Paldino Company CPA - "Success Starts with a Handshake"

Welcome to my blog page the purpose of which is to provide you with timely and relevant tax and accounting information. I intend to bring you information which you can use now to assist you in lowering you income taxes. I will when appropriate give you links to tax related web-sites, worksheets and check-list to assist you in meeting you recording keeping requirements and provide you with the information you need to prepare an accurate return and pay the least amount of tax you are legally required to pay. Please check back often and feel free to post your questions and comments















Sunday, June 23, 2013

Does Your Mileage Log Travel the Distance?




The tax code allows deductions for qualified miles driven for business, medical, moving and charitable 
purposes. But to claim this deduction you must keep adequate records of actual miles driven. During 
an audit this is an often disallowed deduction, despite the fact that you actually drove the distance 
claimed. How to make sure this doesn't happen to you? Here are some tips.
  1. Keep a log. The tax code is clear on this point. You may not estimate your miles driven. You               must support your claimed deduction, ideally with a detailed mileage log.
  2. Create good habits. Your odometer reading and miles driven should be noted as soon as possible after the event. Keep a log book in your car and note the miles each day. Logs created after the fact with estimated miles driven could be disallowed during an audit.
  3. Make thorough entries. Note the odometer readings, date, miles driven, the to/from locations, and the qualified purpose for the trip.
  4. Don't lose out on the extras. The deduction for miles driven is meant to provide a deduction for fuel, depreciation, and repairs. You can also deduct out-of-pocket expenses for tolls, parking and other transportation fees. Keep a running total of these fees in the back of your mileage log.
  5. Keep separate logs for each deduction. Remember you may deduct mileage for business, charitable purposes, qualified moving and medical miles. It is best to keep track of each in a separate mileage log.
  6. Alternative business transportation deduction. When it comes to deducting business transportation expense, remember the miles driven method is not the only one available to you. You may also deduct your actual expenses, but how and when you make this determination is important. In the initial year of placing your auto into service for your business, it is best to keep track and record all your actual auto expenses. An analysis can then be conducted to see which method is best for you to maximize your deduction.

Friday, June 14, 2013

Who Pays What?



In a continuing effort to provide information as we listen to the budget and debt debates out of Washington D.C., outlined here are some IRS statistics on who pays individual income taxes. The information provided here is the most current available information.
Income
% of Income
Share of
Income Tax Paid
Average
Tax Rate
Top 1%
18.9%
37.4%
23.4%
Top 5%
33.8%
59.1%
20.6%
Top 10%
45.2%
70.6%
18.5%
Top 25%
67.6%
87.1%
15.2%
Top 50%
88.3%
97.6%
13.0%
Bottom 50%
11.7%
2.4%
2.4%
All Taxpayers
100%
100%
11.8%
How to read:The top 10% of Adjusted Gross Income (AGI) on 2010 tax returns reported approximately 45.2% of the income and paid 70.6% of the total individual income tax collected in 2010.1

Observations:

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The top 1% of income paid 37.4% of the federal individual income taxes with 18.9% of the reported income.
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The largest gap between income representation and amount of tax paid is in the top 10%. The top 10% of reported income have approximately 45.2% of claimed income, and pay approximately 70.6% of the individual income taxes.
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The Tax Policy Center estimates that 46.4% of households paid no federal income tax for 2011.
Note: The above figures net out "negative" income tax returns for those who filed a tax return, but due to adjustments and credits have negative adjusted gross income.
1 Source: Internal Revenue Service. SOI Bulletin Table 5 - Selected Income and Tax Items, Shares of Adjusted Gross Income and total income tax and average tax rates. All figures are based on estimates from sampling conducted by the Internal Revenue Service using 2011 tax filing data for 2010 taxes. Income means Adjusted Gross Income (AGI) as reported on individual income tax returns.