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April 4th, 2012 MATTHEW SINGER | News Stories
 

1040 Blues

How to screw up your taxes. Or not.

lede_4_pigeon_3822ILLUSTRATION: Will Bryant

As someone once said, there are only two guarantees in life: death and screwing up your taxes. At least, that’s what I’ve been told. I’m a 29-year-old man who still sends his 1099 to his dad and lets him deal with it. I know I’m not the only tax moron out there, though, and speaking to a few local experts confirmed that. Here are five do’s and don’ts for those looking to conquer their tax phobia. (Not me, though. Thanks, Dad!)


Do:
Fill out the correct forms. Well, duh, right? “The most basic mistakes happen because people grab the wrong form,” says April Gutierrez, managing director of Pacific Northwest Tax Service. It’s the easiest way to miss potential deductions (or accidentally leave money unreported) because there simply isn’t a line asking for certain information.

Don't:
Lie about your income. Well, duh, right? “People all the time feel they shouldn’t have to report income,” Gutierrez says. “They’ll come in and say, ‘Yeah, I ran this little business on the side, but I don’t want to report that.’ Well, once you tell your tax preparer about it, your tax preparer is ethically obligated to report that income on the return. If you don’t want them to, you might as well take your stuff and go.”


Do:
Take advantage of state tax credits. Depending on income level, Oregon offers major incentives for tuition costs and expenses related to childcare, as well as for political donations, energy-saving home improvements and retirement savings.

Don't:
Guess at your expenses. “Quite often, what I see,” says Scott Weinert of Integrity Northwest tax service, “is if you ask someone their childcare expenses, they’ll start counting holes in the ceiling and say, ‘Well, here it is.’”


Do:

Keep track of business miles and charitable donations. Even the stuff you’ve given to Goodwill can be written off. Also, expenses related to work clothes—dry cleaning, say—are deductible as well, as long as the clothing is formally issued by the company (business suits don’t count).

Don't:
Attempt to deduct those leather pants and your grandmother’s flouncy pastel blouse as a “work uniform.” Yeah, barista/rock star, we know it’s your “stage outfit,” but even legit musicians can’t get away with that. “Mick Jagger tried to write off his flashy clothing,” says Eve Davis, owner of In or Out Tax Service, “but it was disallowed because it was something he could still wear on the street.”


Do:

Write off your carrier pigeons. Wait, what? “Somebody deducted a carrier pigeon as communication for their business,” Davis says. “They sent messages across town by carrier pigeons, so they deducted the cost of the pigeon and the food. As far as I know, the IRS didn’t disallow it.”

Don't:
Try to claim your cat as a dependent. “You obviously can’t, but people try that every year,” Weinert says. Unless, of course, that cat or dog or rabbit or Madagascan hissing roach has been prescribed to help battle depression. In that case, deduct away.


Do:

Look for home-office deductions. If you work from home, a percentage of utilities and rent, among other things, can be written off as business expenses.

Don't:
Overdo it. “People seem to think, ‘Well, I worked at home or did something at my house, so now I can claim all the expenses at my house as business expenses,’” says tax consultant Danita Wakamatsu. “‘Oh yeah, I’m going to write off my mortgage, because I was grading papers at home.’”


GET HELP WITH YOUR TAXES: CASH Oregon, the financial-education nonprofit, offers free tax preparation and filing at 38 sites across Multnomah County, including a large walk-in site at Lloyd Center mall. See cashoregon.org or call 243-7765 for a list of sites. The Internal Revenue Service offers free federal tax return preparation on Tuesdays and Thursdays to people with incomes of less than $50,000 at its Portland office, 100 SW Main St., 415-7361.

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