Phil Liberatore’s 5 Top Tips for Winning on Your Taxes!

Liberate yourself from tax woes with trusted CPA Phil Liberatore                               
His 5 Top Tips for WINNING on your taxes:                  

1)       Health insurance premiums help lower the self-employment tax: When a person is self-employed, s/he generally has to pay his/her own health insurance premiums as well as both the employer and employees’ portion of Social Security and Medicare Tax (AKA self-employment tax).  For 2010 and 2011, the self-employed are able to lower their self-employment tax by paying their health insurance premiums.  Basically, they premiums reduce the income that the s/e tax is calculated from. This saves BIG money!

 2)       Starting in 2012, every person, corporate or otherwise, engaged in a trade or business, must file 1099-misc to persons or corporations that they pay $600 or more in a calendar year.  So, if you own your own business (self-employed, S-corporation, LLC, etc.), you now need to issue anyone you pay $600 or more to a 1099-misc.  Got a utility company? You’ll have to 1099 them. Bulk store? You’ll have to 1099 them. Office supply store? You’ve got it! You’ll have to 1099 them.  On the plus side, if you pay with your credit cards, the credit card company will take care of this filing for you. On the down side, if you mix up paying cash and credit, you’ll be responsible for 1099-ing the company for the cash portion.  Confused yet?  3)       Do you have an online account where people can pay you (i.e. Paypal)?  Starting in 2012, they are going to start reporting your income to the IRS. Sell a bunch of items on e-Bay or Amazon? That’s going to get reported, too. 

 4)       Currently, not all tax preparers are required to be licensed.  That’s going to change. Soon.  Preparers who aren’t CPAs, EAs, or attorneys will eventually have to satisfy a competency test and continuing education requirements to attain and keep their PTIN (an annual user fee for online registration).

 5)       IRS Audits are on the rise. The IRS has hired 5,000 new auditors and are currently focusing on taxpayers with Schedules A, C, and E.

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