My previous employer failed to pay me over $5K for salary, which was awarded to me in small claims court. However, it was still never paid by him or his company. Can I claim this on my taxes?

I could tell you different but this loss is not likely to be deductible.  It would only be deductible if your previous employer gave you a W-2 that included the amount he didn’t pay you.  However if you don’t report the income, you don’t get to deduct the loss.  This is always hard to understand so here is an example.  You work for this sleeze bag and earn $100.  Sleeze bag only pays you $50 so you report the $50 income.  Now you think wait a minute I lost $50 I want to deduct that so now you are reporting no income?  That doesn’t work because you really made $50.  Of course, if you report the $100 for some reason you get the deduction.  Not such good news I am sure. 

Here’s something better I hope and I hope it is not too late.  Looks like you are in CA so I would call and talk to the Employment Development Department.  Going to small claims was a good idea but EDD has more teeth when it comes to collecting.  Don’t know when this happened and if they have time limits but I do know that if you were an employee and they accept your case they will squeeze that SB hard to get your $$.   At least when I was young and not so smart I represented a client at a hearing with EDD.  The SB I was representing was willing to pay the past employee but got it in her head she didn’t want to waste pennies on a stamp.  The EDD slapped me good for being so dumb as to waste their time and the client got the worst of it.  I would check with them.  If you were an employee that is.  If not you probably have done all you can do.

This blog is a collection of questions from clients and the answers.  The goal of the blog is not to answer the questions you might have.  Most times the answers are based on each client’s personal situation.  Please do not rely on thisinformation to make important financial and tax decisions.  The advice presented here is presented to give examples of the type ofinformation you get as a client of a true tax professional, like Ray Simmons and the preparers he employs.  Advice regarding similar issues for you should be based on your personal situation. 

 Treasury Department Circular 230 Notice. “To ensure compliance with Treasury Department Circular 230, prospective clients are hereby notified that: any discussion of Federal Tax Issues contained or referenced to in this communication is not intended or written to be used and cannot be used by the prospective client or investor for the purpose of avoiding penalties that may be imposed on them under the Code.” Such discussion is written in connection with the promotion or marketing by Ray Simmons Corporation of the transactions or matters addressed in this correspondence.

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Ok, my husband and I make about the same money so our tax advisor told us we should claim married with the higher income. It’s a killer because I’m missing out on about $200 net each paycheck now. Do you think this is the right thing to do since we both make decent salaries and they are very close, aside from our bonuses? By the way- we are in CA.

This could be good advice but it depends on so many factors.  Generally congress tried several years ago to make sure that if your income was less than $130,000 combined you wouldn’t have what is called a marriage penalty.  There are a lot of things that could affect that general rule.  Can you tell me what your approximate income is?

Do you own a home? 

Do you have other income investments or rentals? 

Is this the first full year you will be filing joint for the whole year? 

Did you owe tax for 2010? 

Let me know the answers to these questions and I will be able to take a better guess as to whether your guy is right. 

This blog is a collection of questions from clients and the answers.  The goal of the blog is not to answer the questions you might have.  Most times the answers are based on each client’s personal situation.  Please do not rely on thisinformation to make important financial and tax decisions.  The advice presented here is presented to give examples of the type ofinformation you get as a client of a true tax professional, like Ray Simmons and the preparers he employs.  Advice regarding similar issues for you should be based on your personal situation. 

 Treasury Department Circular 230 Notice. “To ensure compliance with Treasury Department Circular 230, prospective clients are hereby notified that: any discussion of Federal Tax Issues contained or referenced to in this communication is not intended or written to be used and cannot be used by the prospective client or investor for the purpose of avoiding penalties that may be imposed on them under the Code.” Such discussion is written in connection with the promotion or marketing by Ray Simmons Corporation of the transactions or matters addressed in this correspondence

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Do you have a Non-Disclosure Agreement or something we sign prior to me sending you my sensitive information?

I don’t have a non-disclosure agreement.  I can make one up if you will feel more comfortable.  Before you say yes let me explain a couple things.  We have a privacy policy I can send you.  However, your real protection is Federal law.  They have what many might feel are onerous rules about disclosure and severe penalties.  I think the rules are good because what I can learn from your tax return is pretty detailed and sensitive so it should be protected vigorously and it is.  To give you an example, and this may seem a little extreme but it is true:  In addition to my tax practice I have a small securities business.  I do not do much with it currently but I used to be more active.  If you are a client and come to me for investment advice I can’t use information from your tax return to give you investment advice unless you signed a form prior to my preparing the return saying I could use it.  Like any other taxpayer I am not looking to get on the IRS’s bad side.  Of course I want to protect the clients but not willing to risk this.  So your info is well protected but if you want a non-disclosure agreement I can pull one from the internet I am sure. 

This blog is a collection of questions from clients and the answers.  The goal of the blog is not to answer the questions you might have.  Most times the answers are based on each client’s personal situation.  Please do not rely on thisinformation to make important financial and tax decisions.  The advice presented here is presented to give examples of the type ofinformation you get as a client of a true tax professional, like Ray Simmons and the preparers he employs.  Advice regarding similar issues for you should be based on your personal situation. 

 Treasury Department Circular 230 Notice. “To ensure compliance with Treasury Department Circular 230, prospective clients are hereby notified that: any discussion of Federal Tax Issues contained or referenced to in this communication is not intended or written to be used and cannot be used by the prospective client or investor for the purpose of avoiding penalties that may be imposed on them under the Code.” Such discussion is written in connection with the promotion or marketing by Ray Simmons Corporation of the transactions or matters addressed in this correspondence

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Send me a guide for small business owners to get ahead that include some distance, e.g. more than the basic stuff. BMW info privy to elite

A guide for saving taxes?  . 

There so many ways to save tax.  Are you using the right entity?  Do you need more than one entity?  Do you need a MERP, medical expense reimbursement plan? Do you need a CHIC, closely held insurance company?  Which retirement is right for you?  How can you set money aside and pay less tax and use that money to invest in your biz? 

You get the picture.  I design a lot of tax savings plan.  If I can’t show a business owner how to save at least $25,000 over five years they don’t need a plan just a few hints and don’t need a BMW.  We are implementing a plan for a real estate investor that will save about $250,000 over the next five years. That’s a fellow driving a free BMW. 

I’ve never purchased a BMW, I did buy my wife a new Lexus a few years back and I can tell you it was a lot different than when I went to an auction one time and bought an old truck because once in a while I need to haul stuff.  LOL.  Buying a BMW tax plan is not like getting a self-help plan. 

If you are looking for a BMW tax plan here’s the process.  We can talk a little on the phone if needed for you to get comfortable but before I can do anything for you.  You are going to have to show me your cards.  In this case your tax returns.  I have been doing tax returns for most last of the 45 years.  Reading your tax returns is how I get to know you.  Once I read your return we can set up a phone conference and I can tell you what I can do to help you quit wasting tax dollars.  I wil also tell you what your BMW will cost.  Don’t be too worried the cost of a tax plan BMW is far short of the cost of a BMW can drive. 

If your up for savings taxes let me know and I will get my assistant to coordinate getting your returns for review and setting up a conference.  I am copying her so you can respond to me or to her directly.  

Look forward to hearing from you

This blog is a collection of questions from clients and the answers.  The goal of the blog is not to answer the questions you might have.  Most times the answers are based on each client’s personal situation.  Please do not rely on thisinformation to make important financial and tax decisions.  The advice presented here is presented to give examples of the type ofinformation you get as a client of a true tax professional, like Ray Simmons and the preparers he employs.  Advice regarding similar issues for you should be based on your personal situation. 

Treasury Department Circular 230 Notice. “To ensure compliance with Treasury Department Circular 230, prospective clients are hereby notified that: any discussion of Federal Tax Issues contained or referenced to in this communication is not intended or written to be used and cannot be used by the prospective client or investor for the purpose of avoiding penalties that may be imposed on them under the Code.” Such discussion is written in connection with the promotion or marketing by Ray Simmons Corporation of the transactions or matters addressed in this correspondence.

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I am actually looking for a tax preparer, I have just formed an LLC in June and I am working full time as well I have also bought my first place in July.

Congrads on your home purchase. I think it is a great time to by buying a house. One thing we often do when clients buy a new house is look at how much tax they will save. This way you can reduce your withholding if you need more cash flow for your business.

On the LLC. Looked up your biz on Linkedin. Wouldn’t be surprised if you start making a good living with your new venture. I have a few others in the same field. Now the LLC, not such a good idea. If you make money you will probably pay too much tax. If you have a loss you will be an audit target because the llc is a disregarded entity and so the loss goes directly on your return. The loss can be as much as you spend, not limited to $10,000 but the IRS will look at it and think you are just making the business loss up to save tax. We can file an election to report the loss on a separate return and then “carry” it to your return. This decreases your audit chances while maintaining the tax benefits of the loss.

The first consult is free. We can set up a phone conference so I can some details and get some more details. After that I will be able to make some more concrete recommendations.

This blog is a collection of questions from clients and the answers. The goal of the blog is not to answer the questions you might have. Most times the answers are based on each client’s personal situation. Please do not rely on this information to make important financial and tax decisions. The advice presented here is presented to give examples of the type of information you get as a client of a true tax professional, like Ray Simmons and the preparers he employs. Advice regarding similar issues for you should be based on your personal situation.

Treasury Department Circular 230 Notice. “To ensure compliance with Treasury Department Circular 230, prospective clients are hereby notified that: any discussion of Federal Tax Issues contained or referenced to in this communication is not intended or written to be used and cannot be used by the prospective client or investor for the purpose of avoiding penalties that may be imposed on them under the Code.” Such discussion is written in connection with the promotion or marketing by Ray Simmons Corporation of the transactions or matters addressed in this correspondence.

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How interesting! I have spent my entire career, between real estate and financial planning, advising people on how to arrange their affairs to legally avoid paying taxes. I’ll check out your website! We might have a lot in common!

Yes I am sure we do have a lot in common.  I’ve been a real estate investor all my life.  More than half my clients are real estate investors.  Several years ago I got involved in the TIC industry which real estate sold by stock brokers.  I guess that is the best way to put it.  From my perspective not turing out so well for most the investors.  Anyway I ended up with a lot of those.  I was so surprised a few years ago when I was at 1031 exchange conference and one of the speakers pointed out that it is pretty tough to get a 1031 to work for PA law.  It was a surprise because I knew a few of my TIC investor clients had purchased a portion of properties located in PA.  I was pretty sure and later verified that the sponsors of these investments didn’t know and didn’t tell the investors this tasty little nugget of information.  Information which when the properties are sold will cost the investors $$ in PA state taxes

This blog is a collection of questions from clients and the answers.  The goal of the blog is not to answer the questions you might have.  Most times the answers are based on each client’s personal situation.  Please do not rely on this information to make important financial and tax decisions.  The advice presented here is presented to give examples of the type of information you get as a client of a true tax professional, like Ray Simmons and the preparers he employs.  Advice regarding similar issues for you should be based on your personal situation. 

Treasury Department Circular 230 Notice. “To ensure compliance with Treasury Department Circular 230, prospective clients are hereby notified that: any discussion of Federal Tax Issues contained or referenced to in this communication is not intended or written to be used and cannot be used by the prospective client or investor for the purpose of avoiding penalties that may be imposed on them under the Code.” Such discussion is written in connection with the promotion or marketing by Ray Simmons Corporation of the transactions or matters addressed in this correspondence.

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In an effort to get my house (financially speaking) in order, I would like your input as to how I can use the following uncollectible notes as a loss. These are signed, original note documents:

I was out of town for a few days end of last week and still digging from email. Anyway bad debts are short-term capital losses. There is no issue as to writing them off. The value of the write-off and the timing are an issue.

Short-term capital losses can be used against capital gains and you can deduct an additional $3,000 a year. I don’t recall that you have a lot of investments would create capital gains. Therefore you will write them all off in one year but you only get to use $3,000 of that write-off. The timing is the other issue. The write-off should start in the year the notes become uncollectible. I have never seen the IRS do it but they could say you should have written the notes off in an earlier year and that would mean you would have lost some of the deduction. I wouldn’t be overly concerned about this timing issue just want to make sure that you are aware in the off chance it comes up.

This blog is a collection of questions from clients and the answers. The goal of the blog is not to answer the questions you might have. Most times the answers are based on each client’s personal situation. Please do not rely on this information to make important financial and tax decisions. The advice presented here is presented to give examples of the type of information you get as a client of a true tax professional, like Ray Simmons and the preparers he employs. Advice regarding similar issues for you should be based on your personal situation.

Treasury Department Circular 230 Notice. “To ensure compliance with Treasury Department Circular 230, prospective clients are hereby notified that: any discussion of Federal Tax Issues contained or referenced to in this communication is not intended or written to be used and cannot be used by the prospective client or investor for the purpose of avoiding penalties that may be imposed on them under the Code.” Such discussion is written in connection with the promotion or marketing by Ray Simmons Corporation of the transactions or matters addressed in this correspondence.

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I sent my 2Q11 payments. Turns out I sent both fed and state June payments to the fed…so they have extra money and state didn’t get what they should have according to the payment schedule you gave me. (don’t know how this happened)

I think you are best off making the payment now. Basically they look at your payments on a cumulative basis. So if they think by 6-15 you should have paid $2,000 and you only paid a $1,000 they will charge you interest on the difference until it is paid. Usually not a lot of money but IMHO they don’t spend it well so why give them more than we havet to? We can use another trick to get rid of interest if you don’t convert to a roth until after 9-15.

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Thank you, you will be a good friend to have. My taxes last year as a business owner were a nightmare

Are you still self – employed?  I’m asking when I looked at your profile couldn’t tell for sure.  I enjoyed your comment and I think it will show up on my blog soon, sans your name of course.  It’s funny when you become self-employed life is good.  End of the year the nightmare starts.  There’s a reason and it isn’t because the government is greedy and wastes money though that is probably true. LOL.  The issue is when you go to get your return prepared you are going to a historian.  You are asking the historian to record the history of how you made money last year.  That is what a tax return is.  You know, I got a lot of great historians working for me doing this type of work, none of the can change history. 

In my organization I am the prognosticator.  I predict your future taxes by examining what is currently happening.  You can’t change history but you can control your destiny.  Lot’s of times the simplest things can save a client $5,000 or more in taxes especially self-employed people.  Assuming you are still self-employed I urge you to give me office a call and set up a free consultation to discuss your situation and see how we can turn those nightmares into sweet dreams. 

 

This blog is a collection of questions from clients and the answers.  The goal of the blog is not to answer the questions you might have.  Most times the answers are based on each client’s personal situation.  Please do not rely on this information to make important financial and tax decisions.  The advice presented here is presented to give examples of the type of information you get as a client of a true tax professional, like Ray Simmons and the preparers he employs.  Advice regarding similar issues for you should be based on your personal situation. 

 

Treasury Department Circular 230 Notice. “To ensure compliance with Treasury Department Circular 230, prospective clients are hereby notified that: any discussion of Federal Tax Issues contained or referenced to in this communication is not intended or written to be used and cannot be used by the prospective client or investor for the purpose of avoiding penalties that may be imposed on them under the Code.” Such discussion is written in connection with the promotion or marketing by Ray Simmons Corporation of the transactions or matters addressed in this correspondence.

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Could my wife and I claim different primary residences? We have two properties just down the street from each other, we have to support our respective mothers, but since they have no incomes, could she claim one as her primary and I claim the other as a primary?

Great question.  Having a home as a primary residence is only important if you selling the home.  I don’t think that is the situation?  You can deduct taxes on as many homes as you own.  Mortgage interest you can deduct on your primary residence and a second home.   I think that is your concern?  So the answer is sort of yes you can claim deductions for both houses.  If you are planning to sell one the question is a little more difficult if that is the case let me know. 

Your email brings up something more important, I think.  It sounds like both mothers are dependents.  Many times this comes up especially with clients who are of Asian decent, either they just don’t think of parents as someone who should be a dependent or they are worried the parent might not qualify for some type of government program.  Neither should be a concern in most cases they qualify as dependents and it will not affect medicare and similar programs.  Parents don’t have to live with you to qualify as a dependent. 

 

This blog is a collection of questions from clients and the answers.  The goal of the blog is not to answer the questions you might have.  Most times the answers are based on each client’s personal situation.  Please do not rely on this information to make important financial and tax decisions.  The advice presented here is presented to give examples of the type of information you get as a client of a true tax professional, like Ray Simmons and the preparers he employs.  Advice regarding similar issues for you should be based on your personal situation. 

 

Treasury Department Circular 230 Notice. “To ensure compliance with Treasury Department Circular 230, prospective clients are hereby notified that: any discussion of Federal Tax Issues contained or referenced to in this communication is not intended or written to be used and cannot be used by the prospective client or investor for the purpose of avoiding penalties that may be imposed on them under the Code.” Such discussion is written in connection with the promotion or marketing by Ray Simmons Corporation of the transactions or matters addressed in this correspondence.

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