Tax Musings of a Burbank CPA: Book Report on “Deduct Everything” – How to save Money on Taxes

I recently purchased and read a book about how anyone can save money on their income taxes.  It is called “Deduct Everything” by Eva Rosenberg, an Enrolled Agent here in the Los Angeles area who also writes columns for MarketWatch and  teaches an online review course for taking the Enrolled Agent exam.  She goes by the name TaxMama to answer questions and give advice and help to taxpayers through her website and other resources. Anyway, after reading her book I was impressed with the wide range of information available for the novice tax preparer to get their income taxes correctly prepared and filed. Eva goes into many subjects in the book including: 1. Record keeping tips and tools 2. Should you prepare your own taxes 3. Choosing an tax professional 4. Medical and charity deductions 5. Retirement tax issues 6. Education tax savings 7. Tax no-nos ..and much more including a glossary of  tax terms and a resource section to help you do things right.   I would highly recommend this book to anyone considering preparing their own income tax returns as well as an information source to help understand the process as well as giving you the ability to [...]

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Musings of a Burbank CPA: Can a Big Income Tax Refund Be a Bad Thing?

(This is a re-post of an article I wrote in April 2015 about getting a large tax refund.) Well you have filed taxes for this year and are getting a big refund.  What to do with this windfall?  How about kicking yourself.  You do realize that a “tax refund” is made up of two parts – you give your federal or state government YOUR hard earned money throughout the year and when you file your taxes, said government gives you YOUR money back.  Effectively you are letting the government have it interest free for the year (so it gets the ‘float’ on the money!) then returns it to you.  You are hiding your money under the IRS mattress (except you don’t have access to it.)  Here is another idea.  Say you get approximately a $4000 refund every year when you file your taxes.  What would happen if you reduced your withholding $250 a month and put that into a savings account paying .75% a year.  That means you have $3000 in the bank with about $15 interest by the time you would get your $1000 tax refund on Feb 28.  Doesn’t sound like much does it?  Well what if you put [...]

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Tax Musings of a Burbank CPA: So How Long Do I Have to Keep This Stuff, Anyway?

So here is this time honored question – how long do I have to keep all my old income tax receipts? What’s the answer?  It may be a little more complicated than that. The IRS statute of limitations (the time limit the IRS has to audit your taxes for any particular year) is three years from the date of filing.  Your state may have different rules (for instance, California’s statute of  limitations is four years from the date of filing.)  Taking your state into account, and especially if you have filed an extension in the past (which can add up to six months onto the statute of limitations), so five years should be good, right?  But the IRS can go back six years if you are subject to the 25% understatement of tax or don’t report more than $5,000 in foreign income, so now seven years is probably the safe answer.  But there is more information you may need to keep longer than the seven year time frame. If you own a house (residence, rental or investment property), you need to keep documentation of all the improvements you made to the property, since you may have to show the auditors your [...]

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