Are You an Unwitting Tax Cheat?
Did You Take the Right Charitable Donations Deductions?
It used to be that up to $250 in contributions could be claimed as a deduction without a receipt. However, starting in 2008, the IRS requires that filers provide receipts for all cash donations, even that $5 you gave to the Salvation Army bell ringer over the holidays.
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AP
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Are You an Unwitting Tax Cheat?
Did You Take the Right Charitable Donations Deductions?
It used to be that up to $250 in contributions could be claimed as a deduction without a receipt. However, starting in 2008, the IRS requires that filers provide receipts for all cash donations, even that $5 you gave to the Salvation Army bell ringer over the holidays.
Are You an Unwitting Tax Cheat?
Are You a Tax Cheat, Too?
"Our tax code is so complicated and convoluted that, in fact, it's easy to make a mistake on your tax return, just because you don't know what the law is," says Jeff Schnepper, a tax attorney in Cherry Hill, N.J.
Of course, ignorance is no excuse. If the IRS finds a mistake on your return you'll not only have to pay what you owe, but will be subject to interest and, possibly, penalties. And the responsibility for unpaid tax is yours, even if a professional prepared your return.
No matter who does your taxes, click through our gallery to see questions to ask before you sign on the dotted line.
Are You an Unwitting Tax Cheat?
Did You Report All Your Income?
Earned some extra cash from freelancing? Just because you didn't get a 1099 form (businesses aren't required to issue those if they paid you less than $600 in 2008) doesn't mean you're off the hook. Granted, the IRS won't know about that income -- that is, unless they audit the company or person who paid you. And don't forget any income you earned abroad. As a general rule, U.S. citizens are required to pay taxes on all of their income, regardless of where it was earned. If you paid taxes to the country where the income was earned, you may be able to claim a foreign tax credit. (For more information, read SmartMoney's story.)
Are You an Unwitting Tax Cheat?
Did You Take the Right Meals & Entertainment Deductions?
If you took a client out to dinner and discussed business immediately before, after or during your meal, then generally, 50% of the bill is tax-deductible. But you must have a receipt for expenses of $75 or more, containing the name of the restaurant, location, the amount paid, the person you were with and the business discussion that occurred. For expenses under $75, you don't need a receipt, but you must keep a diary with all of the above details.
Are You an Unwitting Tax Cheat?
Did You Take the Right Business Travel Deductions?
If you traveled within the U.S. for business, you may deduct 100% of the cost of getting and staying there (airfare, rental car or taxi, hotel). Personal expenses -- say, a ticket to a museum -- are not deductible. For international travel, you must generally allocate expenses based on the business and personal part of your trip, Luscombe explains. (For details, read SmartMoney's story.) If you use your car for business travel, you may deduct the costs associated with it, or take the standard mileage deduction. But you have to keep a diary, including the origin, destination, miles driven and the business purpose of the trip.
Are You an Unwitting Tax Cheat?
Did You Take the Right Home Office Deductions?
Just because you do a little work in your home doesn't mean you can take a home office deduction. In fact, most people don't qualify for this deduction because they need to use the space regularly and exclusively for business. If you use the home-office computer for personal matters, the home-office deduction is disallowed.
Are You an Unwitting Tax Cheat?
Did You Pay Taxes for a Household Employee?
If you paid that person more than $1,600 in 2008, you're supposed to pay the so-called Nanny Tax. Come tax time, the IRS should receive 15.3% of that person's annual wages in the form of Social Security and Medicare taxes. (Whether you decide to withhold half of that from your employee's salary or pay that yourself is your choice.) (Use SmartMoney's worksheet to determine the tax due.)
Are You an Unwitting Tax Cheat?
