Saturday, March 16, 2013

Keller Williams - Weston (Sean Lam): Realtor Tax Filing Tips

Brought to you by Sean Lam Keller Williams:

The independence that comes with being your own boss is often a double-edged sword. On one hand, it’s liberating to be free of corporate shenanigans; on the other, you’re on your own figuring things out, including taxes.

Filing taxes can be a source of dread for self-employed Americans. The trick is not to see the tax code as bureaucracy meant to confound you but a tool to give your homegrown business a leg up.

You can deduct a host of expenses if you keep good records and know what to look for.

Here are nine tax tips for both making your 2012 returns less of a headache and a bit more financially advantageous:

Remember that you didn’t pay taxes upfront. This can be a shock to first-time filers, but self-employed workers pay no upfront taxes. While salaried workers get paychecks with taxes already taken out, that’s up to you, since you are your own payroll department.

If you did not set aside money to pay the tax collector, your 2012 bill might be high. To avoid problems next year, you should start making a plan for 2013 now.

Read about self-employment tax burdens at irs.gov.

• Don’t fear the home office deduction. The IRS has been cracking down on abusers in the last several years. But if you are honestly using a space for your job and can conform to guidelines for an exclusive-use space (don’t put a bed for guests or video games for the kids in there), you shouldn’t be scared of this big-time deduction.

Qualified home offices open the door to breaks for real estate taxes, utilities, insurance and more. View guidelines at irs.gov.

• Don’t fear vehicle and travel deductions.
It’s highly unlikely you can claim 100 percent business use of a vehicle or write off your daily Starbucks run. But if you keep good travel records, you have nothing to fear.

Get business vehicle guidelines and extensive travel and entertainment tips at irs.gov.

• Supplies and professional dues.
Hopefully, you also kept records for your office chair or special design software, which are deductible, as are professional liability insurance premiums, fees for trade associations and other charges that are the cost of doing business in your field.

Keep good records, and write them off.

• Don’t forget depreciation. If you have a big fixed-asset expense such as a jackhammer or a copying machine, you can write off part of the value each year as the equipment ages.

Get specific guidelines on how to calculate depreciation at IRS.gov.

• Be diligent about income records. If you’re a busy contractor or freelancer, it’s crucial you keep accurate records of your income and track down relevant 1099s and other documentation. You could get audited if the numbers don’t add up, or if you miss filling out a tax form, so make sure you check for complete records before filing.

The IRS has more info about recordkeeping on its website.

• Deduct your health insurance. If you’re footing the bill for your own health insurance, you can deduct the full cost.

• Don’t get greedy.
Generally, a qualified business expense “must be both ordinary and necessary” in government terminology. These are slippery terms, but keep them in mind as you do your returns.

If you act in good faith, you’ll be fine. Otherwise, you could face steep fines.

• Write off tax preparation.
You can deduct tax-preparation expenses, and books full of tax tips or preparation software are deductible, too, so there’s no reason not to get the help you need.

Copyright © USA TODAY 2013. Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks.

No comments:

Post a Comment