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Tax Deadlines passed…did you get all your credits?

This year I took forever to do my tax returns.  I normally have them done by the first week of February.  This time around though my main reason for procrastinating was because I didn’t have any business expenses to write off.  I knew I would definitely have to pay taxes and was not looking forward to finding out how much. If you currently do not have your own business perhaps the following will give you an incentive to start that fine idea that you have brewing in the back of your mind.

One of the nice things of having your own business, whether its owning a small business, a large corporation or being an independent contractor, is the tax write offs for expenses.  I am not going to go into great depth here as I am not a certified tax adviser, but will mention the few things that I was able to write off on my personal taxes when I was an independent contractor.

  1. Mileage – If you use a vehicle for your business then you can write off the mileage.  I used my vehicle part time to see clients and go to company meetings.  In a detailed journal, I wrote down, the location of where I was driving from, the location of where I was driving to, the total miles driven one way and a calculation if it was round trip.  Keeping details of all items you write off is essential!  In case of an audit you have the proof you need and the peace of mind.  I have heard of writing off gas but am uncertain of the details so please see a tax adviser for more details.
  2. Internet – If your business requires you to access the internet then it is a business expense.  Keep receipt of your monthly bills and a record of your payments.  I live at home and the internet bill is in my dad’s name.  I had my mom write out monthly receipts as proof that I was paying this bill.  So keep that in mind if you use items such as the internet in someones name other than your own. For a few bucks you can  purchase a receipt booklet at Staples to have them document payments and details concerning the expense….that was easy.  
  3. Staples – Speaking of receipt booklets, any office supply item that you purchase from Staples or any other office supply location you frequent can be written off as a business expense.  Again, keep all receipts just in case you get that phone call.
  4. Phone Bill – Whether it be your cellular bill, land line phone number, fax line…you get the drift, If you use any of these to conduct your business then, you guessed it, you can write it off.  Keep all monthly receipts of charges being made and payments.
  5.  Food –  Did you take your clients to breakfast, lunch or dinner?  Did you pay and keep your receipt?  Taking clients out to eat is a business write off!  On my budget I preferred going to coffee shops.  Coffee shops, if you pick the right ones can be an inexpensive way to productively meet clients and fellow coworkers.
  6. Self-Help – While books can fall under the category of office supplies, one can not limit their options when it comes to self help.  Seminars, retreats and other avenues can also be included in your business expenses as it counts towards furthering you education and adds value to your business.
  7. Travel – This topic is tricky as there are specific things you can write off for travel while other things are a no no. Please contact your tax adviser for the official list of items that can be written off in this topic.  As far as I know you can write off accommodations, car rental or vehicle transportation (trains, subways, etc), meals related solely to the business meeting and airfare if any.
  8. Licenses – Do you have licenses required to be in your business?  The fees associated with getting and keeping the license are business expenses that qualify for a write off.
  9. Large Purchases – Did you buy a large purchase for your business?  Did you keep the receipt?  I had to purchase a laptop as I had to travel often to clients houses and to the main office.  Depending on the amount of the purchase it might be spread over time.  There is a limit as to how much you can write off in a given tax year.  
  10. Start Up Costs – Did you have a start up cost for your business?  Did you keep all the documentation?  Then you can write it off.  It is a business expense.

I can go on a bit here, but you get the point.  Any item that you have to shell money out for, if you own your own business, should be documented extensively.  The more details the better!   Having a tax consultant or an adviser is a must.  I use turbo tax to do my taxes.  It walks me through the process of things I might miss and lets me know when I need more information.  It keeps track of all my prior tax years and transfers items that repeat, like common business expenses.  This particular year I did not have my business but it asked me about it just in case.  It also keeps track of items that might have carried forward, like the large purchases I mentioned above.  Having a CPA for a friend is also a good benefit as they may offer you advise for a discounted price, that you can also get a receipt for and use as a tax expense.  Yup, you can also write off your tax preparation expenses.  This topic is so big I’ll let you do your own research as many items on my list might not pertain to you.  I have enclosed a few links that are both business and tax related to get you started. Have a terrific Tuesday.

Until then
djrelat7
Jeff Schnepper – The Basics 10 big deductions too many people miss
Use your 401(k) to start a business
Get the most out of itemizing on taxes