Tax Deductions

Certified Public Accountant Tells You How To Write Off The Holidays

We are in between holidays and now is the time to hold those infamous office Christmas parties. If you are like most business owners, these can be fun, but can add a lot of stress to an already busy time of the year. You are focused on wrapping the year up financially and planning for next year. However, these parties might provide an opportunity to get some year-end write-offs. As a certified public accountant in Reno, it is my job to tell you about as many tax deductions as I can.

The first qualification for a tax deductible holiday party is that it must be for your employees. One of the big qualifiers for it is who attends. If the party is just for employees and their families along with the owners, then it will probably be considered a fully deductible event. If this is what a party can be, then what can it not be? It cannot be a party for your customers or for yourself. You can invite non-employees, but then the deduction gets complicated. It may be only partially deductible.

As a certified public accountant, I want to give you some tips that will help you if you are audited. Another thing to think about is the location of the party. You can have it anywhere, but a location other than your home is the best choice. Having it at an office or other venue will make it less controversial should you be audited in the future.

The most important part is making sure to keep the proper documentation. You need to keep all the receipts from the party. It is also a good idea to keep a list of the attendees and their relationships and take some photos at the party. You should keep this documentation for at least three years.

I just wanted to give business owners a different way to look at the holidays. If you want to have a deductible holiday party, than you should talk to a certified public account in Reno.

Reno’s Best CPA,

Tim Nelson

Certified Public Accountant Tells You How To Write Off The Holidaysencpaswp2022-11-29T14:19:20-07:00

Business Owners, Pet Deductions Are Limited But Possible

Business owners, you may be asking yourself if I am being serious. Can you really deduct your pet’s expenses? In most cases, you cannot deduct pet food and vet bills. However, I have had a couple of clients who have successfully deducted their pet’s expenses. If this is something you want to do, you should talk to an accountant in Reno, Nevada who has ample experience in tax preparation.

Let me start out by saying that this is something that we come across all the time, but rarely will fly with the IRS. Let me give you a couple examples of clients who deducted their pets and why they were able to do so.

The first example is a tile manufacturer. This client had a couple of German Shepherds who stayed in the shop all the time. My client deducted their food, water and vet bills. This client was actually audited and the deductions were upheld. The auditor let the deductions stand because the dogs were considered security for the evening.

Another case of a client who successfully deducted their pet expenses was a farmer/rancher. This client has a number of cats, and all of the expenses for the cats were deducted. The ranching operation was audited, but the auditor upheld the deductions because the cats keep the mice down in the barns.

Now let me give you an example of a case were pet deductions are not justified. We had one client who ran a gym. They have a couple of dogs who are always running around the gym and greeting customers. They argued that the dogs were used as advertising because all the clients would talk about them.

The rule for whether you can deduct something as a business expense is if it is ordinary, necessary and reasonable. In the case of the gym, it is not necessary or ordinary to be able to deduct pet expenses. If you think you may be able to deduct your pet related experiences, you should contact an accountant in Reno, Nevada and have them help you with your tax preparation.

Reno’s Best CPA,

Tim Nelson

Business Owners, Pet Deductions Are Limited But Possibleencpaswp2019-03-28T15:00:00-07:00

A Reno CPA Talks about Three of the Quirkiest Tax Write-Offs Ever

Who really needs a Reno CPA? Well, there a lot of people out there who might not think they do. However, they might want to consider that CPAs are experts in tax codes and regulations, and they are not. It is quite amazing how often a CPA can find a tax write-off that was overlooked. Take the three write-offs mentioned later in the article. Would you have known about these?

CPA

CPA stands for Certified Public Accountant. Requirements vary by state, but in general, a CPA must have a degree in accounting, have a set amount of experience, and demonstrate expertise by passing a comprehensive and rigorous exam. As a result, they are experts in tax codes and regulations, which considering how complex the US tax code is – is impressive. Certainly, if there is a tax write-off to be found, a Reno CPA will find it.

Smart Move?

Of course, taxes are often a sore subject for many people. Not only is Uncle Sam demanding a piece of the pie, but it costs money to have someone tell you how much. As a result, many people look to alternative sources for preparing their taxes such as online software or under-qualified tax accountants. However, is that really a smart move? Keep in mind that Reno CPAs are experts in tax rules and regulations. For example, would the average American know about some of these more quirky tax write-offs?

Making Allowances

Tired of paying your child an allowance and getting nothing in return? Would it help if that allowance could be used as a tax write-off? It can be if the parent is the sole proprietor of his or her own business. In this case, parents can hire their own children, and not pay any payroll taxes. Plus, the wages can be deducted on their sole proprietorship. So, basically, it’s like deducting the child’s allowance, and the parent might just get some work out of the kid.

A Noteworthy Loophole

For most parents, listening to their child learn to play the clarinet is a painful experience. However, a CPA might use that clarinet and the lessons as a tax write-off. That’s because orthodontists claim that playing the clarinet can help correct an overbite. That makes it a medical expense. So while the Reno CPA may not make listening to the clarinet any easier, he or she can make paying for it a little easier.

Honest Crooks

According to the IRS, it’s okay to be a criminal as long as the “wages” are reported as self-employment income. For the thieves out there, however, there’s a little loophole that only a CPA would know. Thieves are required to report and pay the fair market value tax on all merchandise that is… ummm… acquired. However, if the items are returned, the thief can get out of paying the taxes. Plus, he or she will get free room and board at the county jail too.

Okay, so most people won’t fall into the last category, but it does prove the point that a Reno CPA will know every loophole out there. So whether you are a sole proprietor, a parent of a child with an overbite, or a thief, a CPA can make sure that your taxes are done right and every tax write-off is used to maximize the return. In the end, the tax savings will more than pay for the services of a CPA.

Reno’s Best CPA,

Tim Nelson

A Reno CPA Talks about Three of the Quirkiest Tax Write-Offs Everencpaswp2016-09-22T21:40:33-07:00

Reno CPA Reveals 7 Business Deductions Business Owners Commonly Overlook

Every year as the tax deadlines roll around, business owners find themselves scrambling to file their business taxes. As a result, these owners often miss important deductions that could end up saving them a significant amount of money. However, a little pre-planning and research can help a lot. For example, here are seven business tax deductions that are commonly overlooked.

Working from Home

A home office can supply a business owner with major business deductions. Most are aware that a home office can be deducted, but did you know it doesn’t have to be an entire room? The area just has to be devoted exclusively to the home office. Just measure out the work area and deduct that percentage from all home-related business expenses such as the mortgage and insurance. Even expenses like phone calls can be included here. Not a bad way to help pay for home expenses.

On the Road

Traveling can offer additional hidden Reno business deductions. In fact, many owners overlook the incidentals charges such as car rentals, tipping employees, and even dry cleaning expenses. Another major deduction involves company vehicles. In 2010, up to 50 cents per mile can be deducted for business trips. This can really add up when you consider the number of business miles driven in a year. Plus, don’t forget things like maintenance and insurance. Even if the car is used for personal use, a percentage can still be deducted.

Benefit Packages

Perhaps the only thing more complicated than business taxes is dealing with benefits. However, a CPA can help business owners find hidden deductions here too. For example, if an owner is considered self-employed, he or she can now deduct the premiums not only from the income tax but from the self-employment tax. Finally, don’t forget business deductions for retirement benefits. The self-employed pay double the social security, but the IRS will allow half of that to be deducted. That’s a huge savings.

Family Matters

What if it’s a family business? There are overlooked business deductions here too. For example, if a business owner is a sole proprietor or is in a partnership with a spouse, a Reno CPA might tell them to put the kids to work! As long as the child is 17 or younger, no social security taxes will be collected, and the salary can be deducted as a business expense. No other employee comes with those benefits to the company.

Start-Up Costs

Operating cost deductions can only be taken for expenses incurred after the business opens its doors. As a result, many owners miss start-up costs such as lawyer’s fees or licensing fees because they occur before opening day. However, these can still be taken as part of the business deductions for start-up. In most years, this is up to a $5,000 deduction the first year with the remaining spread over 15 years in equal amounts. In 2010, the first year deduction was doubled up to $10,000! Now, that’s a deduction!

Of course, there are a plethora of other business deductions that can be overlooked by business owners – subscriptions to trade magazines, memberships to professional organizations, and dining out expenses, just to name a few. To make the most of these on your business taxes, contact a Reno CPA. He or she will help find not only the seven deductions mentioned above, but may just find a few more that can really affect your bottom line.

Reno’s Best CPA,

Tim Nelson

Reno CPA Reveals 7 Business Deductions Business Owners Commonly Overlookencpaswp2016-09-22T21:24:12-07:00

A CPA in Reno Reminds Business Owners to Seek Help (Part 2)

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In part one of this series (A Certified Public Accountant in Reno Reminds Business Owners to Seek Help), the signals that should drive small business owners to seek financial advice from a CPA in Reno were discussed. These include spending too much time on the accounting side of the business, making mistakes that will lead to an audit, declining assets draining resources, stagnating revenue and missing productivity. However, don’t despair because a certified public accountant can usually resolve each of these situations easily.

Shifting Focus

The first thing a CPA in Reno can do for business owners is help them put the emphasis back on their passions. It is frequently said that if you want to be successful, do what you love. The problem is that most owners don’t love doing payroll, accounting, or tax preparations. The certified public accountant can take care of all of that. For someone like a landscaper, this allows the owner to put their focus back on their business.

The Dreaded Audit

As long as a certified public accountant is consulted before the IRS targets the business for an audit, the CPA can often avoid them completely. That is because they can avoid those red flags like little or no sales with high expenses. Something like that will catch the attention of the IRS every time. A CPA in Reno can also help avoid late filings and all of the late fees associated with them. Plus, if an audit is called, the accountant will be invaluable during the process.

Declining Assets

Business owners also need the financial advice of a CPA for things like declining assets. These often drain the resources of a company, but that doesn’t need to be the case. Certified public accountants can carefully analyze all of the assets. By doing so they can track each asset and how much it declines. They can then plug this info into a formula and take the depreciation off as a tax-deductible expense over the lifetime of the assets. This can be a substantial savings.

Stagnant Revenues

Stagnant revenues can also be an area that a CPA in Reno can provide valuable advice. Accountants can help the owner create a system so that revenues and expenses can be tracked. Using this system and analysis gleaned from tax returns, they can identify trends and create reports that the owners can use to guide future decisions. They are also able to help the owner understand the reports so that the most can be made from the information.

Lack of Employee Productivity

While employee productivity may not seem like an area where a certified public account can provide financial advice, they can. Think of the reports that are generated through payroll and the tale those reports can tell. Tax returns and payroll can yield a wealth of information including comparing hours worked with the amount of sales. In addition, an accountant might be able to suggest jobs that could be outsourced.

So if any of these situations apply to your small business, do not worry. A CPA’s services can help free up your time so that you are able to return to your passion. He or she can also help prevent an audit or provide expert backup in the event of an audit. The accountant can also carefully analyze reports on assets, revenue, and productivity to provide the business owner with a complete picture of the business. Plus, the accountant in Reno is there to help the owner understand just how those reports can guide the business.

Reno’s Best CPA,

Tim Nelson

A CPA in Reno Reminds Business Owners to Seek Help (Part 2)encpaswp2016-09-22T20:55:55-07:00

Nevada Corporate Tax Planning is Not an Option, It is a Must

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It is time to talk about the importance of tax planning in small business. Nevada corporate tax planning is necessary for any business to be able to meet their obligations to the government, increase their profits and to plan by analyzing previous years’ performance. An experienced Nevada tax accountant can guide a company through the maze of tax laws, advise about debt-reduction strategies and help put more money into growth and development.

Taxes are Unavoidable

It is impossible to avoid paying taxes in business. Any time a product or service is made or sold, the business has to pay taxes on a portion of its profits. Taxes allow the government to give services and protection to its citizens. However, a company can lower its taxes and increase its working capital with tax planning. A business can grow and become more profitable with more working capital. The company’s accountant should discuss what kinds of tax deductions and write-offs are right for the business at the proper times.

Two Basic Corporate Tax Planning Rules

There are two key rules in tax planning for Nevada small businesses. The first is that the company should not take on extra expenses to get a tax deduction. One smart tax planning method is to wait until the end of the year to buy major equipment, but a business should only use this strategy if the equipment is necessary. The second rule is that taxes should be deferred as much as possible. Deferring taxes means legally putting them off until the next tax season. This frees up the money that would have been used to pay that year’s taxes for interest-free use.

Accounting Methods

A company’s accounting methods can influence its taxes and cash flow. There are two main accounting methods, the cash and the accrual methods. In the cash method, income is recorded when it is actually received. This means it is noted when an invoice is actually paid rather than when it is sent out. The cash method can defer taxes by delaying billing. The accrual method is more complex because it recognizes income and debt when it actually occurs rather than when payment is made or received. It is a better way of charting a company’s long-term performance.

Nevada Tax Planning with Inventory Control and Valuation

Properly controlling inventory costs can positively affect a company’s tax deductions. A tax planning accountant can advise how and when to buy inventory to make the most of deductions and changes in stock value (valuation). There are two main inventory valuation methods: first-in, first-out (FIFO) and last-in, first-out (LIFO). FIFO is better in times of deflation and in industries where a product’s value can drop steeply, such as in high-tech areas. LIFO is better in times of rising costs, because it gives inventory in stock a lower value than the prices of goods already sold.

Predicting the Future by Looking at the Past

Good tax planning means that a company takes the past sales performance of their products and/or services into account. In addition, the state of the overall economy, cash flow, overhead costs and any corporate changes need to be considered. By looking at previous years according to the “big picture,” executives can forecast for the future. Knowing an expansion or a cutback will be needed makes planning for it easier. The company can stagger expenses, purchases, staff reductions, research and development and advertising as needed.

A Nevada tax-planning accountant can help a company increase profits, lower taxes and achieve growth for the future. Discuss your business’s needs, wants, strengths, weaknesses and goals with your corporate accountant to develop a tax planning strategy for all of these factors.

Reno’s Best CPA,

Tim Nelson

Nevada Corporate Tax Planning is Not an Option, It is a Mustencpaswp2016-09-22T18:32:45-07:00

Reno’s Best CPA Featured in NSBDC E-Newsletter

I sat down with Chuck McCumber of the Nevada Small Business Development Center (NSBDC) and talked taxes. The interview was featured in the NSBDC’s monthly e-newsletter. Here is one quote from our conversation:

“It’s also one of the best times,” said Tim Nelson, “because when the economy is down it stirs people to be more creative, entrepreneurial.”

To read the rest of the interview CLICK HERE.

Reno’s Best CPA,

Tim Nelson

Reno’s Best CPA Featured in NSBDC E-Newsletterencpaswp2016-09-22T18:09:02-07:00

Reno Tax Preparation Requires Cooperation Between CPA And Client

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A Reno CPA or certified public accountant is a huge help to individuals and businesses when it comes time for filing taxes. However, in order for the CPA and client relationship to be successful, communication is imperative. By understanding how communication works best between a CPA and his or her client, you can make sure your relationship with your CPA is solid. In addition, this helps to ensure that filing taxes, keeping records, and all other processes are easier and more accurate.

Don’t Be Afraid to Ask Questions

One of the best methods of communication is asking questions. As a client, if you are unsure of a specific process or you do not know why certain results are the way they are you can ask your CPA to explain it to you. Things like tax preparation, expense records, and loss charts can be very confusing for someone who doesn’t work with those numbers every day. A great accountant will take the time to explain what he or she is doing and why things have to be completed a certain way. Just because you’re not doing the tax preparation or other processes yourself, doesn’t mean you shouldn’t be able to understand what’s happening.

Reports and Information

If there’s something a CPA knows about, it’s keeping records. A great certified public accountant will record everything and provide reports and information to you regarding the processes he or she is going through in order to file your taxes or keep up with your business records. This will allow you to examine the processes yourself, and keep your own records for those processes. It’s also very important for you to keep records and provide your CPA with information as well. Keeping receipts and transaction logs of expenses will allow your CPA to prepare your taxes in the most accurate way. This ensures that your taxes are paid correctly and that you’re on an even ground with the IRS.

Why a CPA is the Best Choice

In addition to learning how to prepare taxes to begin with, a CPA will spend hours each year learning new information about laws that have changed, new stipulations for tax preparation and so much more. Most individuals don’t have the time to spend themselves learning these things, and trusting a professional is the best choice. A qualified CPA understands tax laws easily and in-depth, so they can make sure your taxes are filed correctly and accurately. In the same way that you’d hire an expert cake decorator to make sure your wedding cake is perfect, hiring a CPA ensures that your taxes are filed perfectly.

Overall, by having a great relationship with your Reno CPA, you can be sure that your tax preparation is done accurately and that nothing has been missed. It’s important to trust your accountant and communication is the best way to build that trust.

Reno Tax Preparation Requires Cooperation Between CPA And Clientencpaswp2016-09-22T16:29:02-07:00

The Mortgage Debt Forgiveness Act

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Are you “upside down” with your mortgage? Do you know how the tax implications of walking away from your home or having short sale can affect you? How can a Reno CPA help you with these types of mortgage issues? What are the tax implications of a short sale, foreclosure and other options? The Mortgage Debt Forgiveness Act ends this year. Do you understand what the benefits can be for you?

Millions of homeowners around the country are “upside down” with their mortgages. Being “upside down” means you owe more on the mortgage than the house is worth. Real estate values have fallen dramatically, especially in Nevada.

So, many people are asking “What are the tax implications of getting rid of my house? Should I short sell it? Foreclose it? Should I stay or just walk away?”

Here’s an example. A house is worth $200,000 but the mortgage is for $400,000. The Bank will usually send a 1099 or 1099C (cancelation of debt) form for that difference of $200,000.

The IRS will normally require you to pay on the tax owed for that $200,000. But you didn’t “receive” that money, the house is still the same house, and you got rid of it. It isn’t worth $400,000 anymore, you can’t sell it for $400,000 but the mortgage is still for that amount.

The Mortgage Debt Forgiveness Act, which runs through the end of 2012 (December 31, 2012) says you don’t have to pay tax on that $200,000.

Many people are worried about that huge tax liability. They are not sure if it would be better to try to short sell or foreclose on their house before the end of 2012 to be able to use the Mortgage Debt Forgiveness Act before it expires and avoid that tax.

Nevada has had its fair share of foreclosures and other mortgage issues. It is very important to sit down with a Reno CPA to discuss the options and tax implications of walking away from the house, vs. short selling, foreclosing or simply keeping it.

A Reno CPA can help you determine the best course of action, based on the many factors of your personal situation, and can help save you thousands of dollars (along with saving you time and frustration) by helping you determine the best choice for you.

Contact Evans Nelson & Company, CPAs for more information today.

The Mortgage Debt Forgiveness Actencpaswp2016-09-22T15:44:22-07:00