Good Question: Why do ‘fiscal years’ not always sync up with calendar years?
(KUTV) The certified public accountants at Klingler and Associates are getting ready for a rush. A new year always brings a new tax season.
Owner Ken Klingler says they do prepare tax returns for individuals, though his company’s primary focus is managing the books for small businesses. He knows better than most that it’s not tax time for all companies. Some companies operate on what’s called a fiscal year.
“A fiscal year is a financial reporting period that’s something other than just our regular calendar year,” he said.
Klingler says the vast majority of companies do have a fiscal year that jives with the calendar year, ending at midnight on December 31, because it’s easier and cheaper. But companies don’t always have to wrap up their tax year that day.
In Utah, Klingler says several companies choose to end their reporting years in the middle of the summer because ending in the middle of winter would be bad business.
If businesses that cater to snow, like ski resorts, snow plowing companies, ski rental and repair companies or ice fishing businesses, were forced to end their fiscal years on December 31, it would make it very tough to budget, plan and invest.
“You wouldn’t be able to look back and say, 2014 was a good year because it could have been the second half of one year and the first half of the other – so for those companies it does make sense to elect a fiscal year end,” Klingler says.
All companies do have to adopt a tax year. Once they do, they have to stick with that tax year or get permission from the IRS to change it.
Copyright 2015 Sinclair Broadcast Group
Get Gephardt: Tax deductions people might miss
(KUTV) Good Question “What can and can’t be written off at tax time?”
Preparing taxes is in Ken Klingler’s DNA. His dad founded Klingler and Associates back in the 70s and Ken now runs the business, which he says is not easy in the ever changing tax world.”I have often told myself I should have been a doctor because Congress doesn’t meet every six months and change the laws of the human body,” he joked. Keeping up requires weeks of continuing education for Ken and everyone in his office, and that makes him the perfect person to answer the good question: what can we write off that would surprise some people and what can’t we write off that people often think they can?
First, charities, which can go a lot further than the box of old clothes you took down to Deseret Industries, Ken says. “When it comes to charities, you can write off everything you’re out of pocket,” Ken says. “For example, if you baked something for a charity write–off those ingredients. Also don’t forget supplies; if you bought, say, pens and poster board to advertise a charity fundraiser. Those too can be written off. Do you volunteer at a charity in person? Don’t for get to write off the mileage it took you to get there. As for the time you donated, that’s not deductible.
“The problem with time is how do you value somebody’s time?” Ken says. Did you look for a job in the past year or try to move up in your current one? Some of that can be written off, Ken says. The cost to print and send out your resume or money paid to a head hunter is tax deductible, Ken says. Also, travel for a job interview and those pesky baggage fees if you flew can be deducted. Ken says the IRS allowing people to write off job hunting expenses has to do with the concept that if you took steps to make more money, by its very nature, you also took steps to pay more in taxes and tax collectors appreciate it. “Usually I tell people, if it’s for business purposes, if it makes you more effective, more efficient or more marketable it’s probably deductible,” he said.
Some of your work wearables can also be deducted – though be-warned Ken says clothes themselves are very rarely able to be deducted.”If it’s something you can wear outside of the workplace and no one will notice that you’re wearing work clothes, it’s not deductible,” he said. So, your work outfit probably can’t be written off and neither can things like gym memberships to stay fit and marketable. What is deductible is work required safety. Shatter proof lenses in your everyday glasses or steel toed boots that you wear, even off the job site, are deductible. Those are a few of the common write-off overlooks Ken says he regularly sees preparing taxes. Outside of that, he offers this advice as you seek clarification on what is deductible: “If it’s going to have any element of fun to it it’s probably not going to be deductible.”
Copyright 2015 Sinclair Broadcast Group