What’s Keeping You Honest?

Most people are honest and most honest people are that way for two reasons. First because they feel that being honest is the right thing to do. Second they are honest because they fear the consequences of getting caught being dishonest.

I suppose that that’s common sense but IRS decided to take a poll to make sure. They found that 84% of people believe that cheating on one’s taxes is unacceptable. But 54% said that they don’t cheat because of fear of an audit. Further 61% admitted that they accurately report their income because they knew that a third party like their employer or clients had already reported their income. But 87% said that personal integrity also played a role.

So, basically, we’ll cheat as long as we think we can get away with it and as long as we can feel good about ourselves while we do it. Sounds about right to me!

Love Letter from the IRS

I don’t know about you but whenever I go to the mailbox and see that I’ve received mail from the IRS my first thought is, “Great, what now?” My second thought is, “How much is it going to cost this time?” The answer to both of those questions is rarely good.

Well, that’s not necessarily going to be the case in the next few weeks. The IRS is sending out millions of letter to US taxpayers. These particular letters will be explaining when and how we can receive our chunk of the stimulus package.

Is Your Small Business Taking Enough Deductions?

CNN Money just published a great article exploring the myriad ways that small businesses actually help the government screw them out of more tax money than they really should pay. It’s worth your time to check it out and see if you are due more deductions than you’re actually taking.

The article suggests reviewing things like the way that your deductions are categorized. A great example that they use is that small business owners will sometimes categorize their hotel bill for out-of-town trips at “entertainment” which only gives them a 50% deduction. The correct category, “lodging,” will garner 100%. Which deduction would you rather take?

The article is full of useful suggestions like that. But don’t take it too far! The author makes a great suggestion: the laugh test. If the proposal of a deduction causes you to snicker – like the lawyer who invited his clients to his daughter’s wedding then tried to write the expense off as a business meeting – then you’ve probably gone a deduction too far!

A 7 Year-Old’s Tax Troubles

A boy in Carpenterville, Ill recently received a notice from the IRS informing him that he owed taxes on $60,000 worth of income. The agency also informed his mother that should could no longer claim her son as a dependent.

This is not the story of an enterprising child who started a wildly successful business in his parent’s garage; it’s a story about identity theft.

Shortly after the young man was born in 2001 his identity was stolen. His Social Security card wound up in the hands of Cirilo Centeno who used the information to obtain a truck, three separate jobs, gas and electrical service for his home, a credit card, unemployment benefits twice for a total of six months, and over $60,000 in pay and services.

Centeno’s court date is March 12.