​Oct. 15 is almost here, and it's the last day to file for most people who requested an automatic six-month extension for their 2017 tax returns. These taxpayers should remember that they can file any time before Oct. 15 if they have all their required tax documents. They can also pay their tax bill in full, or make a partial payment, anytime, by visiting IRS.gov/payments.
 
As extension filers prepare to file, here are some things they should know:

• They can still use IRS Free File.  Nearly everyone can e-file their tax return for free through IRS Free File. The program is available on IRS.gov now through Oct. 15. IRS e-file is easy, safe and the most accurate way for people to file their taxes. E-file also helps people get all the tax benefits they're entitled to claim.
• A refund may be waiting.  Anyone due a refund should file as soon as possible to get their money. The sooner someone files, the sooner they'll get it. Don't forget to use Direct Deposit. It is the best and fastest way for taxpayers to get their tax refund electronically deposited for free into their financial account.
• They should consider IRS Direct Pay.  Taxpayers who owe taxes can pay them with IRS Direct Pay. It's the simple, quick and free way to pay from a checking or savings account. Taxpayers can just click on the 'Pay' at IRS.gov.
• Here's what taxpayers should do about a missed deadline. Anyone who did not request an extension by this year's April 17 deadline should file and pay as soon as possible. This will stop additional interest and penalties from adding up. IRS Direct Pay offers a free, secure and easy way to pay taxes directly from a checking or savings account. There is no penalty for filing a late return for people who are due a refund.
• Taxpayers should remember the Oct. 15 Deadline.  Taxpayers who aren't ready to file yet should remember to file by Oct. 15 to avoid a failure-to-file penalty. Taxpayers who owe and can't pay their balance in full should pay as much as they can to reduce interest and penalties for late payment. They can use the Online Payment Agreement tool to apply for more time to pay or set up an installment agreement. In most cases, the failure-to-file penalty is 10 times more than the failure-to-pay penalty.
• More Time for the Military. Members of the military and others serving in a combat zone get more time to file. These taxpayers typically have until at least 180 days after they leave the combat zone to both file returns and pay any taxes due.

 

If you use a vehicle for business driving, you have a tax choice: deduct your actual expenses or use an IRS-approved standard mileage rate. Frequently, the actual expense method will provide a bigger deduction, but it requires additional record keeping.
 

Here's a breakdown of your options:

• Actual expenses: With this method, you can deduct actual expenses attributable to business travel - including gas, oil, tires, insurance, repairs, registration fees, etc. - plus depreciation, subject to certain limits. But you must account for every single expense as well as keeping the other records required for the standard mileage rate.
• Standard mileage: This flat rate, which the IRS adjusts annually, is 54.5 cents per business mile in 2018, plus any business-related tolls and parking fees. For instance, if you travel 10,000 business miles, your deduction is $5,450. You still must record the mileage for all business trips, as well as the dates, destinations, names and relationships of business parties and business purposes.

​Did you just start using a new vehicle for business?
 
If you buy a vehicle late in the year, the actual expense method usually provides a much larger deduction, due mainly to favorable depreciation rules.
 
For example, say you drive 1,000 business miles monthly, and start using a car costing $50,000 on Oct. 1. The car is used 100 percent for business, so you can claim the maximum first-year write-off allowed under Section 179 expensing, and bonus depreciation of $18,000. Let's assume that your other business driving costs come to 40 cents per mile for a three-month total of $1,200 (3,000 miles x 40 cents).
 
This would mean you can claim a whopping $19,200 deduction ($18,000 depreciation + $1,200) under the actual expense method, compared to a standard mileage deduction of only $1,635 (3,000 miles x 54.5 cents).
 
If you've been using the standard rate in prior years, you can switch to the actual expense method in 2018. However, you can't switch to the actual expense method from the standard rate if you've previously claimed accelerated depreciation.
 
Call us if you have deduction questions about your vehicle expenses.

Do you work from home? Frequently, you can qualify for home office deductions offsetting taxable income from a sole proprietorship or other small business. However, if you're not careful, one misstep can cost you your deduction.
​
Rules around home office deductions
Generally, you may claim home office expenses only if part of your home is used regularly and exclusively as either:

• Your principal place of business; or
• A place to meet or deal with customers, clients or patients in the normal course of business.

Under the latest rules, deductions have been extended to business people like landscapers and painters who perform administrative duties at home while providing services at multiple locations.

Keep in mind that recent tax legislation eliminated the deduction for any miscellaneous expenses, such as unreimbursed employee business expenses, until 2026. That means employees can no longer deduct home office expenses if their offices are used for the employer's convenience.

If you qualify
You can deduct expenses directly attributable to the home office (e.g., business supplies) plus a portion of indirect expenses (e.g., utilities and depreciation) based on the percentage of business use.

For instance, if a room used as an office makes up 10 percent of the home and you end up with $10,000 in indirect expenses, you can deduct $1,000. Alternatively, you may claim a simplified deduction of $5 per square foot of office space, up to a maximum of $1,500.

Don't get tripped up by "regular and exclusive"
The sticking point may be the requirement for business use to be “regular and exclusive.” In other words, if you use a room or a portion of a room for your business, you can't use the same area for personal purposes. Although the IRS doesn't expressly require physical separation of a business part of a room, that certainly bolsters your position.

Suppose you use a computer in your home office both for business and personally. Technically, this taints your deduction because your business use is no longer exclusive. To be on the safe side, you might acquire another device for personal use and use the computer strictly for business.
​
Questions about claiming the home office deduction? Call us and we can help you.

"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
 
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
 
We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. 

Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs.   
 
We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. 
 
For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.

Monarch Accounting Group, Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527
Phone (630) 320-3720

It may be easier to qualify for a medical deduction in 2018 than before, assuming you'll itemize deductions. Specifically, the threshold for deducting un-reimbursed medical and dental expenses has been lowered to 7.5 percent of adjusted gross income (AGI). That means only the excess amount above the threshold is deductible.

At the same time, other tax law changes increasing the standard deduction and reducing the tax benefits of itemized deductions might complicate your tax situation. As a result, a sizable medical deduction could tilt the scales in favor of itemizing.
​
Look beyond typical medical deductions

Certainly, you should bunch medical expenses in 2018 when it suits your needs. But you don't have to only count on typical costs for doctor visits and prescription drugs.

Deductions for a wide variety of less common expenses have been approved by the IRS or the courts in the past, including amounts paid for the following:
​

• Acupuncture
• Alcoholism treatment
• Artificial teeth
• Birth control pills
• Breast pumps and supplies
• Chiropractors
• Guide dogs and other service animals
• Hearing aids
• Lead-based paint removal
• Medical care for transplant donors
• Oxygen and oxygen equipment
• Pregnancy tests
• Psychiatric care
• Smoking-cessation programs
• Special diet foods prescribed by physician
• Telephone equipment for the disabled
• Vasectomies
• Wigs for mental health purposes (e.g., to compensate for loss of hair due to an illness or medical treatment)

Note that the costs may be large or small. For instance, deductions have been allowed for installing a swimming pool to alleviate the taxpayer's asthma as well as clarinet lessons to correct a child's overbite.

Remember that the medical deduction threshold reverts to 10 percent-of-AGI in 2019. If you expect to clear the 7.5-percent mark in 2018 and will still be itemizing, move non-emergency expenses like medical exams and dental cleanings into this year. Otherwise, defer elective expenses to 2019, when you might have a shot at a deduction.

Give us a call if you'd like help determining your tax savings with your medical deductions.
 
"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.
 
The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.
 
We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. 

Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs.   
 
We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. 
 
For more free resources, such as Tax Rates, Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com.

Monarch Accounting Group, Inc
145 Tower Drive, Suite 4
Burr Ridge, IL 60527
Phone (630) 320-3720