Nice Try – Enjoy Your Audit in 2 Years


With the removal of job expenses under tax reform I have seen this scheme just like I predicted after the new tax laws were passed. It’s summed up in one really lame statement I heard:

“I make myself a 1099 worker by filing exempt from tax withholding for my W2 job and then claim all my travel expenses on a Schedule C, Self Employment Form. All my friends do it!!”

Nice try…..

Creative Record Keeping


In a December 2017 tax court case in Canada, the taxpayer was asked to supply documentation for his expenses. The court record states:

…..In the course of the audit of the Corporation, the Appellant was asked to provide records to show the amount of the expenses which he said he had incurred for the Corporation. He gave the auditor three grocery bags of unsorted receipts. When he was asked to organize the receipts into some sort of coherent order, he said that he was unable to do so. The Appellant admitted in cross-examination that his record keeping was “shoddy”.


Student Loans and Tuition Tax Credits/Deductions

One thing I have never understood is why some clients believe they cannot claim tuition on their tax return if they receive the funds from student loans. At the same time, they will take out a loan to buy a car and be very forthright about claiming the sales tax.

I guess it’s a misunderstanding of how things are paid.  When someone loans you money,  your obligation to repay that loan is instantaneous  regardless of the fact that you negotiate  a payment frequency and an end point  for those payments.  I guess some  would surmise that they could not  deduct the tuition immediately,  but over the life  of the loan.  If that was the case,  they would have to keep track of every principle payment they make to determine  the amount of tuition they can deduct.  That would be a huge administrative burden on the IRS to track.

With tuition,  the only time the source of funds becomes an issue is when it comes from scholarships, grants  and any other source of tax free, unearned funds.  Otherwise, whether you get the tuition money  from a loan or a gift from Aunt Sue,  it’s the payment of the tuition that triggers the  deduction.

Digress to a Rant #1

Digress to a Rant #1

It amazes me that some people like working as an independent contractor because “they don’t take taxes out” ……… That euphoria ends when I have to tell them how much they owe which commences the obligatory rage that the contractor screwed, tricked {Insert your own expression of surprise} them into doing it that way.