Many business taxpayers fail to deduct otherwise eligible business expenses or fail to fully deduct qualifying business expenses. Below is a listing of commonly missed deductions or deductions that you may not be fully utilizing. You may wish to carefully examine your records to determine if you may be missing any of these deductions.

*For Sole Proprietors/Filing Schedule C: Home Office Deduction: If you use part of your home as a home office, you may be entitled to deduct expenses related to the home office based on the percentage of square footage the home office occupies. Related expenses include mortgage interest, property taxes, utilities, and repairs, etc. (S Corporation shareholders and Partners in a Partnership usually cannot take this deduction.)
*General Business Expenses: If you use your personal funds for business expenses such as office supplies, these are qualifying business expenses, which you may deduct. You can fill out an expense report and have the business reimburse you. Keep all receipts attached to the expense report for supporting documentation.
*For S Corporation Shareholders: Imputed Interest on Shareholder Loans: If you have loaned money to your business, you are required to charge interest on the loan or interest will be imputed to you. While you are required to report the interest as income on your personal return, your business is permitted a deduction for the interest paid. If any of the interest amount is improperly characterized as wage income to you, your business may be overstating its employment tax liability. By recharacterizing these amounts as interest expense, your business may be able to reduce its employment taxes. (You should also have an official Note set up with terms, etc….)
*Meals and Entertainment Expenses: If you have used your personal funds to pay for meals and entertainment expenses, these expenses qualify as a business deduction, subject to limitations. Once again, fill out an expense report and have the business reimburse you. Keep all receipts attached to the expense report for supporting documentation. Also document the business purposes of the meals and entertainment expenses.
*Personal Assets Converted to Business Use: If you have contributed personal assets, such as a computer, the fair market value of these assets qualify as a business deduction, subject to depreciation limitations, beginning with the date of conversion.
*Self-Employed Health Insurance: As a self-employed taxpayer, you may deduct your health insurance premiums under certain circumstances. (check with your tax professional for further information)
*<Communications Expenses: Expenses related to the business use of your personal telephones, cellular phones, and internet connections may be deducted.
*Automobile Expenses: Mileage and other related automobile expenses may be deducted when your personal vehicle is used for business purposes.

In the American Recovery and Reinvestment Act of 2009 - taxpayers received a tax credit - but it is not going to be in the form of a separate, special check mailed to them - like last years economic stimulus payment. This tax credit will be incorporated into their payroll checks. The credit will be in the $400 - $800 range per taxpayer.

For the majority of folks, this tax credit will mostly be handled through payroll tax withholdings. The IRS has revised the federal tax withholding tables to incorporate new lower tax rates. So - if you receive a regular weekly/biweekly/monthly paycheck - you will notice that your check contains a little something extra each pay period. For other folks, the credit can be claimed when they file their 2009 tax returns next year.

For more information about the “Making Work Pay” tax credit, see the newly revised IRS Publication 15 (Circular E) Employers Tax Guide.

When working in Quickbooks, have you ever seen “negative A/R” on the balance sheet? And what could this mean?
Where can you find some information to help explain this balance? The first thing you should do when you see negative A/R is run an Open Invoices Report to investigate this odd balance. To run this report, go to: Reports–>Customers & Receivables–>and Select the Open Invoices report. Select the appropriate date range and run it. This report will show you the problem areas. These issues show up in red negative amounts.

What does this balance mean? How can I correct it?
1. Payments were “received” and posted to a customers account - but not against any particular invoice - and they show up as “unapplied payments”. To Correct: First find out if the customer has overpaid you or not. If you have not been overpaid - then you must figure out if you failed to create an Invoice and then create the invoice -using a date prior to the date of the payment. Then apply this credit against the invoice.
2. Payments were “received” and posted to a customers account - and there are no invoices created for this customer to receive against. (See correction for item # 1 above)3. An invoice was create for a customer and a payment was received - but these two transactions were not linked up. On the Open invoices report, you will see an invoice amount and a payment receipt - with a “Net balance of 0″. However, since these two transactions were not cleared against each other, this will create a “negative amount” in A/R. To Correct: Apply the open invoice against the payment.

Note: If payments are being posted to a customers account as unapplied cash or “overpayments” - the revenue from that transaction is Not being recognized on the income statement. The creation of an invoice is the trigger for generating revenue on the Profit & Loss.

If you are the accountant that is working off of the Accountants Copy - you will not be able to correct this for the client in some older versions of QuickBooks. I would recommend recognizing that negative A/R as revenue on the tax return and having the client fix these issues in QuickBooks.