Special Events

The Tax Analyst Commeth

By Michael Causey, WIW President

Keeping more of your money in your pocket and sending less to the IRS’ coffers requires a proactive, savvy strategy that maximizes your deduction opportunities without being greedy. This was the advice Tax Analyst Myra Hall gave participants of WIW’s first audioconference “The Taxman Cometh.” Hall is Tax Manager at the D.C. accounting firm RAFFA.

In a wide-ranging hour-long discussion on January 15, Hall highlighted some new and some old—but overlooked—deduction and tax reduction tactics specifically for writers.

But it all starts with a plan—and relentless record-keeping. “That’s the most important thing,” Hall stressed. The IRS says to keep records for three years; Hall advised five.

And those records should include a paper back-up of your online records, she noted. The IRS doesn’t care what numbers you entered into a Quicken program. It will demand to see the actual receipts for your deductions, Hall said. And that’s a trend that is likely to continue. For example, she expects “more audits of Schedule C’s, with the IRS really scrutinizing them for auto expenses” and other deductions.

Some good news for at-home freelancers: The home office deduction is “less scrutinized” by the IRS than it used to be. That’s probably because the agency realizes that more and more people are working at home in legitimate business enterprises.

However, beware of how you deduct things like home computers. Unless the computer is used exclusively for business, the IRS “doesn’t like” to see computers allocated partially for home and partially for business for deduction purposes. The ultimate deduction is so small, Hall noted, that it isn’t even worth the hint of IRS hassle.

Hall also briefed attendees on the latest IRS law wrinkles, such as the Telephone Excise Tax Refund most taxpayers will receive this year: $30 for a single filer, up to $60 for a married couple filing jointly with two dependents.

In addition, the IRS has raised the limits on contributions you can make for retirement savings. But she offered a word of caution here, too. “Watch for income phase-outs for IRAs if one spouse is an active participant in a retirement plan.”

Turning to the issue of charitable deductions, Hall told attendees that in 2007 things will be a little different. It won’t be enough to scramble at the end of December and mail out a check to the charity of your choice. In 2007 that check will have to be cashed before the end of the calendar year for you to claim it on your 2007 taxes, she said.

Myra Hall can be reached at mhall@raffa.com or at (202) 955-6760.

WIW is considering additional audioconferences and would like your input on what topics would be of most interest. We are currently mulling sessions on negotiating and setting rates, but encourage you to e-mail or call the WIW home office at 202-775-5150 with your additional suggestions or feedback on those two topics.