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STRATEGIC ISSUES...ONLINE
For week of April
11, 2005, Issue #207
Featured Articles:
1. The Biggest Deduction
Myths
2. Focus on Fraud: 10 More
Ways to Protect Your
Identity
3. Tech Tip Weekly:
Microsoft Excel - Adjusting
Column Widths the
Old-Fashioned Way
4. Compliance Calendar
1. The Biggest Deduction
Myths
There are certain myths
about tax breaks held dear
by many taxpayers that
should be addressed and
cleared up. Here are a few:
1. Uncle Sam Will
Help You Buy that SUV
That may be what a dealer
told you, but since when is
a car dealer your go-to
source for tax information?
Some consumers have come to
believe that they can get a
tax credit just for buying
an SUV.
There was legislation being
kicked around in Washington
at one point that would have
offered a tax credit to
buyers of hybrid SUVs, but
it didn't become law.
(There is, however, a clean
fuel tax deduction up to
$2,000 offered to owners of
some hybrid vehicles,
including some Honda models
and the Toyota Prius.)
There is a tax break for SUV
buyers who are small
business owners. In a
controversial move, the U.S.
government decided to allow
taxpayers to write off up to
$100,000 for the purchase of
a new SUV in the year it is
purchased so long as the
vehicle is used for business
purposes and weighs more
than 6,000 pounds. This
deduction has now been
limited to $25,000 effective
as of October 22, 2004.
There is not, however, any
tax break if you buy an SUV
to tote around your family.
2. We Can Write Off
the House!
For some who run home-based
business, the myth is you
can write off 100 percent of
your home. The truth is you
can only write off the
portion of your home that is
dedicated to your business
(such as the square footage
of your home office).
Among some part-time
telecommuters, there is also
an assumption that you'll
automatically qualify for a
home office deduction of
some sort. But as with so
much in the tax code, the
answer "it depends" usually
applies.
The home office deduction is
more nuanced than people
think. For instance, if you
work at home occasionally
because you prefer it to
your cubicle, you may not
be able to deduct any
home-office expenses since
your employer has already
provided a space for you at
work and has not required
that you work at home.
3. If You Have
Medical Receipts, Deduct
Away
Medical expenses may be
deductible if -- and a huge
"if" -- they exceed 7.5
percent of your adjusted
gross income (AGI). That's
a higher threshold than you
may think and the payoff
once you reach it may not be
huge. That's because if you
do manage to spend 7.5
percent of your AGI in
out-of-pocket medical
expenses, you'll only be
able to deduct the amount
above that 7.5 percent.
Remember, "out-of-pocket"
means expenses that are not
eligible for reimbursement
from your health insurer or
from your flexible spending
plan.
4. I've Dieted, Now
I'm Ready to Deduct
That weight-reduction
program has done wonders for
your waistline, but it
probably won't shrink your
tax bill.
A weight-loss program may
qualify as a deductible
medical expense, but only if
it meets certain
requirements. You can't
deduct it unless your
physician prescribed it and
it was intended to treat a
particular disease.
Obesity is considered a
disease, so if you are
legitimately obese, that
would count. Or if you're
not obese but are told to
lose weight to, say, lower
your blood pressure, that
also might make a program a
deductible expense.
But even if you meet those
criteria, the cost of a
weight-loss program is still
subject to the same AGI
threshold restrictions as
other medical expenses.
So, too, are programs
designed to help you quit
smoking. Unlike a
weight-loss program,
however, you don't need a
physician's prescription to
join a smoking-cessation
program.
5. I Can Write Off
That New Business Suit I
Bought For Work.
In most professions, you
might be fired if you came
to work in ripped up jeans
and a stained t-shirt, but
just because that's not
acceptable doesn't mean you
get to deduct the cost of
your work clothes as a work
expense.
There is one exception,
however. You may deduct the
cost of your work clothes if
your employer requires you
to buy clothing that is
specifically not made for
everyday wear, such as a
uniform or clothing with a
company logo.
If you have any questions
about what qualifies for a
tax credit or break, please
contact our office.
2. Focus on Fraud: 10 More
Ways to Protect Your
Identity
And the remaining 5 this
week; See last week for 1.
to 5.
6. Hassle companies that
ask for personal
information, such as your
phone number at a checkout
line. The harder we make it
on companies, the less they
will be inclined to continue
the practice.
7. It's impossible to tell
what's real and what's fake
online. Just delete any
e-mail that asks for
personal information.
8. Just hang up on
telemarketers, particularly
ones who seem to be fishing
for personal information,
like your birthday.
9. Limit the number of
credit cards you hold, and
religiously inspect your
account statements each
month. Consumer rights
quickly fade over time; the
sooner you discover an
identity theft incident, the
better.
10. Most of the time, you
can't prevent an ID theft
incident from occulting,
because two-thirds of the
time, some company that
leaked the data is to
blame. So be prepared, and
be organized. Save paper
bank records for a year, at
least. You'll need them to
prove your account balance
in the event of an ID theft
incident.
3. Tech Tip Weekly:
Microsoft Excel - Adjusting
Column Widths the
Old-Fashioned Way
Using AutoFit to adjust
column widths is nothing if
not quick and easy. The
only problem with AutoFit is
that it's based on the width
of the longest entry
currently in that column.
If you need more precision
in adjusting your column
widths, you have to do this
manually either by dragging
its border with the mouse or
by entering new values in
the Column Width dialog box.
To manually adjust a column
width with the mouse, drag
the right edge of that
column onto the Column
header to the left (to
narrow) or to the right (to
widen) as required. As you
drag the column border, a
ToolTip appears above the
mouse pointer indicating the
current width in both
characters and pixels. When
you have the column adjusted
to the desired width,
release the mouse button to
set it.
To adjust a column width in
the Column Width dialog box,
position the cell pointer in
any one of the cells in the
column that you want to
adjust and then choose
Format, Column, Width on the
menu bar to open the column
Width dialog box. Here, you
enter the new width (in the
number of characters between
0 and 255) in the Column
Width box before clicking
OK.
You can apply a new column
width that you set in the
Column Width dialog box to
more than a single column by
selecting the columns
(either by dragging through
their letters on the Column
header or holding down CTRL
as you click them) before
you open the Column Width
dialog box.
4. Compliance
Calendar
April 13
-Employers deposit Social
Security, Medicare and
withheld income tax for
payments on April 6, 7, and
8.
April 15
-Individuals file a 2004
income tax return and pay
any tax due. Taxpayers
seeking an extension should
file Form 4868 for an
automatic four-month
extension of time to file
the return.
-Individuals make first
installment of 2005
estimated tax.
-Partnerships file a 2004
calendar year return (Form
1065) and provide each
partner with a copy of
Schedule K-1 or a substitute
Schedule K-1. An automatic
three-month extension of
time to file the return and
provide Schedule K-1 or
substitute Schedule K-1 may
be secured by filing Form
8736.
-Employers deposit Social
Security, Medicare and
withheld income tax for
payments on April 9, 10, 11,
and 12.
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information
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Prangley Marks, LLP
Accountants and Consultants
"The Way We Figure, We Are The Only CPA Firm You Will Ever Need"
333 Bridge Street, NW, 11th Floor Bridgewater Place, Grand Rapids, MI 49504-5356
Phone#: 616-774-9004, Fax#: 616-774-9081