The IRS is always on the lookout for misclassification of workers as independent contractors rather than employees. If the workers are independent contractors, the company avoids paying employment taxes. But you must treat workers as employees rather than independent contractors if you exercise control over how, when, and where they perform their duties. Important: Treat all workers doing the same job in the same manner, as either employees or independent contractors. If you treat some as employees and others as independent contractors, the IRS can say they’re all employees and assess employment taxes.

If an occasional trip to the race track is one of your hobbies, you probably know that your winnings are taxable and your losses are deductible only to the extent of your gambling gains. The IRS certainly won’t object to your paying taxes on your race track winnings, but proving your losses is a horse of a different color.

When one horseplayer brought a bag of parimutual tickets to tax court as proof of his losses and asked that their cost be deducted from his winnings, the court declared him a loser because the tickets had footprints on them.

another veteran horseplayer produced a similar collection of losing tickets as proof of his losses. But the court noticed that although the tickets had no heel marks, their  denominations and  serial numbers were so varied that the gambler would have had to buy …

You can deduct actual mileage costs when you use your car for business purposes. as a general rule, you must keep a diary that includes the beginning and ending odometer readings foreach trip, as well as the trip’s purpose. Loophole: The diary entry is sufficient to prove your deduction if you are taking the IRS standard mileage rate for driving costs. You don’t need to collect receipts for gasoline, repairs, insurance and other automobile expenses unless you’re deducting your actual driving expenses rather than the IRS rate.

Inherited Property

If you sell inherited property at a loss, you can deduct the loss on your tax return.

Example: Your parents leave you a house with an original purchase price of $100,000, and a market value of $300,000. You inherit the house estate tax free, receive a “stepped-up” basis of $300,000, and hold it as an investment (you do not live in it). When you sell the house for, say, $260,000, you can deduct $40,000, subject to annual loss deduction limits. (As mentioned earlier capital losses are deductible dollar for dollar against capital gains and can offset up to $3,000 of ordinary income each year. Excess losses are carried forward to subsequent tax years.)

Added benefit: The loss is deductible even if it is created by brokerage commission payments.

Let your customers tell you what quality is.

Make sure that efforts to improve quality are driven by customer needs. You don’t improve quality unless you improve a product in a way that customers welcome and appreciate. Before you undertake a quality improvement effort, always ask yourself whether your customers will see it as a benefit to them.

Improve collections with a well-designed invoice.

A few key tips:  Keep the invoice clean and simple and test it on someone who’s not familiar with the business. Make sure the form is titled with the word “invoice.” Use a special typeface for critical information such as the outstanding balance and the item purchased. Use action words such as “please pay” instead of “amount due.” The invoice should have an area where the customer’s purchase order number can be indicated. Including a self-addressed return envelope will …