Here is a listing of frequently-asked questions and tax tips, as well as changes for this tax year.
Important: New Business Reporting Requirements
I can’t afford to pay my taxes now. What should I do?
If you owe money on your tax return but you can’t afford to pay it, don’t fail to file timely. Instead, file the return timely and enclose what you can afford. Many taxpayer’s do not realize that the penalty for ‘Failure to File’ is 10 times greater than ‘Failure to Pay.’
I was issued a 1099. What’s my best course of action?
If you have self-employed income or you were issued a form 1099, you should strongly consider making a SEP contribution rather than and IRA contribution. A SEP contribution (Simplified Employee Pension) is fully tax deductible and can usually be larger in amount than an IRA. Further, the SEP gives you other options an IRA doesn’t.
I took some courses this year to improve my work skills. Can the cost of those be deducted?
You can deduct certain educational expenses. In general if the education is required by your employer or is to improve your skills in your existing profession you can write it off. Nowadays, with the need for higher education to secure employment, this is a deduction that can save big bucks and should not be overlooked.
What should I do about charitable contributions?
If you make a charitable contribution of $250 or more, you should obtain written acknowledgement from the charity and keep it with that year’s tax file. You do not have to enclose the receipt with your filing to the government. This is an ever changing area of the tax law.
What do I need to claim an exemption for my child?
If you have a child you must have his/her social security number in order to claim an exemption. This is true regardless of your child’s age. You can contact Social Security at 1-800-772-1213. Make your life easy and just fill out the forms in the hospital when your child is born.
Tips for Small Business Owners:
• Making sure to keep up-to-date records of all of your financial activities is important. This includes paying bills, payroll, expenses, and profits. This information is required in order to properly file taxes and can cut accounting costs at tax time.
• Checking all your billing statements should be routine. Often times spotting extra, hidden or incorrect charges soon after they happen may help resolve issues that cost you extra money for nothing.
• While looking at your statements or invoices, it’s a great time to review the expense of doing business. If you appear to be spending too much money in one area, you may wish to find a cheaper, more cost effective alternative.
• If you find yourself too busy to balance your own financial records, then you should not hesitate to hire an accounting professional to keep track of your transactions. An accounting professional can be your greatest asset while doing business. Accounting professionals have access to information and knowledge to help you make the best decisions for your business. This will help you stay on top of your financials while still being able to focus on your business.
