Over the past 10 years, the Internal Revenue Service has implemented more than 4,000 new tax laws. Easy math – that's more than one new law per day. While every tax provision may not be applicable to you, your family or your business, many people miss out on tax benefits available to them and fall into many unfortunate IRS traps.
In a time of critical economic condition, every taxpayer is seeking to file their tax return as quickly as possible for refunds. In hopes of maximizing your refunds so all of your excess can be invested or saved for retirement purposes, or to plan for that Caribbean vacation this year, make certain you are not missing out on commonly overlooked tax benefits.
In filing over 1,000 individual tax returns annually, my colleagues and I at Malvin, Riggins & Company P.C. have seen everything from simple to complex, and we have heard it all. I would rather a client ask questions or have creative ideas that could potentially benefit them, and we collectively brainstorm. One case in point: A dance instructor is permitted to deduct over a period of time body augmentation surgery for benefit of his or her profession!
This is only one fun fact and the reason that our profession isn't always that of the stereotypical pencil pusher.
Some other interesting points:
- Pet lovers, the cost of moving your pet is a permissible moving expense when relocating for a new job.
- While home swimming pools have not been the greatest return on investment for homeowners over the past several years, if you have a medical condition that your physician will substantiate, your money pit may qualify as a significant tax deduction.
- Civil union and registered domestic-partner couples in the District (and nine other states) must file differently for federal and state purposes.
- Business conventions in Bermuda, Barbados, Costa Rica and several other territories are great tax write-offs. Now you have a reason to spend your extra refund – an additional write-off for next year's taxes.
- Anyone can make a traditional IRA contribution, regardless of how high their income may be for a given year. While it may not be deductible due to certain limitations, you are still permitted to contribute. Even better, you immediately convert that traditional IRA contribution into a Roth IRA. You have now successfully made a Roth IRA contribution, even though your income is over the limits, a fantastic loophole that every tax professional should be recommending to their clients.
- For this year, your federal tax return is due April 17 (April 15 falls on a Sunday and April 16 is Emancipation Day, a holiday observed in the District). If you cannot file your return on time, make sure you file for an extension, which gives you until Oct. 15 to submit. If you are due a refund, why would you want the government to keep it for any longer than necessary? If you are anticipating you owe, your extension is for filing purposes only, not paying. Penalties and interest will accrue from the original due date of the return. Therefore, do not delay!
Networking through the Chamber and in the D.C. area has been a rewarding experience for me and has lead to many great connections. From intimate socials with business colleagues to large charity events, the D.C. area also provides many networking opportunities to create a tax write-off for business purposes. Take advantage of it. Most employers expect it and also provide reimbursement accounts for their staff for social events, which is typically more beneficial for an individual taxpayer.
The Chamber means Business. For more information, visit caglcc.org.
John T. Caldwell is the managing principal of Malvin, Riggins & Company P.C., a full-service tax and accounting firm in Washington, Northern Virginia and southeast Virginia. http://www.malvinriggins.com/.