When SALY is and isn't your friend
Same As Last Year (SALY)
(the way of many tax accountants)
Were you able to take a look at your 2013 tax return? I know, it's zero fun to do this and in fact, most people just don't. They want their taxes done as quickly as possible and preferably with a refund or very little due. Taxes are usually an enormous amount of money for almost everyone and if you receive your income as an employee (W-2 wages), you probably see it every time you get paid as hundreds of dollars are deducted from your gross wages each pay period. For many people, the amount paid annually in taxes is more than their total annual mortgage or rent payments. That's a lot of coin.
The Ease Your Friend SALY Provides (and the stuff she won't ask you)
In accounting, we have a term called "SALY" which means "Same As Last Year." As an auditor, this was an easy way to not need to go into detail on what made up a particular balance sheet account. A good example of this is "Organization Costs" which is capitalized start-up costs for new businesses that can not be deducted immediately in the year incurred and are rather amortized from five to fifteen years, depending on when incurred. Are you still awake?!
So as public accountants, because these accounts were never expected to increase, we would just note "SALY" after reviewing the detail in the account and move on to the next account to audit.
This is what almost all tax accountants, tax organizers, the IRS, and probably all state taxing agencies focus on. People are creatures of habit (even with their coins). Anything hugely different from the prior year is going to jump out. It's either wrong or there's a story behind it and it's going to get noticed.
All tax organizers will include your 2013 information. This is helpful because your tax accountant is essentially telling you "this is what you said last year so you probably spent or received something similar this year, right?" This is the SALY approach -- keep it consistent, close to the activities and amounts of last year, and you'll be fine.
But What if This Year is Different?
Unless you are an accountant or experienced bookkeeper, you will just fill in the blanks as requested by your tax accountant and attach the tax forms you received in the mail. When you return your completed tax organizer to your tax accountant, most will just have it next to them as they plug in the information you provided into their tax preparation software and then generate your return (usually at about 2:00 am!).
But what if something new happened this year that doesn't fit any of the boxes or questions asked by your tax accountant? They probably aren't going to ask as they are so busy this time of year and if you don't know it's a potential deduction, you won't tell them. And off goes your return, usually with most numbers very similar to last year.
So here's a list of commonly missed deductions (both business and personal) that most tax accountants will not ask:
Mileage for Charitable and Volunteer Work. Did you know that you can deduct your mileage to/from volunteer work including donations of clothing and household items? It's not calculated the same as business mileage, but it's there for you. This can be a great additional tax deduction if you volunteer a lot. Figure out how many miles you drive to/from for volunteer/charitable work. As long as you can support the miles driven, you can take the deduction.
Industry Standard Deductions. This is a big one if you work or own a company in a specialized industry. For example, if you are in the entertainment industry, you can deduct music, movie tickets, certain equipment (such as big screen TVs you may use for viewing parties, etc.). I don't recommend going all out on this, but whatever you need to do your business (listening to the latest music, checking out a movie that just came out to help hone in your editing, etc.) is deductible (and in the case of going to the movies, 100%). Check out the IRS website (it's really good) for standard and acceptable deductions for your industry. You will probably discover there are few things you could be deducting and are not.
Hobbies. If you are a collector and you buy and sell quite a bit based on your hobby, you can deduct your expenses that are related to your collection. For example, maybe you are a stamp collector and you drive to a convention in Portland, Oregon. The costs related to attending the convention would be deductible on your return. A word of caution when it comes to hobbies, years and years of losses will get noticed. You want to show that you do generate income from your hobby to offset the deductions.
Career Changes, Moving, Professional Development, Continuing Education. Did you move more than 50 miles for a new job? Your moving expenses would be deductible (assuming your employer did not reimburse you -- and if they gave you a partial reimbursement, be sure to itemize for the full tax benefit). Did you take any continuing education or professional development courses or workshops? If they were necessary for your work or helped with your professional development, you will probably be able to deduct most of these.
Inventory. If you carry a lot of inventory, pay attention to what isn't selling or has become obsolete. If the value isn't there anymore, write it off or down.
Self-Prep Tax Software is a Better Friend than SALY
If you feel like your tax accountant isn't taking a very close look at your numbers, then consider purchasing one of the very excellent tax preparation/do-it-yourself tax software programs out there. Especially if you think you are going to owe a lot of money and want to take more control. This doesn't mean falsifying your numbers, rather, it means walking through the questions these software programs ask and answering them. This is the best way to make sure you take advantage of the deductions and credits available to you. It may feel tedious however, given the large amount coins we all spend on taxes, it's worth it.
If you do this, you'll see the type of questions that your tax accountant doesn't ask you when they send you the tax organizer. For a few of my clients, we plug their numbers into the do-it-yourself tax software and then complete the tax organizer and have their tax accountant prepare the formal return. It may sound like a lot of work; it's worth it though in the end when we discover deductions never taken by the tax accountants.
It's also a great way to cross-check the tax accountant's work for anything submitted yet perhaps not picked up. Not to mention a good way to get ready for any taxes due or refund coming your way.
It's also a great way to learn more about something that is tied so closely with humanity -- connecting to your coins that are allocated to the community storehouse.