanic certified in engine repair? I rest my case.
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