Investment Expenses

When can you deduct these expenses? The IRS tells you can deduct them if they are ordinary and necessary for the production of income or management, conservation or maintenance of income producing property. Some examples are: my favorite- tax preparation fees, investment advisory fees, retirement plan custodial fees if paid with funds outside of the plan, safe deposit box fees, the cost of maintaining estate real property until distribution, depreciation on your computer used for online investing, lunch with your broker if you pay for it, and books and  newspapers like the WSJ dealing with investments. You cannot deduct the broker's commissions on stock trading as that cost is added to the basis of the investment. You also cannot deduct the cost of investment seminars or conventions.

IRS Penalties

You won't get an IRS penalty waived or reduced unless you ask. If this is the first time you have been hit with a penalty, the IRS will  give you a break as a first time offender. If there is a reasonable cause then the penalty can also be waived. What is a reasonable cause? If you can show that you exercised ordinary care and prudence through facts and circumstances but still could not comply with the tax law, then  your penalty will usually be waived. For instance the following circumstances can establish reasonable cause: death, illness, fire, natural disaster, undue hardship, and unavoidable absence.

Why You Shouldn't Wait Until the Last Minute To File Your Tax Return

If you are due a refund, then you didn't get the money earlier like you could have. If you owe tax, then you have to pay penalties and interest on the past due amount. It may be too late to make a retirement plan contribution. Your current year estimated payments may be off and you may be subject to underpayment penalties.  There is a longer time for the bad guys to file a return using your social security number. And the final reason you shouldn't procrastinate is that it stresses out your tax preparer.

New 2017 Filing Deadlines for 2016 Calendar Year Tax Returns

2016 W2's and 1099's with non-employee compensation now are due by January 31, 2017 instead of February 28. The two pass through tax returns Partnership and S-Corp returns are due by March 15, 2017. Calendar year Partnership returns used to be due by April 15. C-Corp tax returns are now due April 17, 2017. C Corps get an extra month because there is no pass through of revenue and expenses to other taxpayers.

Court Case on Deducting Business Mileage

In Sam D Kilpatrick (T.C. Memo 2016-166) the court held that the taxpayer lost his deduction for business mileage. The taxpayer produced a record  prepared two years after the fact using a calendar with days marked business travel and mapquest. Nice try. The rules require that you keep a contemporaneous record of business mileage, total mileage, the date of each business use and the business purpose. One thing that might have gotten the taxpayer in more trouble with the court was that he was a CPA.