Best Tax Software for 2016 Returns?

[DRU]

Originally Posted by Sorce

If I had a business or anything I'd probably go the CPA route but for basic stuff it works for me. I like that it imports previous years and that's what I started with so I stick with it.

If you don't have a business, you should create one. The tax benefits / savings will put thousands back into your pocket each year.

Seriously, it can be anything. Make it official and start tracking your expenses. Turn your after tax expenses into before tax expenses, and you'll save a bunch. If you have kids it's even better. Instead of paying taxes and then spending money on your kids, pay them through your business (which gives you the deduction) and then let them pay for their own stuff using their own bank account / debit cards. School supplies, lunches, clothing, sports stuff...all the stuff you spend on the kids anyway.

The first $6k you pay a kid under 18 is completely tax free. You get the deduction, so for example, if you're in the 25% tax bracket, that's $1500 your putting back into your pocket. You don't even have to pay FICA on that money, and the kid doesn't pay any income tax on that first $6k either.

What's cool, too, is that since they have a job you could open an IRA for them and get them started at a very young age with retirement savings. An early start on compounding is never a bad thing. So then, if you have the cash anyway or if the business is doing well enough to generate it, you can pay the kid another $5500 and get the deduction, and then that can go directly into the IRA tax deferred. So now you're getting a $11,500 deduction ($2,875 back in your pocket), and the kid has a solid foundation to build from as they grow up and are ready to become financially free.

Another example is your cell phone. Not uncommon for people to have $100/mo ($1200/year) phone bill. Again, assuming you're in the 25% tax bracket, that's another $300 you'd be putting back into your pocket.

You do this with auto expenses, home office, dining and entertainment, travel, etc. and you can save thousands. Then you can put those thousands towards debt, or if you're out of debt, back into the business, or towards buying other assets that generate more positive cash flow.

Owning a business is a fantastic way to "get ahead" because of the tax savings. So worst case you're pocketing the tax savings, and best case it takes off for you and becomes a solid secondary source of income or even a primary source.

Start a business!!!

[Buehler445]

Originally Posted by DRU

If you don't have a business, you should create one. The tax benefits / savings will put thousands back into your pocket each year.

Seriously, it can be anything. Make it official and start tracking your expenses. Turn your after tax expenses into before tax expenses, and you'll save a bunch. If you have kids it's even better. Instead of paying taxes and then spending money on your kids, pay them through your business (which gives you the deduction) and then let them pay for their own stuff using their own bank account / debit cards. School supplies, lunches, clothing, sports stuff...all the stuff you spend on the kids anyway.

The first $6k you pay a kid under 18 is completely tax free. You get the deduction, so for example, if you're in the 25% tax bracket, that's $1500 your putting back into your pocket. You don't even have to pay FICA on that money, and the kid doesn't pay any income tax on that first $6k either.

What's cool, too, is that since they have a job you could open an IRA for them and get them started at a very young age with retirement savings. An early start on compounding is never a bad thing. So then, if you have the cash anyway or if the business is doing well enough to generate it, you can pay the kid another $5500 and get the deduction, and then that can go directly into the IRA tax deferred. So now you're getting a $11,500 deduction ($2,875 back in your pocket), and the kid has a solid foundation to build from as they grow up and are ready to become financially free.

Another example is your cell phone. Not uncommon for people to have $100/mo ($1200/year) phone bill. Again, assuming you're in the 25% tax bracket, that's another $300 you'd be putting back into your pocket.

You do this with auto expenses, home office, dining and entertainment, travel, etc. and you can save thousands. Then you can put those thousands towards debt, or if you're out of debt, back into the business, or towards buying other assets that generate more positive cash flow.

Owning a business is a fantastic way to "get ahead" because of the tax savings. So worst case you're pocketing the tax savings, and best case it takes off for you and becomes a solid secondary source of income or even a primary source.

Start a business!!!

Lots of good information here.

Definitely some things to be weary of.

1. If you incorporate or start an LLC, it will indemnify you from business risk - biggest thing there is if you are sued for a billion dollars they fold up the business but can't touch you. If you dig too deep in deducting stuff it will pierce the corporate veil and you are personally liable.

2. Be careful on some of the small business deductions. Lots of asshats (not pointing fingers at DRU here) use a business to commit as much tax fraud as they can cram into one 1040. Accordingly, the IRS is a bastard on some of this stuff. IRS shows up, and they find something, they are going to go to looking.

If you pay the kids through the business, make them do some work. If you can't, they get cranky.

I wouldn't do meals. Like at all. Unless you are taking non-relative employees out to eat too. Travel expenses are just asking for trouble. I wouldn't do it. And besides, I think you can only take half.

Cars are a tough ask. You are going to have to assess a business use percentage for each listed vehicle. And (at least for farmers anyway) you can't deduct more than 75%. And then, you have to deduct a proportionate amount of fuel, repairs, insurance, taxes, and all that jazz. And if you **** up, they ding you on it. Moreover, if you deduct it, then trade it off, if the trade in value is more than the book value, it is gain. More tax.

If it were me, I'd keep a mileage log, and pay myself mileage out of the business account. It isn't too bad to keep a mileage log. I did it because I was using a personal vehicle for a bunch of farm stuff, and I wasn't about to go **** around depreciating the asshole, and splitting all that other noise out. Plus, if there is gain, it doesn't matter on a personal vehicle. Sure, you don't get to depreciate it, but I wouldn't go down that road.

The home office thing is a must do. Now, they have a rate per square foot that's really easy. As long as the space is ONLY an office (no treadmill or whatever).

Yeah, the correct answer is find a GOOD accountant (There are shit ones) and get to work. Even if it is a schedule C or E or whatever, keep track of legit stuff, keep the documents, take the deductions, be happy.

Don't take stuff that isn't there, keep the documentation, take what you can get, but only what's there.

[DRU]

Originally Posted by Buehler445

Lots of good information here.

Definitely some things to be weary of.

1. If you incorporate or start an LLC, it will indemnify you from business risk - biggest thing there is if you are sued for a billion dollars they fold up the business but can't touch you. If you dig too deep in deducting stuff it will pierce the corporate veil and you are personally liable.

2. Be careful on some of the small business deductions. Lots of asshats (not pointing fingers at DRU here) use a business to commit as much tax fraud as they can cram into one 1040. Accordingly, the IRS is a bastard on some of this stuff. IRS shows up, and they find something, they are going to go to looking.

If you pay the kids through the business, make them do some work. If you can't, they get cranky.

I wouldn't do meals. Like at all. Unless you are taking non-relative employees out to eat too. Travel expenses are just asking for trouble. I wouldn't do it. And besides, I think you can only take half.

Cars are a tough ask. You are going to have to assess a business use percentage for each listed vehicle. And (at least for farmers anyway) you can't deduct more than 75%. And then, you have to deduct a proportionate amount of fuel, repairs, insurance, taxes, and all that jazz. And if you **** up, they ding you on it. Moreover, if you deduct it, then trade it off, if the trade in value is more than the book value, it is gain. More tax.

If it were me, I'd keep a mileage log, and pay myself mileage out of the business account. It isn't too bad to keep a mileage log. I did it because I was using a personal vehicle for a bunch of farm stuff, and I wasn't about to go **** around depreciating the asshole, and splitting all that other noise out. Plus, if there is gain, it doesn't matter on a personal vehicle. Sure, you don't get to depreciate it, but I wouldn't go down that road.

The home office thing is a must do. Now, they have a rate per square foot that's really easy. As long as the space is ONLY an office (no treadmill or whatever).

Yeah, the correct answer is find a GOOD accountant (There are shit ones) and get to work. Even if it is a schedule C or E or whatever, keep track of legit stuff, keep the documents, take the deductions, be happy.

Don't take stuff that isn't there, keep the documentation, take what you can get, but only what's there.

As I said...cautiously aggressive. You don't lie. That's where people get screwed up. You simply track all of your expenses, go over them with your CPA / EA, and you will be able to deduct all sorts of legitimate stuff that will save you thousands, and they will go to work for you (for free) if an audit happens. Some of them even offer audit insurance if you lose the case, so you're covered. Of course, that means they're absolutely doing things legitimately, so that never happens.

Meals and Entertainment, Travel...those are areas people do take advantage. Just don't take advantage. Use it legitimately, and you'll still have more money in your pocket at the end of the year than if you weren't doing that. You'd be surprised how easy it can be to make those types of things legitimate, too. For example, have a relative in another state? Make them part of your board of advisors. Guess what? Every time you go visit them or they come visit you...100% write off. Completely legitimate. Go on vacation once a year with the family? Make it your annual board meeting and the whole thing can be deducted. You just can't have 20 board meetings in a year, for example. That would be a red flag and you'd be in trouble (and your CPA/EA wouldn't let you do it anyway.)

Yes, of course, if you're paying your kids they have to be doing work. But guess what...you need a paper shredder, right? You need somebody to enter transactions and reconcile bank accounts, right? You need somebody to sort bills and trash all the garbage, right? How about social media marketers? You can find legitimate tasks for kids to do to earn their money, and it gets them started at a very early age understanding work, money, business.

They actually have a "simplified method" for home office deductions now where if you check the box you get $5/ft. at 300 sq. fb, so you get a $1500 deduction ($375 cash in your pocket if you're in the 25% bracket) right off the top. If you do have a large house in an expensive area with a big office then you can still do the standard method and use the sq. footage calculations, but in most cases now the simplified actually makes it better and easier.

So yes, absolutely, if you're doing this you don't want to be doing taxes yourself. The savings will be huge, though, and it can change your life financially. As he said, find a good accountant, track your expenses, and it will be WELL worth it.

[mikeyis4dcats.]

Originally Posted by DRU

As I said...cautiously aggressive. You don't lie. That's where people get screwed up. You simply track all of your expenses, go over them with your CPA / EA, and you will be able to deduct all sorts of legitimate stuff that will save you thousands, and they will go to work for you (for free) if an audit happens. Some of them even offer audit insurance if you lose the case, so you're covered. Of course, that means they're absolutely doing things legitimately, so that never happens.

Meals and Entertainment, Travel...those are areas people do take advantage. Just don't take advantage. Use it legitimately, and you'll still have more money in your pocket at the end of the year than if you weren't doing that. You'd be surprised how easy it can be to make those types of things legitimate, too. For example, have a relative in another state? Make them part of your board of advisors. Guess what? Every time you go visit them or they come visit you...100% write off. Completely legitimate. Go on vacation once a year with the family? Make it your annual board meeting and the whole thing can be deducted. You just can't have 20 board meetings in a year, for example. That would be a red flag and you'd be in trouble (and your CPA/EA wouldn't let you do it anyway.)

Yes, of course, if you're paying your kids they have to be doing work. But guess what...you need a paper shredder, right? You need somebody to enter transactions and reconcile bank accounts, right? You need somebody to sort bills and trash all the garbage, right? How about social media marketers? You can find legitimate tasks for kids to do to earn their money, and it gets them started at a very early age understanding work, money, business.

They actually have a "simplified method" for home office deductions now where if you check the box you get $5/ft. at 300 sq. fb, so you get a $1500 deduction ($375 cash in your pocket if you're in the 25% bracket) right off the top. If you do have a large house in an expensive area with a big office then you can still do the standard method and use the sq. footage calculations, but in most cases now the simplified actually makes it better and easier.

So yes, absolutely, if you're doing this you don't want to be doing taxes yourself. The savings will be huge, though, and it can change your life financially. As he said, find a good accountant, track your expenses, and it will be WELL worth it.

I think your definition of "legitimate" and the IRS's are probably different. I had a buddy who's family biz found out the hard way that a drywall contractor claiming a boat, some sports cars, motorcycles and lot's of other "legitimate" expenses is frowned upon.

[DRU]

Originally Posted by mikeyis4dcats.

I think your definition of "legitimate" and the IRS's are probably different. I had a buddy who's family biz found out the hard way that a drywall contractor claiming a boat, some sports cars, motorcycles and lot's of other "legitimate" expenses is frowned upon.

Ha, that is not at all the type of examples I've been giving. My definition of it has been approved by CPAs, EAs, and Tax attorneys...and the IRS. I am not saying to buy boats, sports cars, and motorcyles. Yes, that would raise flags if you are a drywall contractor. Also, sounds like that person has bigger problems than tax write-offs. Buying that many liabilities is asking for financial disaster. Instead, you should create or buy assets that can then buy your toys...or even better buy other assets.

[DRU]

Originally Posted by Buehler445

Lots of good information here.
1. If you incorporate or start an LLC, it will indemnify you from business risk - biggest thing there is if you are sued for a billion dollars they fold up the business but can't touch you. If you dig too deep in deducting stuff it will pierce the corporate veil and you are personally liable.

I stepped over this before, but it's an important point. The best way to protect from this is to maintain the company properly. What does that mean? Keep actual records of board meetings, minutes (notes), etc. If you're claiming travel, keep documentation of why the travel is for business (ie. board meeting, advisor meeting, checking up on a rental property, employee perk, etc.) This is not a difficult thing to do with Google Drive or something similar on your phone. Just take quite notes about who you're with and what you're doing. If you're thinking that you may want to write off some particular travel, dining, entertainment, take some quick notes.

If you're ever audited or taken to court and you can present clean documentation for all of that sort of stuff you'll be just fine.

So yes, owning a business will require some organization. Clean books, clean company maintenance, and legitimate tax avoidance (not evasion...big difference) and you'll be just fine.

[BWillie]

Originally Posted by DRU

If you don't have a business, you should create one. The tax benefits / savings will put thousands back into your pocket each year.

Seriously, it can be anything. Make it official and start tracking your expenses. Turn your after tax expenses into before tax expenses, and you'll save a bunch. If you have kids it's even better. Instead of paying taxes and then spending money on your kids, pay them through your business (which gives you the deduction) and then let them pay for their own stuff using their own bank account / debit cards. School supplies, lunches, clothing, sports stuff...all the stuff you spend on the kids anyway.

The first $6k you pay a kid under 18 is completely tax free. You get the deduction, so for example, if you're in the 25% tax bracket, that's $1500 your putting back into your pocket. You don't even have to pay FICA on that money, and the kid doesn't pay any income tax on that first $6k either.

What's cool, too, is that since they have a job you could open an IRA for them and get them started at a very young age with retirement savings. An early start on compounding is never a bad thing. So then, if you have the cash anyway or if the business is doing well enough to generate it, you can pay the kid another $5500 and get the deduction, and then that can go directly into the IRA tax deferred. So now you're getting a $11,500 deduction ($2,875 back in your pocket), and the kid has a solid foundation to build from as they grow up and are ready to become financially free.

Another example is your cell phone. Not uncommon for people to have $100/mo ($1200/year) phone bill. Again, assuming you're in the 25% tax bracket, that's another $300 you'd be putting back into your pocket.

You do this with auto expenses, home office, dining and entertainment, travel, etc. and you can save thousands. Then you can put those thousands towards debt, or if you're out of debt, back into the business, or towards buying other assets that generate more positive cash flow.

Owning a business is a fantastic way to "get ahead" because of the tax savings. So worst case you're pocketing the tax savings, and best case it takes off for you and becomes a solid secondary source of income or even a primary source.

Start a business!!!

Dude...teach me. I am lazy. I will pay you, just tell me what I need to do and how to officially set the business up. I hear in Kansas if you have an LLC you don't even have to pay taxes on the earnings cuz of Brownback. I just don't know how to do it. I need a step by step because I have an extremely low iq and lack the intelligence to succeed.

My home office use is legit for what I do, but it's not enclosed in a room. It's just in my basement suite that also has a kitchen, bathroom etc but no windows. Not sure if I can even deduct a home office.

[DRU]

Originally Posted by BWillie

Dude...teach me. I am lazy. I will pay you, just tell me what I need to do and how to officially set the business up. I hear in Kansas if you have an LLC you don't even have to pay taxes on the earnings cuz of Brownback. I just don't know how to do it. I need a step by step because I have an extremely low iq and lack the intelligence to succeed.

My home office use is legit for what I do, but it's not enclosed in a room. It's just in my basement suite that also has a kitchen, bathroom etc but no windows. Not sure if I can even deduct a home office.

If you have an official business and you are using the office space to conduct business then you can take the write off. There are a few rules. For example, the space has to be the primary location for the business, and it has to be used exclusively for the business. That said, there are special circumstances (ie. Doctor, Dentist, etc.) where your primary location might be a place separate from your home, but then you use a home office to do bookkeeping and general office tasks for the business. In this case you'd still be able to take the deduction. Also, things change if you're taxed as S Corp or if you are a C Corp, but you can still get the deductions (at that point you either rent your home office to the business, or the business can reimburse the employee...and yes, if you're a sole proprietor then you are both the employer and the employee.) The S Corp is where huge tax benefits begin to kick in, but the business needs to be generating some decent revenue in order for that part to come into play. In fact, the Kansas trick you're talking about is when you have "pass-through" income, which is what you'd have with an S Corp.

I'm happy to help you out and give you some good resources to do more research on your own. Obviously, you should talk to a CPA/EA/Attorney, but they will back me up on everything I've said.

If you want to PM me some details about what you're currently doing I can give you some quick guidance on the best way to set it up as an official company.