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21 Replies Latest reply: Mar 31, 2009 2:56 PM by bmeighan RSS

Event: Navigating business taxes with TurboTax

SBC Team Master
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Don't know a thing about business taxes? You're covered!

A common challenge to most start-up entrepreneurs is complying with the Internal Revenue Service and ever changing regulations. Bob Meighan, Vice President of Consumer Advocacy for TurboTax can help you navigate through this dynamic world, whether you're a corporation, partnership, or multi-member LLC. He can provide extra guidance to simplify tax preparation and help you maximize tax savings.

Founded in 1983, Intuit Inc. is a leading provider of business and financial management solutions for small and mid-sized businesses; financial institutions, including banks and credit unions; consumers and accounting professionals. Its flagship products and services, including QuickBooks®, Quicken® and TurboTax® software, simplify small business management and payroll processing, personal finance, and tax preparation and filing. More information can be found at http://www.intuit.com.

 


Bob Meighan, Vice President of Consumer Advocacy, is the customer's voice at Intuit. As vice president for consumer advocacy in the TurboTax organization, he represents customers to ensure that new products meet their needs. He also shares the knowledge he gains from customers throughout the TurboTax development teams.

 


Bob joined Intuit in September 1991 and has held several positions within TurboTax. Before that, he spent 11 years at Price Waterhouse where he was a senior manager in the advanced technology group.

 


Ask Bob:

 

  • How do I handle major life changes?
  • What are some major red flags that trigger audits?
  • Which deductions are the most overlooked?

Post your question here today and then join us on March 31 at 2:00PM EST for Bob's response.
  • Re: Event Mar. 31: Navigating business taxes with TurboTax
    caffeinated Apprentice
    Currently Being Moderated
    Hi Bob,

    I've only used TurboTax to file my personal taxes and I think its a great product. I'd like to start using it for my small business. Can I make quarterly tax payments using one of your small business products? If so, how does it calculate estimated payments if its my first year using the software?

    Thanks for helping!

    caffeinated
    • Re: Event Mar. 31: Navigating business taxes with TurboTax
      bmeighan Newbie
      Currently Being Moderated
      Our small business products are just like our products for doing your individual taxes. All of our TurboTax products can easily calculate and schedule your estimated tax payments. If it's your first year, you'll have to tell TurboTax how much you expect to make for the year. Then TurboTax will determine the minimum payment needed to avoid any "underpayment" penalties. After the first
      year, TurboTax will have sufficient information to do the calculation for you unless you want to tweak your forecast to increase or decrease income and/or expenses.
  • Re: Event Mar. 31: Navigating business taxes with TurboTax
    Howard Novice
    Currently Being Moderated
    Can you tell us about the recovery rebate credit? Who qualifies for this? And how much are they worth?
    • Re: Event Mar. 31: Navigating business taxes with TurboTax
      bmeighan Newbie
      Currently Being Moderated
      The recovery rebate credit is a one-time benefit for people who didn't receive the full economic stimulus payment last year and whose circumstances may have changed, making them
      eligible now for some or all of the unpaid credit.

      You may be eligible for the credit this year if you:

      Did did not receive an economic stimulus payment last year.

      Received less than the maximum economic stimulus payment in 2008 - $600 per taxpayer; $1,200 if married filing jointly -because your qualifying or gross income was either too high or too low.

      You gained an additional qualifying child (had a baby!) in 2008.

      Could be claimed as a dependent on someone else's tax return in 2007, but cannot be claimed as a dependent on another return in 2008.

      You did not have a valid Social Security number in 2007 but received one in 2008.

      You need to claim the recovery rebate credit on Form
      1040, 1040A or 1040EZ. Tax software programs like TurboTax will automatically determine if you qualify and for how much.
  • Re: Event Mar. 31: Navigating business taxes with TurboTax
    Vince Novice
    Currently Being Moderated
    Bob, What are the main reasons why some tax returns get audited? And how can businesses avoid sending these red flags?
    • Re: Event Mar. 31: Navigating business taxes with TurboTax
      bmeighan Newbie
      Currently Being Moderated
      Vince... First,let's scope audits because they seem to take on a life much bigger than warranted. In general, only about 1% of all returns get audited. Of those, the majority are what are called "correspondence audits." That means the IRS sends you a letter asking for more information on a particular item of income or deduction. Generally, an income item reported to the IRS doesn't match what you reported. These are pretty simple to take care of.

      Although the IRS does not disclose the formula for
      identifying which returns to audit, it's pretty easy to figure it out. At a high level, the IRS looks at those areas which have been abusive in the past or where there is a lot of cash involved. Abusive areas have included charitable contributions, home office deductions, and car expenses. Any business that deals in a lot of cash will certainly get some attention. As a result, small
      business owners will see the risk of an audit triple versus a wage earner.

      TurboTax has a feature called the Audit Risk Meter that
      assesses your risk of an audit, identifies those audit risk areas and helps you mitigate the risk. The key takeaway here is to keep good records, document your expenses, and keep receipts for everything. What I tell our customers is not to shortchange your tax deductions simply because you want to reduce your audit risk. Rather, claim every legitimate deduction you can and keep good records
      and receipts. A good offense is the best defense against an IRS audit.
  • Re: Event Mar. 31: Navigating business taxes with TurboTax
    antiques4me Newbie
    Currently Being Moderated

    Can you share with information on deduction limits, receipts required, etc.for donation deductions? Also can a donation be service related, e.g. a friend of mine is a lawyer and provided free legal advice to a non-profit for an entire month.
    • Re: Event Mar. 31: Navigating business taxes with TurboTax
      bmeighan Newbie
      Currently Being Moderated
      The area of charitable contributions has changed significantly in the last few years because of abuse. Taxpayers were overstating the value of contributed property, inflating cash contributions, etc. So the IRS put into place strict rules governing the requirements for claiming a charitable contribution deduction.

      For example, you now need receipts for everything. That may be a receipt from the recipient, a cancelled check, a sales receipt, etc. For items of clothing,furniture and other household goods, the items must be in "good" condition or
      better to qualify for a deduction. If you're donating a car, not only will you need a receipt but you'll also have to find out how much the charity sold the car for to earn a deduction. And, you deduction will be for the amount for
      which the car sold. When it comes to valuing items of property, I highly recommend relying upon the values published by ItsDeductible. This is included with TurboTax and provides "fair market values" of thousands of items.

      ItsDeductible will provide much higher deductible valuations than those provided by Goodwill or Salvation Army because ItsDeductible uses current selling prices for
      millions of auctions from the eBay site. My final point is this... these are all generic rules so pay attention to the details.
  • Re: Event Mar. 31: Navigating business taxes with TurboTax
    simon07 Novice
    Currently Being Moderated

    If I run a part-time business at home what type of deductions would I qualify for?
    • Re: Event Mar. 31: Navigating business taxes with TurboTax
      bmeighan Newbie
      Currently Being Moderated
      Simon07... Running a part time business qualifies for all the normal business related deductions PLUS you may qualify for a home office deduction. This all assumes that you are in business to earn a profit. If you consistently lose money from this business, the IRS will consider it a hobby. As for the deductions, here are some:

      • Advertising
      • Car expenses
      • Labor
      • Rent
      • Utilities, property taxes, insurance- a proportionate part
      The list goes on and on. I encourage you to check out TurboTax Home & Business, which will identify all the deductions to which you are entitled.
  • Re: Event Mar. 31: Navigating business taxes with TurboTax
    CommunityTeam Novice
    Currently Being Moderated
    Everyone please join me in welcoming Bob Meighan from TurboTax. While Bob begins responding to the questions, Community please begin posting your questions to Bob. Simply login to your account and hit the reply button and then post your question. Please note, that your questions will be put in a queue. Bob may not be able to get to all the questions, but he'll do his best to answer all questions.
  • Re: Event Mar. 31: Navigating business taxes with TurboTax
    jackzee Newbie
    Currently Being Moderated

    What tax deduction opportunities do I have with used office purchases (e.g. I purchased an old counter and some other used furniture)?
    • Re: Event Mar. 31: Navigating business taxes with TurboTax
      bmeighan Newbie
      Currently Being Moderated
      jackzee... You can deduct the depreciation on used equipment and furniture you use for your business (like a home-based one). It's no different than if you had purchased it new other than you paid less for it. Likewise, you depreciation deduction will be slightly less too than if it were new. The other thing to remember is that for many assets you have the option to write off the full amount in the first year (known as section 179 deduction).
  • Re: Event Mar. 31: Navigating business taxes with TurboTax
    Bernoulli Newbie
    Currently Being Moderated
    Hi Bob,

    I have a tax deduction question. For equipment used both for business and personal use (e.g., camera or computer), what percentage of the use must be for business in order for me to deduct the cost? Does TurboTax assist me with these types of questions?

    Thanks!
    • Re: Event Mar. 31: Navigating business taxes with TurboTax
      bmeighan Newbie
      Currently Being Moderated
      Bernoulli... For assets used for personal and business, you should allocate the deduction betweeen the two based on its use. The great thing about tax software like TurboTax is that it will do all this work for you. With TurboTax, you simply identify the equipment and how much you use it for business. TurboTax will do the rest including determining it's "useful life", depreciation deduction, etc. Keep in mind that with most tax rules, there are some exceptions. For example, there are special rules for assets known as "listed property." This includes computers. I hate all these details and that's why I honestly rely on tax software to do the hard stuff.
  • Re: Event Mar. 31: Navigating business taxes with TurboTax
    bmeighan Newbie
    Currently Being Moderated
    With two weeks to go to the tax filing deadline, here are 4 tips I'd like to share with all of you:

    1. File Electronically - Filing electronically enables you to get your refund in as little as 10 days versus 4-6 weeks for a paper-filed return. With about 80% of all returns showing a refund, hopefully you'll be one of the lucky 80%. Plus, with the average refund running at about $2800 now, you'll want to get your hands on this money fast. It's your money and it should be in your pocket, not the IRS'.
    2. Select Direct Deposit - If you're getting a refund, specify that you want the refund direct deposited in your bank account. This will shave another couple of days off the wait for your refund check. Plus, you won't have to make a separate trip to the bank to deposit a paper check.
    3. Go Online to File - There are many online sites offering tax preparation. TurboTax, for example, is available 24x7 and even offers a free solution for simpler federal returns. State is extra. If you've never tried tax software before, going online is an excellent way to discover all the benefits at no cost or obligation. Even if you select one of the "for fee" solutions, you generally don't pay until you're satisfied with the result.
    4. Double Check Your Return Before Filing - Regardless of how you prepare your return, always double check the return (especially for reasonableness). Pay particular attention to the big error people make with their social security numbers.
    Hopefully these tips will help.
  • Re: Event Mar. 31: Navigating business taxes with TurboTax
    CommunityTeam Novice
    Currently Being Moderated
    Don't forget to refresh your screens to see Bob's latest response. We are at the half hour mark, Community get your questions in now. Simply login to your account and hit reply to post your question.
  • Re: Event Mar. 31: Navigating business taxes with TurboTax
    franklinplace Newbie
    Currently Being Moderated
    This is my first year in business. For personal taxes it gets confusing when it comes to deductions for medical/health expenses. Always scrambling for receipts. How does Turbo Tax help me sort this out for my business expenses paid for employee health benefits?
    • Re: Event Mar. 31: Navigating business taxes with TurboTax
      bmeighan Newbie
      Currently Being Moderated
      franklinplace... Congrats on your first year in business! If you can make it in these challenging times, you can make it anytime. Best of luck!

      First, while TurboTax will help you navigate the maze of rules and regulations, we can't help you get organized. That is something you will have to master. My tip to you is always keep your business and personal expenses separate. If you have to use a separate credit card for business purchases, I encourage you to do this. It helps at tax time.

      Depending on your business structure (I assume you are a self employed small business owner... as opposed to having a corporate or partnership structure), your medical expenses will be treated as a personal expense subject to the regular rules for deducting medical expenses (subject to 7.5% of your adjusted gross income). However, there are some provisions that allow you to deduct some of these medical expenses as "an above the line deduction" (line 29 on Form 1040) for those who are self employed. This is a great way to reduce your income for an expense that generally is not deductible for many taxpayers.

      Here again, TurboTax will walk you through this area to ensure you get the biggest deduction and thus the biggest refund.
  • Re: Event Mar. 31: Navigating business taxes with TurboTax
    CommunityTeam Novice
    Currently Being Moderated
    Bob - Thanks for taking the time to share your expertise with SBOC. With tax deadlines just around the corner, we appreciate the timely tips and advice your provided to the Community.

    Community - If you would like to learn more about TurboTax, please visit http://www.intuit.com/ or http://turbotax.intuit.com/
  • Re: Event Mar. 31: Navigating business taxes with TurboTax
    bmeighan Newbie
    Currently Being Moderated
    In closing, there are two weeks left before April 15. My advise to you is as follows:

    1. Start now. Tax filers who wait until the last minute tend to make more errors. Starting now also allows you to identify and documents you may be missing.
    2. Go Online. I mentioned this above. It's easy and convenient, and for many filers it is free.
    3. File Electronically. Other than the fast refund you get by efiling your return, you don't have to print, copy, sign, staples W-2s and run down to the post office. Plus, most tax software services offer free federal electronic filing. It's a great deal and will greatly reduce the frustration of mailing your return.
    4. File an Extension. If you can't make the April 15 deadline, file an extension. The extension gives you a 6 month "grace" period in which to file your return. However, it does NOT give you an extension of time to pay. If you owe the IRS (or state), you need to pay that on or before April 15. Again, tax software will help you identify whether you have a liability and file the necessary form for the extension (Form 4868). Don't forget that you may also need to file an extension for your state. Each state has different rules so I can't generalize other than to say most states honor the IRS extension (but you'll have to pay the state if you owe them).
    Good luck and I hope you get a big refund.

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