1. If you are collecting unemployment benefits, your benefits are taxable. To ease the tax burden when filing your return, you can file Form W-4V and specify the amount that you want withheld from your benefit.
2. If you turn age 70 on July 1, 2007, or later, you are not required to begin your minimum required distributions from your IRA until April 1, 2009. You are not considered to be age 70 and a half until January 1, 2008. Minimum required distributions from your IRA must begin no later than April 1st of the year following the year you reach age 70 and a half.
3. Each cash contribution that you make must now be substantiated with a written receipt or other documentation, regardless of the amount. Unsubstantiated cash contributions are not deductible. Non-cash contributions of household items must be in good or better condition to qualify for a deduction. A single household item valued at $500 or more qualifies as a deductible contribution regardless of its condition, provided you obtain a qualified appraisal of the item.
4. Beginning January 1, 2007 the standard mileage rate for the use of a car (including vans, pickups, or panel trucks) are:
- 48.5 cents per mile for all business miles driven
- 20 cents per mile for all medical or moving purposes
- 14 cents per mile for all miles driven for charitable purposes
5. If you move, make sure to notify the IRS of your new address by filing Form 8822.
6. If you are a self-employed taxpayer, you may deduct 100 percent of your health insurance premiums as an adjustment to income. For shareholders in an S corporation or a partner in a partnership, health insurance premiums paid on your behalf are included in your income and allowed as a deduction as an adjustment to income.
7. Expense related to the business use of your personal telephone, cellular phone, and internet connection may be deducted as business expense.
8. If you hired a housekeeper or a dependent care provider who provided services in your home, you may be a household employer. A household employer may be required to withhold social security, Medicare, and federal income taxes from their wages. In addition, you may be required to pay federal unemployment tax.
9. If you are planning to set up a retirement plan for yourself and your employees, a Simple plan must be established by October 1, 2007. A SEP must be established by the due date of your return, plus extensions. You can make employer contributions up to the due date of your return, including extensions.
10. Generally you can deduct only 50 percent of your business-related meal expenses while traveling away from your tax home for business purposes. Also, you can usually deduct only 50 percent of certain reimbursements you make to your employees for meal expenses they incur while traveling away from home on business.
“Tax Tips” are the opinions of Executive Accounting Solutions, which is not a substitute for individual accounting, tax, and professional services since individual situations vary.