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Tax tips that can help you this season

by Divine Caroline  |  1763 views  |  0 comments  |      Rate this now! 

Shipping Materials and Postage

If your profession requires you to ship materials to your clients, save your receipts for all your work-related stamps, packing materials, and charges from the U.S. Post Office, FedEx, UPS, and the like. Heck, you can even write off bubble wrap. 

Professional Services

When you consult a lawyer or an accountant for a work-related purpose—including preparing your taxes—the IRS permits you to deduct that specialist’s fees, as well as any others you pay for advertising, business licenses, membership in professional organizations and civic clubs, and vocational training. 

Insurance

Health insurance premiums may be skyrocketing in the United States, but the IRS considers your individual policy a tax-deductible expense. Other types of insurance related to your business that you can write off include fire, theft, flood, liability, auto, malpractice, and credit insurance. (Not bad, right?) 

Depreciation and Section 179

If you buy business equipment that you expect to use for more than one year, the IRS will usually not allow you to deduct the item’s entire price in the first year in which you acquire it; instead, you’ll disperse the cost over either five or seven years and itemize these partial deductions on Schedule C annually. This gradual-deduction process is known as depreciation. However, the U.S. government has established an initiative called Section 179 that encourages business owners to invest in themselves by allowing them to sidestep depreciation and write off the entire price of qualifying equipment that they’ve bought or leased during a single tax year (in 2009, the maximum allowance for this purpose was $250,000). Some taxpayers also call Section 179 the “Hummer deduction,” because of all the Hummers and SUVs businesses have purchased under this tax code. 

’Cause I’m the Taxman

If you’ve always worked for companies that withhold your taxes from every paycheck they issue, cultivating the fiscal discipline that self-employment requires can be a rude awakening. Even when you believe you’ve acclimated to your home office and your irregular schedule, you’re still faced with the knowledge that IRS will be watching you to ensure that your business operating costs qualify as “ordinary and necessary” expenses. But take comfort in these words from June Walker, author of the useful book Self-Employed Tax Solutions: “Look at everything that you do as a possible business connection and define your business as broadly as you can.” By analyzing your professional overhead from every possible angle, taking advantage of any windows of opportunity the IRS offers you as a sole proprietor, and, most of all, maintaining an immaculate paper trail, you may wind up pleasantly surprised by how little you end up owing for your quarterly payments to Uncle Sam next year.

 

 

 

 

About the Author

DivineCaroline.com is a unique offering where women come together to express themselves, find answers and share life through storytelling.

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