Elementary deduction

A new set of books helps demystify deductions just in time for tax season.

By: Lauren Otis
   We’ve all had that feeling when it comes to our taxes. We read about a lesser-known but important deduction, or someone describes one, and we realize that for years we could have taken it ourselves but haven’t and instead have effectively been tithing part of our income to the Internal Revenue Service.
   Anne Skalka has that feeling many times each year.
   Ms. Skalka, is a certified public accountant who heads Anne Skalka & Associates in Lawrence. She handles tax matters for a client base that includes individuals, small businesses, estates and trusts, and tax exempt organizations. After years of seeing how many deductions her clients were missing out on simply because they weren’t aware of them and couldn’t bring them to her attention, Ms. Skalka has come out with "Tax Deductions A to Z," a series of books that simply and alphabetically lists deductions both common and obscure for a variety of occupations.
   Ms. Skalka, a talkative and engaging woman in her early 50s, plainly enjoys her work because of the interesting people with interesting occupations it places her in contact with.
   "I love what I do," she says, acknowledging that on one level her new books are an attempt to bring a little fun and inspiration to what so many people regard as the drudgery of filing tax returns. "I’d love to make what I do more interesting and exciting for people, because I find it very interesting," she says.
   Ms. Skalka, who estimates she completes about 450 returns each tax season — which spans January through April — has been in practice since 1980, on her own since 1991, and plainly has heard it all when it comes to deductions. She has fielded questions on whether everything from pet health insurance to baby sitting and daycare expenses to music lessons, parking tickets, even ballet lessons for an exotic dancer are deductible.
   But just as commonly, and more unfortunately, are the instances where clients are not even aware of deductions they have that they could take, Ms. Skalka says. An accountant’s work, after all, is only as good as the information clients give them.
   "That is one of the main hurdles we face from the client, is trying to pull out the information from them," she says. "Sometimes only accidentally something will come to light, and then there is a whole other avenue of deductions we can talk about," Ms. Skalka says, adding "I try to draw them out as much as possible but sometimes they don’t know where to start."
   People with home offices, who are self-employed or have income-generating sidelines, often miss out on many deductions, Ms. Skalka says. "They miss a lot, they don’t understand about the home office expense. They don’t understand that the stuff they use to generate revenues, most of that stuff is deductible."
   She notes that she will ask people what their business expenses are and some reply, "I don’t have expenses, I work at home." In particular, "The mileage deduction is something that a lot of people miss out on. In 2007 the rate is 48.5 cents a mile, so if you don’t take that deduction you miss out on a lot," she says.
   Because of this confusion, Ms. Skalka says that when Blanche Brann of Boxed Books in Lawrence approached her about doing a series of tax deduction books, she leapt at the chance. The project took almost a year, even utilizing the input of a researcher. Everything had to fit in with Ms. Skalka’s busy professional life, including her professional practice — "from Jan. 15 to April 15 I am pretty much out of the picture," she says — and her service as secretary of the New Jersey Society of CPAs and being a member of Zonta International, a worldwide service organization working to advance the status of women.
   The series includes one volume for the "general taxpayer," and another "log book" in which deduction information can be recorded. The remaining 10 volumes focus on alphabetized tax deductions for a specific profession: clergy, educators, fire, police and EMTs, freelance workers, healthcare professionals, the self-employed, members of the military, sales professionals, trades people and union members, and lastly, writers, artists and performers.
   "The fact that we were able to organize it by occupation, that is pretty cool," Ms. Skalka notes. "I don’t think there is anything else like this on the market," she adds. "I’m very excited about this."
   Each book comprises, effectively, "an encyclopedia, in very plain language, of some very basic tax facts, what is deductible and what isn’t," Ms. Skalka says. Care was taken not to oversimplify, but not to go too deeply into tax jargon and the arcane either.
   "Every book has an introduction. I give them the basics of how you arrive at taxable income," says Ms. Skalka. Readers are also instructed in the thresholds, caps and other limitations that often apply to deductions. And each describes basic records questions — "I get questions hundreds of times a year from people on how long they should retain their records," Ms. Skalka says.
   She emphasizes that the books are not do-it-yourself tax preparation books, but are simply intended to inform people in various occupations about the deductions they can and should take so they can give tax preparers as comprehensive a picture of their finances as possible and reap the benefit in lower taxes. They actually will help CPAs do a better job on behalf of clients, she notes.
   Tax law governing deductions often involves a general rule with a number of specific exceptions or elaborations which are the result of previous court rulings involving a deduction, Ms. Skalka says. If clients know enough generally they can inform her and she can then go into the specifics and test cases.
   "You can’t do a good job for the client if the client is totally ignorant of what the rules are. The client needs to know enough to ask questions," she says.
   In one instance, Ms. Skalka notes that cosmetic surgery is in general considered a personal expense, even for business executives and other professionals who may feel they need to avail themselves of cosmetic surgery to stay looking young and competitive in a corporate world that rewards appearance as much as substance.
   "But, if you are an exotic dancer, and you need enhancements, it is a deductible expense, because it has become a necessary part of her occupation," Ms. Skalka says.
   Ms. Skalka says she’ll encourage all of her clients to buy copies. "I’ll tell them to buy one and I’ll autograph it," she says with a laugh. And, as is noted on the cover of the series, the purchase of the books themselves is tax deductible.
   Putting together the series, Ms. Skalka says, "has been a very good experience for me, pulling together a lot of isolated facts I already knew. For my clients this is really going to help. I feel I am more aware of what is out there (in the realm of deductions) and that is a good thing."
   If the current series sells well, Ms. Skalka said she definitely wants to expand it to other occupations.
   The 12- book series "Tax Deductions A to Z," published by Boxed Books, will be available in early December. More information can be obtained at www.boxedbooks.com.