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The Top 10 Deductions Your Business Should Be Taking
Are you unsure that you are getting all of the small business deductions that you should be getting? If so, then consider what the top ten deductions for small business are and find out if you are applying for them.
First, the most overlooked is that of car deductions such as traveling to business meetings and other business related activities. Next, office expenses should be noted. This includes everything from your office furniture to the utilities that it takes to keep it running. Business travel is another consideration. Remember that you get 100 percent deduction for your travel and accommodations and another 50 percent on your meals. Meals and entertainment are just as important there. Depreciation, rent for equipment and tools, and supplies are also deductions you may miss.
The others include legal and professional services, insurance and business start up costs.

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If you’re not sure whether you have a simple tax return you can do yourself or you wonder about missing significant tax advantages or are concerned that you might be making mistakes, use the checklist below from the American Institute of Certified Public Accountants to help you decide whether you should hire a certified public accountant to help you prepare your tax return.

You may want to consult with a CPA if you:

• Bought or sold a home. You’ll want to take all allowable deductions and make certain you qualify for the personal residence exclusion.

• Got married, divorced or your spouse died. Only a competent tax professional can guide you through the complex tax rules that pertain to assets passing through estates.

• Had a baby or adopted a child. A CPA can explain in plain English the sometimes dumbfounding array of investment options for saving for a child’s college education, as well as details about the child credit, child care credit and earned income credit.

• Have a retirement plan, such as an IRA, 401(k), Keogh plan, a pension or an annuity.

• Recently bought or started a business, own a business or work from home. A CPA can advise you on whether you should operate as a corporation, partnership or sole proprietorship.

• Acquired rental property or have rental income. A CPA understands the complex tax rules that apply.

• Have needs for estate planning and need to understand all the ramifications of property taxes.

Like your doctor, your tax preparer knows a lot about your personal situation, so continuity of service is also an important factor. That’s why, for many individuals, choosing a CPA is the right choice.

CPAs are college-educated, licensed professionals certified by the states in which they practice. They have passed a rigorous licensing exam and are required to adhere to strict ethics standards, as well as to stay current with evolving tax laws and regulations. They are not part-timers who took a crash course in a few basic tax rules, operating out of a storefront. Finally, if a dispute arises about your tax return, only CPAs, attorneys or enrolled agents are authorized to represent you before the IRS.

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The last thing most people think about when starting a business is doing taxes. But proper planning will make doing your taxes much easier - and keep the IRS happy!

Here are 3 simple tips for keeping proper records:

1. Whenever you buy anything for your business, keep the receipt!

Not only will this make record keeping a lot simpler, but if you are ever audited (having your tax return reviewed in detail by the IRS), you can prove your expenses, and save yourself money.

2. Write down all your expenses and income as they happen.

As your business grows, you’ll have more and more activities to keep you busy. The last thing you’ll want to do each April 15 is to organize your records for the year. So, it’s a good idea to write down all your financial activities as they happen. You’ll find preparing your taxes will take much less time if you are organized.

3. Learn how to save money on your taxes.

As you learn about taxes, you’ll find that there are many deductions (expenses that reduce your income, and therefore your taxes) you can take that are not obvious. When using your home office, you may be able to deduct (at least partially) repairs you make around the house, utilities, your home’s value at the time you start your business, and more.

The more you know about taxes, and the more organized you are in keeping records, the more time and money you’ll save at the end of every year!

What happens if you don’t keep proper records?

Individuals with small businesses are the most likely to have their tax returns audited by the IRS. If you don’t have a receipt, you will likely lose the deduction and owe the IRS money.

And while an audit does not have to be feared, you should be prepared - the more organized your records, the easier it will be to prove your case.

If you don’t have one, get a file box and some folders at your local office supply store (these supplies are deductible, so keep your receipts!) and create a filing system for your business. Put all your receipts in the proper folders, and put them in a safe place.

Another way to save yourself time is to record all of your business transactions - expenses and income - on a spreadsheet on your computer. Keep a column for income, advertising, supplies, etc. You don’t need to be a computer expert. But keeping accurate, organized records will help you save time when you fill out your taxes at the end of the year.

And it can help you plan, by giving you a snapshot or your financial progress whenever you need it.

Which may come in handy when you need to place ads, borrow money - or take a much needed and well-deserved vacation!

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If you work in a service where you get tips, guess what? The IRS expects you to report them and pay taxes on them.

Your Tip Earnings and Taxes

The internal revenue service takes a very simple approach to tips. It views all tips you make in your job as taxable income that must be reported and for which taxes must be paid. Put another way, the IRS has a simple but brutal view towards taxes

Now tips come in different forms. Some are received directly from customers while others are automatically added to the customer’s bill. The IRS takes the position you must report and pay taxes on both amounts. This also includes taxes you earn through any group splitting where all tips are collected together and then split amongst the employees. On top of this, the IRS also takes the view that any non-cash tips such as tickets to something are also income that should be reported and taxes paid on. Put another way, the internal revenue services gets you coming and going.

To make things a little more brutal, the internal revenue service requires you to take some steps in reporting tips. If your tips total $20 or more in any calendar month from a single job, you are supposed to report the total to the employer by the 10th day of the next month. The employer is then supposed to withhold federal income tax, social security and Medicare taxes from your paycheck. Keep in mind that the failure to do so can lead to the placement of a 50 percent penalty on your taxes. Obviously, the IRS is fairly serious about getting its money.

Tips paid to waitresses, bartenders, barbacks and so on are a hot spot with the IRS and always have. Since tips tend to be given in cash form, the potential for forgetting to report them is particularly high. The IRS seems to think so and has shown a generally aggressive attitude on the subject. If you indicate you are a waitress or bartender on your tax return, but fail to report any tip income, it could be audit time.

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Most people don’t really look forward to filing their tax returns and paying their taxes. As it is, there really isn’t much to look forward to because it is a tedious process that can take weeks to complete. Some people even have the bad luck to raise the interest of the IRS. The trouble is, most of these people’s mistakes are not intentional. They just lack proper tax preparation, and in all probability, must have rushed through the filing process. Lack of preparation and attention to detail are the most common faults of people who often get flagged by the IRS. Let’s face it. Even if audits are not criminal in nature, they are embarrassing and distressing events people can do without.

Filing accurate tax returns and paying correct taxes are not impossible with the right preparation and a good headstart. A good headstart is important in filing because taxpayers get more lead time to organize and prepare the necessary documents. Even if there are lots of tax software available, it is a wise idea to allot a significant amount of time in reviewing past returns, current returns applications, and tax laws. Tax laws are dynamic; they can be changed or revised between the last tax season and the one coming up. There might be some important things in the revised policies that can affect your returns and deductions. Pleading ignorance of the new policies are not acceptable to the government and the IRS because everybody is presumed to know the law. Taxpayers are recommended to review their current applications especially if they’ve been audited before. According to the IRS, taxpayers repeating audited mistakes are not uncommon. Speaking of mistakes, ‘forgetting’ additional income sources is the predominant mistake most people make. The IRS also compares issued forms against reported income on the returns for disparity. Still on the issue of disparity and comparison, returns are checked for names and SS numbers so they must mirror those in the SS records. Wrongly issued forms must be returned and reported to the issuer for corrections.

Wrong sums are also common mistakes due to rushing. Though tax software is usually thought of as a late taxpayer’s savior, early filers can use this software to check their computations. Tax charges can usually be avoided by printing correct sums on returns. Taxpayers are encouraged to file their returns even if their current financial situation makes them unable to pay their taxes. Installment payment is an option that IRS offers. Tax matters are sensitive and can be subjected to random auditing. It is advised that taxpayers keep and file their returns of six years at the very least for reference if ever they are called for auditing. Lastly, since the agency is the one who gets burdened by tax problems, the IRS is open to giving assistance to taxpayers. With proper preparation, filing tax returns can be an easy process.

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Few things threaten your well-being like the harassment and anxiety of persistent tax problems. Most people make 3 mistakes that get them in trouble with the IRS. They procrastinate. They attempt to represent themselves. They hire sub-par representation and now are in MORE need of help than ever before.

These are the kind of services a Tax Attorney can provide: Offer in Compromise Cases, Penalty Abatement Petitions, Full Audit Representations Business Strategy Sessions. Preparation and Filing of Tax Returns. Settle taxes for Pennies on the Dollar owed, Stop IRS wage and bank levies (garnishments), Have property liens lifted, get affordable installment agreements, File bankruptcy against the IRS, Have penalties and interest forgiven, Reduce taxes by running out the IRS' time to collect. Offer in Compromise: Settle your taxes for Pennies on the Dollar owed Professional law offices can help get you a favorable settlement with an experienced IRS tax attorney. The IRS' Offer in Compromise program allows taxpayers to settle their tax debt.

What is an IRS offer in compromise?

It settles your tax liability for less than the full amount owed, providing you can prove you don't have the ability to pay. Depending on how much you can afford, you really can pay "Pennies on the Dollar Owed" in taxes. If it is done correctly - this option could save you an enormous amount of money, and is the best strategy for most taxpayers. You should take extreme caution. You should hire a professional with knowledge of the IRS' procedures. This professional should determine the least amount that the IRS will accept from you. If the Offer is not submitted correctly it will be rejected, or you may be required to pay more than is necessary.

An Offer in Compromise may save you a LARGE amount of money. Do you know that the IRS only has a limited time to collect your back taxes? Let a Professional Tax Attorney determine when the IRS' time limit to collect taxes runs out. In most cases the IRS has only a limited time to collect the unpaid taxes. You must CAREFULLY evaluate exactly when that time period will run out. Your troubles may be solved. and moreover: If the IRS' time has run out, or if it will run out soon, your troubles may be over.

Delaying tactics may be used to stall the IRS while their time runs out. Once the IRS is out of time, they MUST stop ALL collection action against you.

The IRS MUST release all property liens

TAX RETURNS - FAILURE TO FILE

Many people fail to file Individual Income Tax Returns for a variety of reasons. Some reasons are innocent, although the most common is the fact that people can't afford to pay the taxes.

When this happens it becomes difficult to get back into the system. "I filed for 1998. I couldn't pay for 2000, so I did not file. Then I was afraid to file for 2001. I haven't filed since then. What can I do now?"

If you do not file Income Tax Returns you commit a criminal offense. However, no one who has voluntarily filed back returns before being caught has ever been criminally prosecuted. That is the first key: filing BEFORE they catch you.

IRS Penalties
Some IRS penalties can be as high as 100% to 150% of the original taxes owed. Even if you could pay the taxes owed, the extra penalties will make it impossible to pay off the entire balance.

The IRS imposes penalties to punish taxpayers and keep them in line. The IRS does forgive penalties. Before you pay the IRS any penalty amounts, you may want to consider requesting the IRS to not punish you because it wasn’t your fault.

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When it comes time for people to file income taxes many of them do not know what they need or what to expect. In fact, filing taxes is a first for many people!

There are many things that people should know when they are about to file income taxes for the first time, as well as the second or third time. In fact, filing taxes is one thing that many people will never forget, especially if they end up having to pay the government money! Before you file income taxes, the best thing that you can do for yourself is to have all your receipts, W-2's, or any other paperwork that you will be using all together.

When it's time to file income taxes one of the most important things you must know is which way you are going to be filing, whether you are filing singly, married-jointly, or married separately. It is very important that you know how you're going to be filing especially if you are married! Also, if are married, you must make sure that your spouse is filing the same way that you are! Although, generally only one of the spouses does the filing, unless they are separated.

Another important thing that you should know before you file income taxes is the due date that the taxes must be filed by. However, the due date may vary from state to state. So, depending on which state you live in; the due date is different. However, for most states the due date is April 15th. If you are just moving to another state and do not know when the due date is, it would be a great idea to find that information out!

Many times when people file income taxes they are not sure of what they are doing or whether they did them correctly. However, once they are done you must hope that they were done correctly; there is no changing them once they are turned in!! So for many people, if they do not know how to file taxes, they will either get a program for their computers that tell them where to put the information or they take their taxes to a professional tax company. However, when you file income taxes through a tax company, the company charges a bass rate and then per form that must be filled out. However, when you file your income taxes through a tax company they do guarantee their work. By that, if the IRS were to audit you, the tax company would be there with you when you are being audited.

The most important factor when filing your income taxes is that you feel confident about them!! Your taxes represent you, and only you!!

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Most often when people have income taxes, they usually file them the same way each year. However, more and more people are changing the way they file their taxes!

In recent years, more and more people are beginning to change the way they file taxes. Many of the people that are changing the way they file taxes, they normally filed their taxes the old fashioned way; filling out the forms with a booklet then mailing them in to the government. However, many are now learning how to file taxes online for free! In fact, learning how to file taxes online for free is a really simple thing to learn; almost anyone can learn it!

In fact, most people that have learned how to file taxes online for free have said it was the best thing they could have done for filing taxes! In addition, most of the younger kids that work are also learning how file taxes online for free. In fact, when younger people learn to file taxes online for free, they are better off! That way, they will know how to file the taxes themselves, and they may be able to show others how to file taxes online for free as well!!

When it comes time for people to learn how to file taxes online for free, it is very simple. In fact, most people don't even know how simple it is! One of the most difficult things in learning how to file the taxes online is finding the perfect website to go to! Some people find it very stressful because there are so many different companies as well as websites to choose from! Another thing about all the different websites and companies is that they all seem to be doing the same thing! In such cases like that, many times you have to go with a name that you know and trust! In fact, there are many well known and trusted names that allow people to file taxes online for free. One of the biggest and most known companies is TurboTax. In fact, TurboTax also allows you to purchase any of their software that you may need! Another company that people know is H&R Block. However, at H&R Block people have to pay for the services they provide, so it actually is not free of charge!

Besides using many of the well known companies website, one website that many people are now switching to is the IRS website. On that website, not only can you file your income taxes but you can also use all the different browsers, as well! The IRS websites is now one of the most used sites for people that file taxes online for free!!

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In the United States, there are only six states that do not have sales taxes. For someone who is travel from a state with no sales tax to one of the states with sales taxes, it can sometimes get confusing. After all, you are used to paying the price that is marked, and sometimes may even have the exact change ready for the cashier, only to have to dig into your pocket or purse for more money. Of course, sometimes it can happen in reverse as well when someone from one of the states with sales taxes visits a state with no sales tax. In addition, it can become difficult for someone who travels to different states because the rates are different. Until you learn the rates for the different states you visit, there will also exist the confusion. You will eventually become used to the taxes in the states you visit the most and be able to know before you finalize your purchase how much you will need to pay.

You thought you didn't have to pay taxes if you didn't live in that state, right? Unfortunately, exemption from paying taxes to states with sales taxes only applies to merchandise that is shipped or delivered such as cars, furniture, or catalog or Internet purchases. Again, there are many exceptions, so before you buy something out of thinking you won't have to pay taxes on it for your home state, be sure to check the exemptions within both your state and the state where you are buying the merchandise. As a shopper, you will not know all the rules and regulations that apply to shopping in states with sales taxes, so you have to depend upon the retailer to keep you informed about such matters. Of course, if you have not traveled yet, you are free to contact any of the states with sales taxes in order to find out what their rules are and where any exemptions from sales taxes apply.

Sales taxes can be a complex matter for those who are from another state, so unless you are a tax expert, do not attempt to interpret the tax law on your own. The retailer knows whether he needs to charge sales tax based upon your situation, so allow him to use his expertise to give you the right advice. After all, it falls on him if he doesn't collect taxes on your purchase when he files his sales tax return. Someone who deals with taxes on a daily basis as a retailer does should surely know if a transaction is taxable or non-taxable.

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When you buy a house or property, the mortgage company that holds your mortgage usually has an escrow account set up, which holds your monthly payment towards your homeowners insurance and property tax. The standard procedure is for the mortgage lender to send you the money in a form of a check in December to pay your property tax. If you do not receive this check by the end of December, you should consult with your mortgage lender. The idea of paying your property taxes before the end of the year, means you can claim it on your current years tax return that you will file in January or February.

People expect to pay their property tax before the end of the year so they can take the tax as a deduction on their taxes. If you do not receive the payment before the end of the year, you will have to wait until the next filing season to claim your property tax, which means this year's property tax deduction is not available and therefore, you have one less deduction. This means a lot to people that rely on deductions to reduce their total tax liability. You can still claim your mortgage interest, but not the property tax.

Some people do not have an escrow account set up by the mortgage lender for one reason or another. If you happen to be one who does not, you have to save the money yourself. This is sometimes very hard for people to do, especially if you are on a tight budget. You could wait until you receive a refund for your yearly tax returns, but you might miss the first installment date, which in most states is January 31. The second installment is then needed by the end of July.

If you miss the first installment, you are not able to participate in the installment plan. You can still do it this way, but you will be charged a penalty and interest on the outstanding balance. Many people have found that the interest rate can accumulate quite rapidly if you do not have the funds available when needed. This can cause a strain with the county and the homeowner. The county wants their money. If you leave your property tax liability go to long, you might find yourself in quite a predicament. The county can and will come after your house for the money.

It is always better to have some form of escrow account set up by your mortgage lender or by you, therefore, the money will always be available to pay the taxes. If you fall behind, it is very important to get caught up as soon as possible in order to prevent a lien being put against your property and risk an auction of said property to recoup the delinquent property taxes. Property taxes owed on a property never go away unless they are paid. Property owners need to plan ahead, especially if the mortgage lender does not provide an escrow account to save the money for you.

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