Tax Advisor’s for Transportation Workers

5
by on November 5, 2010 at 8:56 pm

Dr. Emery says,

Intuition can supplement logic in problem solving and decision making but it has been unjustifiably ignored in modern times.

http://www.drmarciaemery.com/about.htm

Does this mean we should follow our gut when choosing a tax advisor? Certainly not. But be sure not to ignore that voice as well. Sometimes that little voice in the back of our head is quite wise. But sometimes we’ve been in an engine room without ear protection for too long and are hearing things.

What issues does a transportation worker encounter?

Colleen’s email sums it up pretty well -

When I graduated from Mass Maritime I heard rumors about “tax breaks” for mariners. I didn’t want to miss out. I found a preparer who seemed to be popular with transportation workers, specifically performing tax services for mariners. My returns were expensive to prepare. But I was told the tax savings were far beyond the cost. Not only was I audited for 3 years. He never answered my calls when I was looking for advice. I misunderstood the law when I bought my first house. I thought retirement money would be tax exempt. It was the first year I owed. $8,168 – I’ll never forget. Then after the audits I owed an additional $9,300. Then I was hit with interest and penalty charges. Where was my preparer? I still don’t know. I was told he no longer supports the deductions he once took. I was also told that he’s now pushing the same deductions on pilots.

The “but for” test will take you a long way…

But for test? Yes… It’s a staple of taxation, and it’s quite valuable decision making tool. In tax, a deduction or shelter is not valid if it fails this test. “No one would take this deduction BUT FOR the tax advantages”. There needs to be a primary purpose for the transaction before the tax benefit. Yes, you can receive a tax benefit. But that is not your #1 reason for entering into the arrangement. A rental property can show a net loss. The Primary purpose is property management. The net loss is a secondary effect.

How would Dr. Emery approach Colleen’s situation?

She would probably ask Colleen has certain she was about the write offs her preparer was taking. Had Colleen heard any scuttlebutt about audits, lawsuits, and things as such? Or did Colleen ignore the little voice in her head – sign and mail the return – putting blind faith in the preparer? Probably. But that’s common. It’s why we trust professionals. It’s also why professionals are held to higher standards in their field.

Merging intuition with maritime logic…

Do your own but for test…

  1. Does this advisor have many clients outside of the maritime or transportation industry. – a well rounded preparer would have advised Colleen regarding her real estate transaction properly. This could have saved thousands.
  2. Does the advisor offer planning updates throughout the year?
  3. Is the advisor willing to sit down with you to discuss future planning?
  4. Does the advisor become cryptic when explaining their process for preparing transportation workers returns? This is a big flag!
  5. What community ties does your advisor have? How are they connected to your industry? Dr. Emery might say there was an intuitive issue from the onset. Why are they targeting this industry?

Would they have a business “but for” the maritime and transportation aspect? If you think not, remember…. If they can’t operate “but for” the niche income, they have to keep it going. This is quite often when honest people begin crossing lines. Gambling on audit probability. Hoping their numbers won’t drop too drastically.

5 Comments

  • mike wittenberg

    30/01/2011

    I too have paid tax profestionals to find this deduction,how ever I no longer take this deduction, being afraid of being audited, an occuring more trouble!

  • admin

    30/01/2011

    Fair Approach Mike! Generally if the “incidentals” are making a tremendous change to your refunds there’s an issue. This isn’t to discount real tax planning. Just beware of folks selling magic beans :)

  • Shipofools

    20/02/2011

    Is it fair to sa that the maeger $5/day for being away from your home is a legit deduction, without any documentation other than discharges? Does this “incidental rate” of $30 something a day for Singapore also count with only a discharge as documentation??

    • admin

      31/01/2012

      They never required discharges. I advocate a written log. Just where you are and that you indeed incur incidentals that day “not itemized, simply yes or no”

  • Tomornove

    17/04/2012

    Types of Money Issue to TaxThe subsequent classes stand for kinds of cash flow, which may perhaps be topic to Federal/State cash flow tax, as set forth by the IRS:Wages and salariesSuggestion cash flowInterest receivedDividendsOrganization profitsCapital gains and lossesPensions and annuitiesLump-sum distributionsRollovers from retirement designsRental salary and pricesFarming and fishing profitsEarning for ClergyUnemployment compensationGambling profits and lossesBartering revenueScholarship and Fellowship grantsSocial Safety and equivalent Railroad Retirement Amazing benefits401(k) ideasPassive routines (losses and credits)Inventory methodsTrade of Policyholder Curiosity for inventoryCanceled credit card debtAlimony and young child helpFor a complete checklist of the sorts of revenue subject matter to tax, see the IRS Publication 525 (Taxable and Nontaxable Cash flow).What’s mistaken with acquiring a refund?In standard, you needs to pay Self-Work Tax and file “Schedule SE” (on Type 1040) if both of the adhering to applies:Your net earnings from self-employment cash have been $four hundred or way moreYou function for a competent church-managed organization (other than as a minister or member of a religious get) that has elected an exemption from Social Protection and Medicare taxes.o If your filing status is Solitary and at the stop of 2011 you were AGE 65 OR More mature, then you should file a return if your GROSS Salary was at least $ten,950.four% for Social Security (aged age, survivors, and disability insurance coverage) and two.

    http://wal29n8nba.freeweb.me/index.php?news&nid=2

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