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Five questions for a tax expert

Monday, November 5th, 2012 | Posted by

Santa Rosa tax expert Bonnie Lee will speak at the Flamingo Hotel Nov. 11. (Courtesy of Bonnie Lee)

By MELODY KARPINSKI / Santa Rosa Correspondent

Santa Rosa tax expert Bonnie Lee likes to add a comedic twist to her financial presentations. Lee, who has been a Sonoma County resident for 19 years, says her dream job is to be a “stand-up comic.”

Instead, she fell in love with numbers, opening a bookkeeping service before venturing into the tax world. In 1990, she became an Enrolled Agent and later wrote a book entitled Taxpertise. When she’s not representing taxpayers, Lee writes columns for Fox Business and hosts a radio show on local station KSVY.

Lee will be the featured speaker at a workshop entitled “Taxes 101 for Writers” on Nov. 11, which will address some of the tax topics facing writers, artists and those with careers in similar fields. She sat down with us to give a brief preview of her presentation.

1) What are some of the most unusual or under-utilized ways to protect your money? Tax planning. The rates are so high that it would behoove all taxpayers, especially business owners to sit down with a qualified tax pro to find ways to cut the tax bill.

2) What are your top three financial recommendations for writers, artists and other freelancers? 

A) Don’t be afraid to write off the home office. It is no longer a red flag with the IRS (unless you misrepresent the amount of space you use.

B) When it comes to deductions, think in terms of whether or not you would incur the expense if you didn’t need it for your artistic endeavor. Take every deduction to which you are entitled. As an artist/writer you may deduct expenses as they occur whether you’ve sold that Great American Novel or not.

C) If you write off your vehicle, keep a mileage log. At least mark down a beginning odometer reading on Jan 1 and ending reading on Dec 31. Then extrapolate business mileage – keep your appointment book to prove business use of your car.

3) What are the top three common pitfalls you see people experiencing? 

A) Not knowing the rules or keeping adequate documentation to back up expenses like travel, meals and entertainment. The IRS will classify these expenses as personal if you can’t show solid proof of business intent.

B) Losing receipts and not keeping a good set of books – this can easily turn writing/art from a business to a hobby in the eyes of the IRS and valuable deductions will be lost.

C) Not hiring a tax pro to review, tax plan and make recommendations in order to maximize profitability and minimize the tax bite.

4) What inspired you to incorporate comedy into your workshops? 

First of all, my dream job is to be a stand-up comic, but I don’t want to travel and do shows in Nebraska. Taxes are so freaking boring that an audience will be sound asleep by the end of the intro if you don’t have a clever and funny way to present the material. When I wrote Taxpertise, my publisher asked me to start each chapter with a funny story and I did. It makes the concept easier to understand if you aren’t ready to cover your ears and hum loudly.

5) If you had to describe your book, Taxpertise, in two sentences, what would you say? It’s everything a business owner needs to know to not only survive, but excel financially by saving money on taxes and being ready in the event of an audit or other tax problems that may arise. [It's] told in such a way that the reader will not only understand it, but find it entertaining.

Lee appears on Sunday, Nov. 11 from 3-5 p.m. at the Flamingo Hotel on 2777 Fourth St for her workshop entitled “Taxes 101 for Writers.” Admission is $5 for Redwood Writers members, $8 for non-members. Call 478-1460 or go to www.redwoodwriters.org. 

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Ann Hutchinson is our Santa Rosa correspondent.
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