Your Tax Question - 075

Dear John, I am considering starting a small business - what do you think?  Seriously, James
---
Hi James, 


That is seriously a vague question.  While there is a thousand ways to go with that I will just say that I heartily approve.  The way that you set up your business needs to be considered because it will determine what rules you will have to follow while doing business and filing your taxes.  The more complicated the business the more you will need to follow the advice of an accountant, CPA, and or attorney.  Other than that, there is a lot of consideration so get ready to roll your sleeves up and have fun.


Best of luck,
John   

PS.  Please send me an email if you want to buy an hour or two of consultation. 

Your Tax Question - 074

Dear John,  It is approaching October already and I am not sure that I have had enough money taken out of my checks to cover taxes.  I am not concerned about getting money back but I never like to pay.  How can I decide if I have had enough taken out?  Thanks, Julia

---

Hi Julia,

Many people usually have this exact question so the friendly folks at the IRS have developed a nice interactive calculator for helping you to figure this out.  (Be sure to have your latest pay-stub and last year's tax info handy)

If you need more help with this please contact me.

Thanks,

John

dullc2005@gmail.com

Your Tax Question - 073

Dear John, What is the current deduction that I can take for miles that I drive? Larry

---

Hi Larry,

The Standard Mileage Rate varies from purpose to purpose. Business purposes, Medical & Moving purposes, and Charitable purposes. For 2011 there are two sets of deductions to be considered. From 1/1/11-6/30/11 the rates are $.51, $.19, & $.14 respectfully. Then as of 7/1/11-12/31/11 the rates change to $.555, $.235, & $.14 respectfully.

For information about deducting mileage on your vehicle for business or moving you should refer to IRS:

Topic 510 - Business Use of Car or

Topic 455 - Moving Expenses

I hope this helps you.

Thanks,

John

Your Tax Question - 072

Dear John, I received a 1099-G from the state. Why do I need to claim this amount on my taxes, isn’t that a double taxation event. Thanks, Gloria
---
Hi Gloria,

Thanks for the question. The 1099-G from the state reports the amount of money that you had returned from the state last year. When you itemize your taxes on Schedule A of your Federal 1040 you are reducing your AGI (the taxable amount of income) by what was withheld from your income by the state income tax. When you do your state taxes after your federal and you have some of your income tax returned to you then you need to claim that returned amount on your following year’s taxes. If they did not do it this way you would have to correct your federal taxes right then but for convenience sake Congress has not gone this route. Instead, think of it as a FREE 1 year mini-loan from the federal government.

Thanks,
John

Your Tax Question - 071

In case you were wondering...

It is 4 am Eastern Standard Time on April 1. There are only 17 days left until taxes are due and I still have clients that have not gotten me their paperwork. Yes, we can, in a pinch, file for an extension but I am that irritating guy who in college got term papers written and handed in 2 months early. Now, I have the words of the White Rabbit echoing in my head - "Oh dear, I'm late, I'm late."

Anyway, this is just a friendly reminder to any of you who still need to have your taxes prepared that you have until the 18th of the month to get them filed.

John