[Dixielandjazz] I am not a Paid Tax Preparer folks.
LARRY'S Signs and Large Format Printing
sign.guy at charter.net
Sun Mar 13 09:17:28 PST 2005
After having worked for H&R Block for a year and taking their Tax course it
taught me a couple of things but a valuable one that I might pass on is that
they operate all year. The significance of this is that the tax people that
they hire for the April 15 rush are not really that good - including me -
but the people that they keep on all year are very good also they operate an
executive service mostly for businesses and the people who work for that
branch are really good too. Find out where the nearest office that offers
that service. They will answer your questions free over the phone. DO NOT
CALL THE IRS HOT LINES. They can tell you anything and are not obligated to
stand behind it. They actually disclaim their own service.
If you want to find the best person to ask at H&R Block ask for a registered
agent. Those people have many years experience and have taken tests etc to
qualify them. These are the guys that H&R keeps on full time all year
round. If you call them in an off season you will most likely get someone
pretty good and may even be a registered agent. A registered agent can
represent you to the IRS hence the high qualifications.
Late with your taxes? There is a form for extending your deadline past April
15. If you owe taxes send a check for your taxes with it. Here's why you
should extend your taxes if you go to H&R. After April 15 they lay off all
the klutzes and you get then a very good tax person.
The automatic extension form is 4868. You can walk into any H&R office and
ask for that form and they will give you one. The person may not know what
you are talking about. The receptionists are not tax people and H&R does
not teach their tax preparers about this form because they don't want people
filing late because they would have to retain their work force longer.
If you have significant tax liabilities you do not want a new person. Ask
for someone who has had at least 5 years of experience. If they want to
charge more than the regular rates for forms question them as to why they
are charging more. Tax preparers get a commission on overcharges and some
do it as a routine because "your return takes extra time". Question every
charge because the time for each form is built into their formula for
charges. Ask them the charges for each form before you start so you will
know if they are padding it.
Although H&R is a walk in business the preparers who have been there for a
long time will take appointments although they say they don't do that in
Be prepared to pay extra if you walk in with a bunch of receipts in a shoe
box and dump it on their desk. Go prepared to rattle off the numbers. On
the other hand if you are that well prepared why not buy Turbo Tax and save
----- Original Message -----
From: <TCASHWIGG at aol.com>
To: <dixielandjazz at ml.islandnet.com>
Sent: Saturday, March 12, 2005 12:53 PM
Subject: [Dixielandjazz] I am not a Paid Tax Preparer folks.
I am a Professional Musician/businessman who stays well informed about
things that matter, especially when someone is trying to stick their hand in
"There are only a few items the IRS has specifically said increase the
for an audit." You may not be an outright tax cheat, but your return may
contain a couple of those red flags. Here are five to watch out for.
The IRS is more likely to scrutinize returns with itemized deductions than
those that take only the standard deduction. The agency keeps a range of
"normal" deductions for each tax bracket based on the average claim taken.
So if you
are earning $45,000 a year and deduct half of that for mortgage interest --
but the average for your tax bracket is around $5,000 -- the taxman may come
calling. $7,000 on business meals? If the average for your tax bracket is
$1,500, watch out. If you can legitimately claim those deductions, by all
means take them. But hold on to your receipts.
If you are holding down a full-time job but are running a side business, you
may be targeted for an audit if your pet project posts a loss year after
Schedule C is used to report income or loss from sole proprietorships, but
some businesses are little more than a cover-up for a loss-producing hobby.
code does not permit you to deduct hobby losses," The gentleman farmer that
doesn't intend to turn a profit, is an example of a hobbyist. And the IRS
agrees. Even if that hobby generates a few bucks, it may be in your best
to stay far, far away from Schedule C because the IRS may not be satisfied
a modest profit. Schedule C filers are among the highest audit risk group so
be prepared to justify your claims. Draft a business plan and enlist expert
help, if needed. Also, carefully record your business expenses and keep them
separate from your personal expenditures. The goal is to present yourself as
professional, not an amateur. Especially for Doctors and Lawyers playing a
little music on the weekends. These are the guys the IRS is looking for, not
the poor underpaid starving professional musician trying to compete against
these guys for legitimate work and earnings.
Due to the low earnings of many professional musicians, the IRS knows full
well that many of us have to supplement their PROFESSIONAL Musician earnings
with other Full time Jobs and sometimes two of them. Remember this if you
audited and the auditor tries to classify you as a hobbyist.
Home office deductions
If your place of business is also your residence, be careful with that home
office deduction. "The room has to be used exclusively for business
"You cannot just have a desk in your living room where you have a television
set." That can be disproved too if you have a video recorder and playback
system hooked up to the TV and use it to show live performances of your band
prospective clients who visit your office.
Just think about the poor Homeless musician living in his van, let them try
to disallow his deduction of it as his HOME OFFICE, I would venture to say
if he were audited and showed parking tickets deducted as rent he could win,
provided of course he had receipts to show he had paid them. :)) I bet he
the exception to the rule that you can't deduct your dog as a security
too, if he can prove the dog lives in the van to protect thieves from
stealing his instruments. Sounds crazy, but no more crazy than the idiotic
they try to tax. So if you can justify and prove it claim it and make them
their money by proving that it is not a legal deduction. Just because they
say it is not does not always mean it is not. Stand up and Fight Back damn
Have a tape measure handy because the IRS limits that deduction to the
space your office occupies? So if your office takes up 200 square feet in a
1,000 square foot apartment, then only 20 percent (200 divided by 1,000) of
your total housing expenses are eligible for that deduction. Your total
expenses includes any rent or mortgage, insurance, utilities, and
associated with the residence. Some auditors will say that a home office
deduction cannot result in a loss. Not true if you establish your home
your principle place of conducting your business. Their example often is
that if your business income totals $6,000, but you have $5,000 in business
expenses and $1,500 in home office costs, that last $500 cannot be deducted
your taxes. You can, however, carry that deduction over to the next year
provided you have sufficient income.
If you also have another room set up totally for band rehearsals, and or a
recording studio that you use to produce your work it too is a legitimate
deduction as part of your "HOME OFFICE" All of your stereo gear, recording
equipment, PA System and instruments are depreciable assets. CDs you
sheet music, fake books, copy machines, paper to print your flyers on
cards, free CDs sent to radio stations and prospective bookers, agents,
etc., and the postage to mail them are all legitimate deductions. All
expenses, incurred in the normal operation of your Music Business.
Now as for income, you also must claim it all, from gigs, Lessons,
or whatever, in many cases you will indeed have more expenses than income
The IRS guy might try to tell you that you can't continue to run this
business at a deficit, :))
Ask him when was the last time the US Government did not operate it's
business at a deficit. Many corporations also deduct enormous amounts for
and development for years before they ever even release a product to sell to
Many musicians also work for many years writing music and arranging it and
recording it before they ever release it for sale, keep track of the costs
you have legitimate deductions against future sales and income from the
you are not evading taxes here folks you are avoiding them and deferring
until such time as you have actually made a profit to owe them. This is
perfectly legal. You may also defer your income and keep record of it. It
works very similar to an IRA.
Not only are your taxes higher, you are chances of being audited are 1 in 20
if you earn $100,000 or more. Leaves out most Musicians right ??
Don't believe it look up Musicians under the US Government website. I think
Steve Barbone posted that info a while back.
"Higher income earners are more likely to be audited because there is more
tax money at stake," Tyson said. "The IRS is a business, they have employees
they do not have time to let them audit people if they are only going to
$2 worth of tax."
Earning less money really isn't an option, but high earners should be aware
that the government is eyeing their returns very carefully. So any
to tack on another $1,000 to a charitable deduction shouldn't be indulged.
Don't try to cheat them by not claiming your income whatever it is, that is
EVASION of Taxes and what they are looking for more than anything else. The
guy driving a Hummer and claiming he only makes $300.00 a month as a
is asking for trouble. As is the guy who remodels his home in a cheap
neighborhood to make his house stand out as a mansion amongst shacks while
he only makes $300. $500. a month.
The first thing they will check is any income taxes withheld from any of
earnings that were reported to them, the second is how much money you put
into your bank accounts and then they will start asking you where you got it
ou had better have the right answers. If you do and you have good records
you have nothing to fear but fear itself.
Educate yourself, don't take H&R Blocks word for it, Hell they will hire
anybody to work for them and do what they are told just like Wal Mart or
Depot, Just because they work there does not mean that they know what the
they are doing, and especially about music business returns. I have met
>From Burger King and even unemployed musicians working for H&R Block, :))
the system, if you do it correctly and honestly you too can win, "You can
cheat an Honest man." Most Politicians are not the most Honest of Men or
In an effort to reduce Paperwork the IRS says:
Next year's Tax return will look like this.
Line #1 How Much did you Make?
Line #2 Send it to us.
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