It doesn't matter what goes on in the bureaucratic halls of Washington, we small business people are expected (and required) to pay our taxes. We also know the IRS frowns on delays, errors, and omissions; and it's main goal (proven by testimony in Congress), has been to punish those of us who unwittingly or on-purpose break the rules. It's not a nice agency!

Luckily, there are competent taxpayer-help books and computer programs out there that won't cost you an arm and a leg that could help you avoid the unpleasantness of errors. There are many tax guides available, and most are accurate and comprehensive. Make sure they are user-friendly before you spend your money. By the way, the cost of the book or books is a deductible expense.

Paying taxes is becoming a more difficult task for everyone every year, and the impact is great on everyone from small home-based businesses to individuals to large corporations. Whether we will be able to take a Capital Gains tax write-off, whether we will be able to deduct certain expenses we took last year, or whether we can use any of the tax tricks we've relied on in past years are all in doubt, and will remain in doubt until Congress and the President get their acts together and we get a fair budget and maybe a fair set of tax laws.

Don't hold your breath. While we're waiting, we still have to file tax returns, and they are subject to audits and punishment if we don't get it right, so let's make the task as simple as possible.

SPECIAL DEDUCTION TIPS
"Can I take 'that' as a deduction?" There's no need to wonder if you use one of the better help books. Most of these have specific and innovative ideas to make filling out tax forms less of a chore than last year. Use them!

USING COMPUTER PROGRAMS
Most of us select one of three ways to calculate the egregious bite taken from our earnings by politicians who never worked at a job other than politics a day in their life where they had to perform to meet a payroll or pay a grocery bill.

We either involve a competent CPA, hire a bookkeeper, use a computer program, or we do-it-ourselves. Computerized tax programs are wonderful, but they don't answer tricky questions like: "Based on the at-risk passive activity loss rules, exactly how much can you deduct of the losses incurred in your "S" Corporation last year?" (The answer is there in one of the books, you just need to look under the title: "Professional help".)

Use the computer to run the calculations and do the arithmetic, but use the experts to tell you what numbers to plug into the equations.

USING A CPA
I am a believer in using competent help to calculate the absolute minimum I owe. The magic word is CPA. CPAs have to pass a rigorous set of exams, regularly take courses to keep on top of accounting changes, and are normally (but not always--so ask) insured in our favor should they make a mistake that costs us money. This is not necessarily true of non-CPA accountants, and is practically never true of bookkeepers.

One thing a CPA can do is calculate the MAXIMUM deduction you can take. ALWAYS ask them to do this. The tax law says you can take 'X' as a deduction amount, so take 'X' - always! A good example of this is the amount of money for meals away from home. Use the maximum instead of keeping receipts (unless your receipts are larger than the maximum).

THE DO-IT-YOURSELF TRAP
If you insist on doing your own taxes, I'd say, "Okay, but only if you are a CPA and use a computer program to do the work and have a reference book or another CPA handy to show you the best way." Winging it alone is not healthy to our pocketbook, so I recommend not doing it, ever! Until the tax code is simplified, there are just too many holes for us to fall into to warrant a freeform try at satisfying the IRS. However, if you must do it yourself, use one of the major Tax Guides as your best reference to what you can and cannot do.

BUY AUDIT INSURANCE
Nothing instills fear more than a letter from the IRS saying you are about to undergo an audit and bring everything to your first meeting and kiss your relatives, kids, employees, and business goodby because: "WE ARE THE IRS AND WE'RE GOING TO GET YOU!!!

There are a few 'audit defense' organizations out there who, for a fee, will represent you in an audit. If you are in business, the few bucks they charge would be a great insurance policy defending you in an audit. The staff of most of these agencies are composed of ex-IRS employees who know the ropes. It is well worth your effort to find, sign-up and work with one of these firms BEFORE you get the dreaded AUDIT letter.

Just a note: Your CPA will usually represent you in an audit at no cost, but typically, he or she lacks the years of experience available from one of the audit defense organizations.

SAFETY NOTES
I am neither a CPA nor an attorney, but I regularly consult with both when writing. Because of this, I urge you to seek competent help in calculating what you owe your governments . . . don't just take my word for it. If you know of another program or another way of keeping up with the government's taking of your earnings, let me know and I'll do some research and report back.