If you're running a personal business, whether you're selling products for another company in home parties, you sell homemade products on-line, or you're a freelance writer or photographer like me, you need to keep close fiscal records for each year's income tax. Keep track of both your earnings and your deductions, and save a receipt for everything.
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For anyone who files the family taxes, finding deductions is an effort which gives great rewards. One of the easiest places to find deductions is in tax deductible donations to charities. Any donation made to a non-profit charity can be claimed on income tax as a deduction.
Did you know that you may be able to deduct certain taxes on your federal income tax return? You can receive these deductions if you file Form 1040 and itemize deductions on Schedule A.
If you work from home, be sure to take advantage of any tax deductions that are available to you. For example, if you set up an office in your home that is only used for business purposes, you can write of the space on your tax return.
At the end of the month when I reconcile my bank statement I go ahead and start adding together all of the tax write offs for January. I staple them all together and put a cover sheet on top with the numbers. I do this at the end of every month.
Here are the questions asked by community members. Read on to see the answers provided by the ThriftyFun community.
Can you deduct your rent payment on your taxes? I have been told two different things. So if there are people that are familiar with this please inform us asap. Thank you for your support.
By Vera from Wichita Falls, TX
No you cannot deduct rent; if you could I would be doing it. I have been preparing tax returns for family and friends for years using TurboTax.
Let me add to the previous statement I made. Do you use part of your home for business? In that case you can deduct part of it.
Sorry, no you cannot deduct your rent payments. It is one of the benefits of home ownership.
In the state of Missouri, you can get a credit for rent payments if you are retired and drawing SSI or if you are disabled. It is a percentage of your total rent for the previous year. I don't know about other states.
Here's the specific page at the IRS site that answers your question:
www.irs.gov/
Scroll almost all the way to the bottom under the "Non-Deductible Expenses" heading--rent is there as a no-no.
Unless you are running a home business, in which case you're permitted only a portion of the rent dependent upon how many rooms in your rental you're using for the home office; there's plenty more on that at the IRS site, too.
What pieces of my cell phone bill do I need to take to my tax prep? I started using my personal cell for some calls that were work related in June 08. Do I need to highlight specific calls, or just give him a monthly payment rundown?
When I was working as a tax preparer last season this was a fuzzy area. I'm not sure if the regulations have changed or become more clearly defined this year, but basically if you incur expenses over and above what you would already pay for your personal cell phone, you can deduct those expenses (i.e. you go over your minutes, etc.). Odds are you won't be able to use the deduction anyway, because you can only deduct unreimbursed work expenses to the extent that they exceed 2% of your adjusted gross income.
Take all the information with you, just in case. Your tax preparer should be better able to gauge your individual situation. Hope this helps!
Getting my son's parttime business stuff ready for the CPA. Take the totals for the whole amounts, you take the time to sort them out and list totals.
The total bill (if you have no overage) will be divided out by percent used as a business expense. So you will have to know if 100 calls per week of 500 are work related-20% of the bill gets to be used. If you have overages on your allotment, that is YOUR loss, not to be added, you can't prove those work calls put you over. If you have a flat monthly fee, you know exactly what the 20% is going to be.
These are the figures your CPA will use to do your taxes.
TurboTax is so very easy to understand and use that I wonder why so many people don't prepare and file their own returns. You answer the questions that TurboTax asks you and you enter in the figures from your W2 and any other forms you have. The software will tell you the names/numbers of the forms. If you don't understand a term you can easily find it's definition by going to help. I'd like to make a suggestion to those who are skeptical. Go to www.IRS.gov and find the link to TurboTax.
Figure your own taxes to get a feel for how the software works. If you're not comfortable then you don't have to file it yourself; it's not done until you hit the submit/file function. OR after you have your return prepared by a professional go the the same site; enter your information and see if you come up with the same results he/she did. This way you will learn and become confident in doing it yourself.
Give it a try if you're tired of paying, in most cases a lot of money for a return that sometimes took 5 to 10 minutes total. In a lot of cases there is no charge for TurboTax and free filing. When the software walks you thru the process you may find things that you can deduct that you hadn't thought of and things that you didn't even know about; things that you didn't tell that professional. This sounds like a commercial for TurboTax but I do not have ties with them I just like their software and have used it for years.
