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Friday, April 14, 2006
Your Home Business & the IRS
We thought it fitting to post on this topic today, on the eve of the income tax due date, even though most of you are certainly so organized that you have already mailed in your 2005 package to the IRS. But just by way of reminder, here are some thoughts to consider for filing for tax year 2006.
If you have not yet organized your office well enough, now is a great time to start. Keep all of your records and documents in order to be able to file easier at the end of the year. Home business owners have their own set of allowable deductions that differ from other businesses. You have a chance to save much money by knowing how to take advantage of your home business situation.
Know your deductions. There are several deductibles to which the home-based business owner is entitled. Automobile or vehicle deductions can help with mileage, gas, insurance, or other related expenses. You can write off your business cards and stationary, plus any business meals and entertainment. All business traveling expenses, education, and even the interest on your business credit card can be counted in your favor. If you use a computer strictly for your business, the Internet service costs and expenses related to your web sites could be deducted as well. The cost for office furniture, supplies, your phone and other communication devices related to your home business can be deducted. Any postage or cost for delivery of goods is also considered a business expense. The home-based business owner can also get deductions for rent and utilities that keep the business running. Deductions that you will want to take on your 1040 form are:
* Half of your self-employment tax amount, which gives you a huge savings.
* As much as 100% of your medical insurance costs for you and your family.
If you make more than $600 per year in self-employment income you must file your taxes for this. You may qualify for the C-EZ form if you have had a bad year or just got started. Your total business expenses will have to be less than $5000 for that year; you have no inventory, or have to file a 4562 form (depreciation and amortization form). Make sure first and foremost that your expenses are less than $5000 and that you have taken all the deductions to which you are entitled.
Deciding who will be doing your taxes is no small matter. You need to decide if you plan to do them yourself or if you want someone else to do them for you. Using a tax professional has several advantages. Tax professionals can save you much time and unnecessary frustration. They can spot deductions you might miss or of which you might not be aware. Hiring a tax professional also saves you from being responsible for any errors that were made in the preparation, which could end up saving you thousands. No matter how you decide to prepare your taxes be sure to claim all possible deductions to save you in the long run. Businesses have been given tax breaks for a reason and you should make sure you know which you qualify for and how to save by using them legitimately and legally.
Lastly, remember this post is only a reminder of possibilities for readers. For detailed and official information, please visit the IRS website or speak with your tax professional. Have a worry-free April 15th!
To read about a great online home business opportunity,
visit www.HomeNetMonies.com today.
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