Drew Miles Tax Planning Advice and Tax Savings Tips

The current economic downturn has prompted lawmakers to reconsider the loss carryback rules under the Worker, Homeownership and Business Assistance Act of 2009. This would provide tax relief to all businesses except for companies receiving payments under the Troubled Asset Relief Program (TARP). Most businesses have an opportunity to use business losses from prior tax years under this rule.

The previous carryback rules limited loss carrybacks to two years. Now, taxpayers can elect to carryback a net operating loss (NOL) for a period of one to five years, or a loss from operations for four or five years to offset taxable income in those preceding tax years. However, losses carried back five years may offset no more than 50 percent of the taxable income in the fifth year.

Taxpayers must do several things to make the special carryback election. First, the taxpayer must have the federal income tax return of the NOL year or an amended return for the applicable NOL. Second, the statement must clarify that the taxpayer is electing to use the new NOL rules under Revenue Procedure 2009-52. Third, the taxpayer must state that they are not a TARP current recipient for the years, 2008 and 2009. Finally, the taxpayer must specify the length (3, 4, or 5 years) that they will elect for the NOL carryback period.

More Internal Revenue Service specifics on Revenue Procedure 2009-52 and other tax advice can be found at  http://www.irs.gov/newsroom/article/0,,id=217370,00.html.

Drew Miles wants you to avoid tax scams by documenting everything right.  Drew grew up working in a family business on Long Island, NY.  After passing the New York State Bar, Drew established his own firm where he practiced for 18 years.  In 2006, he set out to concentrate solely on his commitment to serve his clients and expand Pathfinder’s scope of programs.

His unique approach combines what he has learned, not only from his formal legal education, but also his “informal” business education and 25 years of entrepreneurial experience, in the development of programs designed to educate people in the fine art of building and preserving wealth.

Drew is an author, teacher, and international speaker.  His highly acclaimed book, Zero to Success, chronicles the steps every new business owner must take to ensure success.  He has been featured in Forbes, the Dallas Morning News, American Banker, and Yahoo Finance.  To date, he has helped over 5,000 business owners save over $100 million dollars in taxes.  That’s why he’s known throughout the United States and Canada as the “Tax Saving Attorney”.

Avoid being looked at as though you are running tax scams by documenting everything the right way.  Take automobile expenses for instance.  A solid tax-planning tip for business expense deductions is to deduct the use of your automobile expenses. Business mileage is vehicle use for business tasks such as client meetings, mileage to the office, a trip to Office Depot for business supplies and business-related long distance travel.

The Internal Revenue Service issued the 2010 standard mileage rates in its news release, IRS-2009-111 on December 3, 2009. The new mileage rates are slightly lower than 2009. The IRS mileage rates are estimated based on lower transportation costs in comparison to the year before. Beginning January 1, 2010, the standard mileage rates for vehicle use are $.50 per mile for business use; $.16.5 for medical or moving purpose; and $.14 per mile in service for a charitable organization.

Auto mileage deductions can be tracked by using a business mileage diary. Business destination and mileage are logged on a continual basis. This task can be frustrating, however, one way of minimizing the monthly logs is to track your odometer reading for three straight months and multiply the result by four. Another method for business owners who have high (80%) business mileage is to track only your personal mileage and deduct from the overall mileage.

Keeping a good documentation system is a worthwhile investment of time and consistency. It justifies business tax deductions, updates and organizes business records and audit proofs your business so that you save money and avoid being accused of running a tax scam on the IRS.

Drew Miles is an author, teacher, and international speaker. He worked as an attorney for 18 years before retiring in 2006 to concentrate solely on his commitment to serve his clients and expand Pathfinder Business Strategies’ scope of programs. His highly acclaimed book, Zero to Success, chronicles the steps every new business owner must take to ensure success. He has been featured in Forbes, the Dallas Morning News, American Banker and Yahoo Finance. To date, he has helped 4000 business owners save over $50 Million dollars in taxes. That’s why he’s known throughout the United States and Canada as The Tax Saving Attorney™.

Drew Miles and Pathfinder Business Strategies advises its clients to utilize a tax strategy diary as an easy and safe method of audit proofing their tax records and avoid what some would say are tax scams. It is a simple form applied to business tax deductions using the five questions of “who, what, where, when and how much”.  Pathfinder Business Strategies teaches clients to use this application for each business expense so that their tax diary becomes more extensive as the year progresses.

The first action is to create a tax diary in column form. You can create this file in either a word document or a spreadsheet. A large paper pad can be used if you do not have a computer. Create six columns and label the first five “who” “what” “when” “where” and “how much”. Each row will contain the date of business tax expenses.

The second action is to open both your business and personal checkbook registers and records of cash receipts and begin reviewing expenses from January 1 on. Determine which expenses should have been registered as business expenses, enter the information into the tax diary by date, and answer the five questions.

For example, if you met with a client at a restaurant and inadvertently paid for it with a personal check or credit card, place it in your tax diary and use the five questions to qualify it as a business tax deduction.

The third action would be to add a sixth column to the tax diary strategy and label it “missed deductions”. If that expense was paid for from your personal funds and not reimbursed by the business, then place the amount of that expense in the sixth column.

Go through every business expense, line by line, from that year and enter the information into your tax diary. If a business expense was paid from your personal fund and not reimbursed by the business, then place the amount of that expense in the sixth column.

This may take a while to create an up-to-date business expense history but once you are finished, tally up the numbers in the sixth column. The result will be new identified business tax deductions you may have missed and will prove financially worthwhile to your business.  To avoid a potential tax scam, make sure the deductions you are indicating in your diary are legitimate business expenses.

Drew Miles is an attorney, author, teacher, and international speaker. He concentrates solely on his commitment to serve his clients and expand Pathfinder Business Strategies’ scope of programs. Visit http://www.pfbs.com for more information.

His highly acclaimed book, Zero to Success, chronicles the steps every new business owner must take to ensure success. He has been featured in Forbes, the Dallas Morning News, American Banker and Yahoo Finance. To date, he has helped 4000 business owners save over $50 Million dollars in taxes. That’s why he’s known throughout the United States and Canada as The Tax Saving Attorney™.

Pathfinder Business Strategies uses a powerful tax strategy process to identify both personal and business tax deductions that can save its clients thousands of dollars in unused or underutilized deductions. Be wary of tax tips or scams to buy something just to reduce your taxes.

Instead, Pathfinder Business Strategies will look at where your hard-earned money is currently going.  We want you to make more of those purchases with pre-tax dollars instead of after-tax dollars.  This is the cornerstone of lasting tax savings.

Our tax strategy resource contains over 400 tax deductions available to business owners in a simplified checklist of the IRS tax code. Pathfinder Business Strategies teaches clients how to take advantage of the list without eliminating items they think are not available and get the most out of possible business tax deductions.

Most clients are already claiming some deductions but our brains are wired to scan over things we think are not business tax deductions. For example, many business owners take tax deductions on auto business use. Many use the IRS standard rate deduction (50.5 cents for every business mile you drive) but there is also the actual cost method.

The actual cost method would take the car payment of $500 each month plus gas, oil changes, tires, car washes, tune-ups, etc. and add another $500 for a total of $1,000. If your car is used for 80% of business, you have a business tax deduction of $800 per month or $9,600 annually. That is an additional tax write-off of $6,960.

A written medical reimbursement plan allows you a tax write-off 100% of your documented medical expenses. Most people think only about health insurance and deductibles.  This is correct but there are many other items to include. Items that sustain or enhance your emotional, physical and mental energy toward your business are other potentials for business tax deductions.

Take for example a client that is worth around $70 million. He started each day with swim laps and a soak in his hot tub to counteract fifteen physical injuries and surgeries over several years. His daily routine was important to his job performance. His doctor was willing to write a note on his behalf and additionally, the inclusion of $125,000 in equipment for business tax deductions. Pathfinder Business Strategies saved this investor about $60,000 in tax deductions simply by reading through the list and applying the unused items in his home gym.

Items such as your children’s daycare expenses, annual vacations and even the family motor home are possibilities of business tax deductions depending upon your circumstances. Meals are a prime example. A meal with an old friend is 0% tax deductible but if the same person is a business potential, the meal is 50% deductible. If you are working on a business deadline during the meal, that is a 100% business tax deduction.

Pathfinder Business Strategies works with our clients through their previous tax returns, a list of assets and their twenty largest personal expenses. We are more interested in what you are spending money on (actual expenditures) than what you may purchase.  We teach clients to take advantage of unknown business tax deductions and to caution them on taking a tax deduction that they should not have.

Pathfinder Business Strategies can be found at http://www.pfbs.com and welcomes you to consult our online coaching programs and videos for more information on business tax deductions, tax tips and strategies.

Drew Miles is an author, teacher, and international speaker. He worked as an attorney for 18 years before retiring in 2006 to concentrate solely on his commitment to serve his clients and expand Pathfinder Business Strategies’ scope of programs. His highly acclaimed book, Zero to Success, chronicles the steps every new business owner must take to ensure success. He has been featured in Forbes, the Dallas Morning News, American Banker and Yahoo Finance. To date, he has helped 4000 business owners save over $50 Million dollars in taxes. That’s why he’s known throughout the United States and Canada as The Tax Saving Attorney™.

A well-planned tax strategy is the key to tax savings with the primary benefit of increased asset protection and income tax reduction.  Individuals are hesitant to maximize their business tax deductions because they believe it to be risky. Proper tax deductions are not risky. What is risky is falsifying records or failing to document the deductions you are utilizing. Beware of scams that suggest hiding income by putting it in an offshore trust or international business corporation. These scams and schemes will earn the wrath of the IRS.

Pathfinder Business Strategies has researched over 400 available business tax deductions yet most individuals only utilize about 10%. Most individuals pay for their expenses with after-tax dollars. A corporation pays their expenses with pre-tax dollars. The difference is that businesses subtract these first, then pay taxes on the balance. Individuals pay expenses on what is left. Our goal is to teach our clients how to find and maximize significant income tax deductions.

You need to understand the tax codes. Pathfinder Business Strategies has found a few tax codes within the 12,000 IRS tax code pages that we call the Golden Tax Secrets.

There are numerous tax savings in converting your home into a business corporation. The key is not to add additional expenses just because they are deductible, but to convert those things that you are already spending money on into legitimate business expenses. Begin this process by reviewing your current expenses and ways to convert these expenses to business expenses. Begin by making of a list of your monthly checkbook, credit card bills for the previous year and cash receipts.

Look at Section 119 of the Internal Revenue Code. You can deduct the obvious items, but you can also deduct more, such as home repair, home insurance, some or all meals/clothes and heat, phone and other utilities under certain conditions. You can write-off many other expenses including health insurance, travel expenses, retirement plans, dependent care plans, auto insurance and college funds.

Section 74 covers achievement awards for safety and longevity. There must be some inherent danger in your job to receive the safety award. If you do not electrocute yourself when you turn on the computer or you have been there from the beginning, you can receive up to $1,600 a year in awards. Activities like operating heavy equipment, construction, driving a truck would certainly comply.

Section 79 covers group term life insurance. You can receive up to $50,000 in coverage and the premiums are not included in your gross income. The premium is a total business tax deduction to the business and is tax-free to you.

Section 105 covers health insurance. If you already have a health insurance program, the corporation can reimburse you with no limit, is not included in your income and is a complete business tax deduction.

Section 106 deals with insured medical plans except as otherwise provided in this section. The corporation can have a medical plan and pay up to 100% of the plan for you. In addition, this benefit is not included in your income and is tax deductible to the corporation.

Section 119: A home-based business that is considered the business or corporate headquarters may qualify for meals and lodging if it is a requirement of the employer to stay there on the premises. This can be tax deductible to the corporation and not included as part of your income.

Section 120 covers a group legal plan.

Section 125 cafeteria plan includes a variety of employee benefits. This could include Section 105 under the unlimited reimbursement for health insurance premiums or Section 106 health care plan paid by the company. There is also Section 127 for educational assistance. You can allot up to $5,250 per employee for continuing education and seminars, which will not be included in the employee’s income. Seminars relating to your business can be considered continuing education. You can be reimbursed for these expenses under the education category, or you can be reimbursed under Sections 162 or 212, which covers seminars.

Section 243: If your corporation owns stock in other corporations or receives dividends from stocks, bonds and mutual funds there is 80%-100% forgiveness on capital gains. For example, if you receive $1,000 in dividends, $800 of it disappears as though it did not exist.

The I.R.S. has specific tax advice and regulations concerning each kind of business tax deductible expense. It is imperative, therefore, that you work closely with your accountant to ensure that you comply with these rules. Each tax deduction require proper documentation. A tax diary is your secret weapon. It provides all the information required to audit proof your records.

Pathfinder Business Strategies welcomes clients to consult our online coaching programs and videos for more information on business tax deductions, tax tips and strategies.  Visit http://www.pfbs.com for more information.

Drew Miles is an author, teacher, and international speaker. He worked as an attorney for 18 years before retiring in 2006 to concentrate solely on his commitment to serve his clients and expand Pathfinder Business Strategies’ scope of programs. His highly acclaimed book, Zero to Success, chronicles the steps every new business owner must take to ensure success. He has been featured in Forbes, the Dallas Morning News, American Banker and Yahoo Finance. To date, he has helped 4000 business owners save over $50 Million dollars in taxes. That’s why he’s known throughout the United States and Canada as The Tax Saving Attorney™.