Here are some funny things I heard during this tax season

• “I heard that there is a secret IRS deadline - so if you extend and can figure out the deadline, you  won’t be audited”
• “I’ve heard if you extend, you have a much greater chance of being audited”
• “I’ve heard that if you don’t file your tax return by April 15th, you won’t get your economic stimulus payment”
• “I’m worried because I have a large refund.  Can you make it smaller - I don’t want to send up a red flag”
• “Will IRS think it’s strange that my estimated payments are going down”
• “Will IRS think it’s strange that my estimated payments are going up”
• “I’ve  heard that if you file a paper return, you won’t get audited”
• “I’ve heard that if you file electronically, you won’t get audited”

and so on . . .

By the way, none of these statements are correct.  The best way ever to not worry about  IRS is to document everything you do AND keep up with your finances through0ut the year.  You’ll have such peace of mind - and when you turn over your tax records, EARLY next year - your CPA will love you.

I am fortunate.  Most of my clients are not audited.  Occasionally though - it does happen.  Like yesterday.

 Just so you know, my clients don’t actually attend the audit - I do that in their place.  It’s one of  the perks of having a CPA.  We represent you.   It’s a good thing too.   It can be a little intimidating to look at an auditor and tell them they are wrong.  I had to do that yesterday - several times.  Unfortunately, the auditor was right about a few things too. 

 Auditors usually pick two or three things to focus on - they tell you what they want to see before you show up for the meeting.  If you can get them happy on those items, you are done.  In our case, one category the auditor wanted to see was travel expenses.  She wanted to see receipts and iteneraries.  My client is so great - he had receipts - lots and lots of receipts.  He even organized them by trip.  But he didn’t have time to  prepare iteneraries.  The auditor didn’t even bother to look at the receipts.  She wanted iteneraries and without iteneraries, she had no reason to bother with the receipts.  Lesson here is:  you cannot come to an audit halfway prepared.  Her initial report now disallows all the travel deductions.  Every last one of them.  Is there any good news here?  Of course.  We now have 30 days to produce iteneraries.  Lucky for my client - I already know his trips are legitimate.  We discussed that before I prepared the return.  I am not worried about a huge adjustment for him.  All he has to do is get that paperwork to me. 

My client had 10 days to prepare for this audit.  He had to produce a mileage log (from 3 years ag0), odometer statements, receipts, iteneraries and more.  He did pretty well given the time frame.  He was just lucky that this happened in his slow time for business.  Other clients have not been so lucky. 

Ask yourself now - “If I had to produce what I need for an audit in the next 10 days, could I do it?”  If not, get busy!  A good way to start is by using my tax documentation checklist.  When you sign up for my newsletter, we’ll send it to you at no charge.   Just go to the home page at www.deductiondiva.com and sign up for the newsletter.  Check the list - and start filling in the holes in your arsenal of documentation. 

 I would  love to hear from you.  Do you have any audit stories?  Please share.  All of those who post replies to the blog will be entered into my drawing to attend my teleclass “How to Pay Your Kids” on Sunday March 30th at 7PM Central time.

How many times have  you said that?  Maybe you’ve heard about a great deal - a couple of months too late.  Maybe you’ve received a strategy about  how to win the car, the trip, the jewelry - only now you dont’ have time to make it happen.  Maybe you’ve heard about a tax tip in December - when you have no time to make it happen in the current tax year . . .

I can’t help you with some of those “I sure wish I would have known” type statements - but I do know I can help you now with your tax planning and strategies.  It’s only February - you have A LOT of time to make 2008 the smartest tax year you’ve ever had. Are you ready?  Do you want to know for once and for all - how to move past the fear of hobbby losses, make sure your maximizing your automobile deductions, pay your kids, deduct medical expenses on Schedule C?  Are you ready to make sure that you are keeping more of what you are making through legitimate tax planning and strategizing?

If you’re willing to overspend, do you really want to overspend on tax ?

I didn’t think so  . . .

I have solutions - but you have to act quickly.  I am having a secret sale.  It’s all happening this month.  If you’re ready - click here now - act now - make this your year to get on top of your tax game.  I will never offer lower prices - and  these are the last “live” calls for 2008.  For a small (and tax deductible) investment - you can learn how to save thousands of dollars.

I hope to hear you on the calls. 

 I just wanted to thank everyone who registered for last night’s call.  We had a lot of people on that call!  In fact, we oversold it.  Good news - it’s now available for immediate download in the Direct Selling Leaders store for only $9.95. 

It has been really nice today hearing from those of you who enjoyed the learning.  There’s certainly more where that came from.  Some of the feedback I received was on the Tax Intensive Program (TIP) special.  Many of you have indicated that you are definitely wanting this course but that the 17th start date is just too soon.  You’ve spoken and I’ve listened - and you win!  We will be starting this class on February 24th instead of the 17th - The date change has NOT been made on my website yet - but rest assured - the true start date is on the 24th.  The changes will be made on my web site later on this evening.

While at the Deduction Diva web site, be sure to look around - there is a lot there to help you with your business.

 Last but not least, be sure to sign up for my newsletter.  I only send them out about once per month or when something really important is going on - so don’t worry about receiving endless tax emails. 

Until next time - keep up the good work!

Vicky Collins, CPA

Your Deduction Diva

A lot of people are under the impression that if they buy a bunch of inventory before year end, that they will get a big tax deduction for their 2007 taxes.  NOT SO.  You only get to deduct the cost of inventory purchases when you sell your products. 

Little example here:  Jane was on a message board and read another distributor’s post.  That person was telling the world to buy inventory as a way to reduce their taxes.  Good thing Jane has me as her CPA.   She contacted me and thought maybe there had been a law change.  “No” I said, with a heavy sigh.  It’s just that time of year -

 Just for the record, let me say this one more time.  Do not buy a bunch of inventory as a way to reduce your current year tax liability.  You can only deduct the cost of inventory as you sell the product.

Does anyone out there have any thoughts on this subject they would  like to share?

Hopefully, you’ve got your receipts organized and recorded so that you know where you stand.  If you don’t have these ready yet - I don’t recommend trying to record every transaction now - it’s the holidays after all.  Just take a short cut - add up your receipts and make a ballpark estimate.  If you think you will have a loss - stop spending on your business until next year.  If you have income, consider the following:

1.  Make purchases of office supplies, pay bills, your assistant - whatever you can now.

2.  Consider buying office equipment and furniture.  Most people can take an immediate write-off of these items by using a special election on your tax return.

3.  Buy your big-ticket items now.  I’m talking about cars, motor homes, boats, etc.  NOT all of these will be business write-offs BUT - since the sales tax deduction is still available if you itemize, you could potentially save big with extra itemized deductions.

4.  Hire  your kids to work for you during the holidays.  Put them on the payroll.

There is so much that is possible with proper planning.  If you are feeling stressed about your taxes, contact your tax preparer right away  - it’s  not too late yet . . .

How many times have you said that?  It doesn’t just apply to tax, but since I’m here as the tax coach - I will only be chiming in on issues relating to tax.  I have a lot of people tell me that next year will be different.  I hear a lot of guilt when these statements are made and I think that is just the wrong way to feel.  I believe that as long as your mind is telling you “ick - tax” you  will never move beyond the statement that next year will be different. 

I really want a different reality for you.  Imagine how you will feel when you  actually are organized and ready for tax?  Imagine the feeling of really knowing that you are on top of your tax game.  Now imagine that you’ve had fun getting your records together.  It’s been fun learning about all the great deductions . . . it’s been fun leading by example . . . it’s been fun because someone (me) has finally made it all palatable enough to digest. 

 My promise to you is that all of  these things can be true for you.  I’ve had the pleasure of helping many people get over the tax hurdle annd I know that  you can too.  BUT - you have to take action.  You have to TRUST YOURSELF enough to know you can do it. 
I love this Buddhist saying:  ”When the student is ready, the teacher will appear”.  It has been so true for so many areas of my life.  Are you ready?  I am here.  From fabulous and fun organizing systems, to teleclasses, to one-on-one personal consultations, I am ready to help you.  Are you ready?  If so RUN don’t walk to www.deductiondiva.com - I am here!

So the headline says “Good News” . . . what does that mean?

It’s not too late and it doesn’t have to be painful.  Many strategies may be available for implementation now.  Here are some examples:

• Put your kids on the payroll for the month of December
• Purchase office supplies or equipment that you need.
• You can charge December’s purchases - the deductions will count for this year, but you won’t have to pay for them until your January bill comes in.
• Consider purchasing a new car before year end.  If you purchase an SUV over $6,000 pounds, there are extra incentives.
• There are many more possibilities so consider using a tax coach.  You may have a tax preparer you love and adore.  Do you ever wonder if he or she isn’t completely up to speed on the tax deductions available for direct sellers?  A good tax coach can help you do your planning and give you a plan  that includes IRS code references for your preparer.  This could possibly be one of the most important investments you ever make . . . unless you want to just keep overpaying your taxes.

The bottom line is this:  Recordkeeping doesn’t have to be painful and neither does tax planning.  You can find many tools and resources at www.deductiondiva.com   This is your business.  This is your life.  Invest in you today.  

At first I thought I had no passion.  But as I thought this through, I realized that I did.  My passion was my family, travel, and helping others.  On the business side, I liked helping my small and home based business clients become more profitable through the creation of tax strategies, efficient processes and tools. I liked talking to groups about how to keep more of the money they worked so hard to earn.  I also knew that small, and especially home based businesses, were and still are an underserved market and that there was and still is much confusion around the topic of taxes.   On the one hand, you have the ultra conservative accountants, who believe every home based business is some kind of “Pyramid scheme” and tend to discourage every deduction.  They believe that this type of client is not profitable.  That was the case at my firm.  I wasn’t able to help the people who needed my help the most, because our billing rates were too high.  On the other hand, there are the people who have no real background in tax preparation, but have “studied the laws” and written books.  I often find these folks to be too aggressive, even suggesting silly things like deducting your cat as pest control.

I thought about what I liked to do I realized I could create the life I wanted.  I had found a way that my training and background could make a real difference for real people.   I’m so proud of the work I do now.  I have created tax tools that help with understanding deductions, a filing system that is fun, yet practical and an online member resource center that provides tax tips and business strategies.  I travel to many exciting locations to do tax training and also spend a lot of time on the phone doing group teleclasses and private consultations.

I am now so passionate about my life.   It was scary to give up the financial security of the CPA firm, but I am glad I took the chance.  Work no longer feels like work.  Weekends are no longer an endless “to do” list of chores that must be done.  As a family, we laugh more, hug more, and play more.  Life really is better when you are able to work with passion and purpose.

I am so honored to be an Expert Blogger for Direct Selling Leaders.  Sarah Robinson has put together an outstanding team and an outstanding business.  I am looking forward to sharing, learning and growing with you.

Vicky