[Patrician]

If you get money back, you probably file your taxes January 2. If not, April 14.

It is good to keep your tax records organized all year around. Much easier not to miss anything that is due you or that you owe.

Never too soon to get started if you haven't been doing that.

Remember that every single dime you spend on your business is a tax deduction if you file to itemize deductions. This works even if you have a job and pay income taxes deducted from your check (in fact I used to come out better that way).

However if you do not work outside your home at all, you can take more deductions than if you have both a job and a business.

I used to keep a cool Excel spreadsheet all year and add to it everytime I bought something or received money. A very simple formula on each column would recalculate everytime there was an addition.

I have gotten lazy, but still keep a folder with all receipts and check stubs and then before I make an appointment with my tax guy, I pull together the spreadsheets and receipts.

I print out statements from Paypal and other payment processors which really helps. I copy all my credit card statements as I pay my bills each month and put them in the folder.

I save money on my taxes because I walk in with an organized report of expenditures and income, rather than a big box full of junk for the tax preparer to figure out.

To get exact numbers and percentages go to the IRS website.

Some examples of deductions;

Whatever space (square feet) you have in your home that you use EXCLUSIVELY for office space, can be figured as a percentage of your rent - (if you also work outside the home, then they want a door on the room that is your office - if you work 100% at home, they don't care about a door)

A percentage of your utilities, (electric/gas), percentage of phone bill, home owners insurance, security system costs, medical & dental insurance/expenses, charitable donations -

PC maintenance, software, technical support (including blog services or site enhancements) office supplies, equipment (computer, chair, desk, flash drives, etc), training, business cards, tax preparation fees

Hosting, domain name registration, business license, your ISP expense (internet service provider)

Membership dues for all affiliate programs (my guy calls these advertising); marketing and advertising resources and tools -

Payment processing fees such as the fees charged by Paypal for receiving money; bank account fees for business account.

If you use your car even just to go to the office supply store, you can deduct mileage and gas.

If you have any advertising on your car such as a plaque or sign, you can deduct most automobile expenses since technically every time you drive your car you are advertising your business. (you have to check what all this includes as I have not done this personally yet)

These are all perfectly ethical and legal deductions in the US. However, as a caution do not ever declare a deduction for a penny that you don't have a receipt for.

There is a lot of abuse and as such they can be strict on home businesses. Once you get audited, they will be on your case for years, particularly if they find anything 'funny'.

I will add to this as I think of more. If anyone sees any changes that make any of what I have listed not applicable this year please advise here. They do change the laws and I don't know this year yet.

[Doug Gorman]

Pat,

This is a very crucial issue for home business owners. I am so happy that you are pointing this out now...people can never start too earlier preparing...

Great post Pat,

Doug

[mlipson]

Thanks Pat,

This is a wonderful post and right on time. I have already been thinking about tax time and what all I could deduct. Your post is great, and I need all the advice I can get.

Thanks again,
Martha

[Matt Helphrey]

Hi Pat,

Thanks for the advice. I am totally clueless on what I can or should do so I certainly appreciate the insight.

My brother is a CPA so hopefully he can help me sort some things out.

Matt

[Dan Grossman]

My business was audited, they found everything I reported was accurate, and I never heard from the IRS again.

But shipping reams and reams of paper to prove all the pennies was annoying (and time consuming and expensive since I was across the country at the time). Over 10,000 PayPal receipts a year alone... is a lot of paper. And I'm a one person business, so I had to print it all out on my little inkjet printer :p

[Alan Thomas]

Hi Pat,

I was just working on my accounts when I saw your post.

Isn't it funny that no matter where you live, the tax men can find you.

But seriously, by keeping good records you will save yourself many hours of heartache in the future.

Alan

[Patrician]

http://www.warriorforum.com/plug-pro...-employed.html


Check this resource one of our great members posted recently that is very relevant

[Stephen Meyer]

US Tax Time Soon - Start Preparing Now

I am getting it all together and will be ready. As soon as I file 2005 I'll be good to go for 2006. It's great to be prepared.

[Patrician]

Hey - Uncle Sam Needs YOU!

Really? What happens when you file years late? Do you get lots of penalties?

I already pay $200 because self-employed is supposed to pay taxes quarterly and I won't. I want the money in my account.

[Dan Grossman]

Originally Posted by Patrician

Really? What happens when you file years late? Do you get lots of penalties?

If you didn't purposely make up numbers or otherwise evade taxes, then an unpaid balance would just accrue interest until it's paid. If you did, say, purposely underreport your income and not pay the taxes, the IRS can add on fines and even sue you (with jail time if convicted).

[Patrician]

I am much too paranoid to under-report or defraud (besides my sister is a criminal fraud investigator for the Treasury Dept)

I have receipts for anything I deduct. Every cent.

Is not paying evading?

People just tell me to skip paying my taxes for a year or so - hmmm wonder what the interest is like.

[Stephen Meyer]

Pat, I don't know, am I late?

[Charles Boustany]

Hi Pat
Thanks for the reminder As alan said the taxman will reach you wherever you are in the world
In my instance in the UK our ONLINE deadline is the 31st January offline was October so for those in the UK DONT FORGET

Cheers
Charles

[Doug Gorman]

Forget taxes...I am moving to Panama, or somewhere warm where you can live tax free...

Doug