Start Up Costs

Basically start up costs are all of the expenses you have in creating or investigating a new business up until the time you get that first dollar of sales. The IRS allows you then to deduct up to $5,000 of start up costs and amortize any excess over 15 years beginning with the month of first sales. If your effort is unsuccessful and you are an individual, generally the costs are personal and nondeductible.

Standard Allowance for Business Mileage for 2015

The new business mileage rate has increased from 56 cents per mile to 57.5 cents per mile for 2015. The standard rate is determined by an annual study of all of the costs of operating an automobile including depreciation, and can used to determine the taxable deduction of using a vehicle for business. I find using the standard allowance the best and easiest way for most taxpayers. You have the option of using actual costs, but once you go that route you can't change back to using the allowance method.

Tax on Social Security

Up to 50% or 85% of social security benefits are taxable if your modified income is greater than certain amounts based on your filing status. If you have less than those amounts, then social security benefits are tax free. As you can see though the limits are very low. For single returns, income between $25,000  and $34,000 makes up to 50% of social security benefits taxable. Over $34,000 and up to 85% is taxable. For joint returns, income between $32,000 and $44,000 makes up to 50% of social security benefits taxable. Over $44,000 and up to 85% is taxable. To calculate the modified income you have to add tax exempt interest and one half of social security benefits to adjusted gross income before any social security benefits. You have to add certain other items of income but those two are the most common. Roth distributions do not have to be added so a Roth is a good source of funds in retirement which will not make more of your social security income taxable.

Statute of Limitations

The statute for tax examinations is the later of three years from the date the tax return is filed or due. There is no limitation for false returns or failure to file returns. If you leave out more than 25% of gross income, the statute of limitations is six years from the date the return was filed, whichever is later. To comply with these provisions, I usually tell clients to retain support for tax returns for the current year and the three prior years. That would mean at present you should retain your supporting records for 2011 through 2014 tax years. I would keep a copy of the tax returns themselves forever.