The economy is booming and so is the tax scam market! Don’t believe everything you read when it comes to taxes. Including, I suppose, this blog post.
Let me start there. I’m a Nevada CPA. My license number is 1886. If you want to check me out, just go to the Nevada State Board of Accountancy and see if I’m for real.
You can’t say that about these other guys. They do have brilliant marketing campaigns, though. I have to give them that.
Here is a question that I received at USTaxAid.com.
Q: Was a new tax law passed in Dec 2015- that had to do with consumer rebates?
A: There are a couple of problems with relying on free answers on the Internet for time-sensitive tax issues. #1: You don’t know how good the information you’re going to receive is. #2: The true professionals are going to be slammed with work during tax season and don’t have time to work for free.
I guess maybe that’s the way you tell if you’ve got a true tax professional. If they don’t have time to answer you during tax season, they’re for real.
Let’s talk about the question.
There is a kernel of truth in this. What the poster is talking about is the fact that you can still take a deduction for sales tax on your itemized deductions. This tax provision had expired. Congress finally acted in December 2015 and gave us back the tax deduction, effective 2015.
So, it was partially true. What happened next is what is so surprising.
A company called Oxford Club blew this one little part of the Tax Code up into something fabulous (it’s not really). And then sold a special report about it for $47. For $250, you can get all of their special reports.
Then they threw a lot of marketing at it.
Here’s the straight scoop and I’m not going to charge you $47 for the information.
When you file your Form 1040, you can choose to either itemize your deductions or take a standard deduction. Which should you choose? Whichever one gives you the most in deductions. Any good tax software program or tax preparer can help you decide that.
If you itemize, you can take a deduction for the amount of state income tax you paid in the year or the amount of sales tax you paid. For sales tax, you can either take a deduction based on an IRS table or the actual sales tax you paid. Usually you’ll use actual sales tax if you made a big ticket purchase during the year such as for a vehicle, boat or RV.
Again, a good tax program or tax professional can help you figure out which is best for you.
If you want to save taxes this year (2016), the best thing you can do is start a business. It can be a part-time business, an online business, a side business or a business that is a ramped-up hobby.
Just make sure it’s a legitimate business. You can then pick up a whole lot of deductions you never thought you could.