Tax Refunds & Advice

If you are self-employed you are probably familiar with schedule C. Even though you may know a lot about your tax situation and what the IRS expects from you, filling out and filing schedule C is not always the easiest thing to do. Here are a few schedule C problems to avoid:

1. Don’t forget to track your income and expenses. Many self-employed professionals get so excited and caught up in their business that they forget about this detail. It is important to have a flawless system for tracking income and expenses. Any mistakes or omissions will throw your schedule C out of whack.

2. Know which deductions are for business and which ones are not. Take for instance a freelance writer who purchases a new computer. Even though you may use the computer for business, if you also use it on a “personal basis” you cannot deduct 100 percent of the purchase price, maintenance, etc.

3. You need to keep great records in case you are audited. A tax audit is not something you ever want to go through, but every year millions of Americans face this scenario. The IRS is aware that self-employed professionals are in a unique situation, so they will be watching you. Be sure to keep accurate records in an easy to understand format. When you have documentation to backup your claims you never have to worry about a tax audit ending badly.

If you need to file a schedule C it is important to avoid the problems detailed above. These potential issues wreak havoc on many taxpayers every year. 

Starting a business changes your tax situation. You are now in charge of your personal return, as well as that for your business. But don’t be scared, this is something that millions of people deal with every year. There are many ways to better your situation, and finding business tax deductions is a good start. Simply put, the more deductions you find the less money you are going to owe in taxes. And that is what you want, right?

Here are three recommendations for finding business tax deductions:

1. Always keep your eyes open. Those who miss deductions are the people who are not looking for them. If you are always thinking about the next deduction there is a good chance that you will find them more often.

2. Seek them out. Don’t sit back and think that deductions are going to come to you. Buy office supplies when you need them, track mileage if you are visiting a client, and think about creative ways to increase the number of deductions you can take advantage of.

3. Ask your tax professional for guidance. A professional can give you a long list of business deductions that you may qualify for. To go along with this, he can tell you how to best take advantage.

Believe it or not, business tax deductions are out there. And not only are they out there, they are available in large numbers. You should do whatever it takes to increase your deductions and lower your tax liability. This will make you a happy person when it comes time to file your returns. 

There may come a time, now or in the future, when you are going to prepare a tax return on your own. In the past you may have hired a professional, but now you realize that this is no longer necessary. Preparing your first tax return can be intimidating. But is this going to slow you down? Hopefully not. Once you learn the ins and outs and are willing to move forward you should be ready to prepare your first tax return with 100 percent accuracy.

The first thing you should do is collect the proper documents and other related information. Do you have all your income documents such as a W-2 and 1099? How about receipts for tax deductions? These are all things you need before you begin to prepare your return.

As you move on, you should obtain the proper forms from the IRS. Starting with 1040EZ form is a great idea. This is the simplest way to prepare your tax return, and it is a good start for those who have never done this before. The only problem with this form is that you can only use it if you are married with no dependants or single.

You should definitely file your first tax return on paper. This doesn’t mean that you have to submit the return this way, but the traditional method is where you should start. Once you have all the paper forms filled out you can then decide whether or not you want to use tax software to make things easier and to find additional deductions.

No help, no problem. Being organized and having all the proper forms will allow you to prepare your tax return with accuracy and efficiency.