THE IRS & TAX DEDUCTIONS FOR FREELANCERS & SMALL BUSINESS OWNERS: An Article About How to Find Out More Information About What You Are Allowed to Deduct for Taxes
by Joyce Moseley Pierce
INTERNET ENTREPRENEURS, FREELANCERS, HOME-BASED & SMALL BUSINESS OWNERS: WHAT ARE YOU ALLOWED TO DEDUCT IN ORDER TO SAVE MONEY ON TAXES????
Tax deductions for business expenses aren’t just for large corporations. As an Internet marketer or online entrepreneur it is important to know what you can and cannot deduct to save money on your taxes.
DO YOU TRY TO DEDUCT EVERYTHING YOUR BUSINESS TOUCHES OR ARE YOU A NON-BELIEVER IN TAX DEDUCTIONS?
People new to business taxes tend to fall into one of two groups. The first group are those people who simply don’t believe they can be eligible for tax deductions. The second group are those who believe anything they touch while conducting business can be written off as a business expense. Both ideas will cost you money; the former in lost tax money, the latter in IRS fines.
YOU CAN DEDUCT ONGOING OPERATION COSTS SUCH AS RENTAL COSTS, UTILITY EXPENSES & TRAVEL EXPENSES
In general, the kinds of things that can be deducted deal with the ongoing operation of your business: rental costs, utility expenses, and travel expenses. Not, for example, a new car. Items that add permanent value to your business (i.e. assets) are capitalized, not deducted. Interests on mortgages or repair of computer equipment (which maintain rather than appreciate your businesses value) are deductible expenses.
If you use your personal vehicle for your small business you may be able to deduct repair expenses. If you have a room in your home used strictly as a home office you can deduct certain expenses. There are numerous ways to plug the money leaks streaming out of your business.
THE IRS HAS LISTED WHAT YOU CAN DEDUCT IN THE PUBLICATION 'BUSINESS EXPENSES'
Luckily, the IRS has listed in detail what you can deduct in its free publication entitled, shockingly, “Business Expenses.” (http://www.irs.gov/pub/irs-pdf/p535.pdf) At fifty-eight pages it is not a casual read, but it has a good index you can use to find the parts relevant to your business.
UTILIZE THE IRS'S SMALL BUSINESS SITE TO ACCESS USEFUL INFORMATION ABOUT AVAILABLE TAX DEDUCTIONS
The IRS Small Business site (http://www.irs.gov/businesses/small/index.html) contains a lot of useful information and, as government websites go, is well put together and easy to navigate. From this site you can access practically every form needed in your relations with the IRS and even find out how to electronically file for free. Our tax system isn’t simple, but at least they publish the rules.
MORE ARTICLES ABOUT TAXES & DEDUCTIONS FOR FREELANCERS & THE SELF-EMPLOYED
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Small Business Taxes Notes - Here are some tips to help you reduce your taxes.
IRSs Tax Information for Small Businesses & The Self-Employed - Find out Information about US Taxes from the source.
Inc.com Self-Employed & Small Business Tax Articles - Tax planning is a year-round event if you want to minimize your business's tax bill. Whether it's surviving an audit, capitalizing on business deductions, or finding tax-friendly ways to run your business, this Inc.com guide can help reduce your tax obligations and make paying taxes less anxiety provoking.
Reporting Your Net Profit & Paying Your Taxes - The basic equation for a Schedule C, or another other business-related tax return, is income minus expenses equals profit. If the profit figure is a positive number, congratulations! You are one of the few self-employed people who made money as a freelancer. If the profit figure is a negative number, you have a business loss.
Handling Writing Income and Expenses - The information in this chapter applies to writers who pay U.S. taxes. If you're not a U.S. citizen, or liable for U.S. taxes, you'll need to check with the tax agency of your country of citizenship or residence for information on how to handle your writing income.
Tax Tips for Home-Based Home Business Owners As tax time approaches, many home-based business owners begin completing their forms or paying their accountants with trepidation.
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Contractors and Taxes(CT.Monster.com) - Without an employer, you're in charge of tracking and paying your own taxes. Do you know what you're doing?
Do Your Own Taxes? (CT.Monster.com) - If you're self-employed, determining how much you owe can be taxing. Should you seek professional help?
Tax Resources (CT.Monster.com) - As a contractor, your tax duty to the IRS may seem complicated. These resources will help you get in gear.
Taxes and Your Tips (CT.Monster.com) - Billions of dollars in tips go unreported each year. What are the legal repercussions, and how do they affect you?
Quarterly Payments & Estimated Taxes Articles for Self-Employed Freelancers, Small Businesses & Home Business:
Estimated Taxes: Another Deadline Coming up for Freelancers - April 15, most taxpayers filed their 1040 forms for 2002, and many made their first estimated tax payment for 2003. And before they know it, another deadline is just around the corner.
Quarterly Taxes for Self-Employed & Freelancers - The IRS* calls the federal income tax a pay-as-you-go tax. As an employee you usually have taxes withheld from each paycheck throughout the year. As a self-employed business person you are responsible for paying taxes throughout the year.
Full Time Freelance & Taxes - This past year was my first year as a full-time freelance employee. I will be filing a 1099 at tax time. What kinds of home-office deductions are standard? Also, will I be penalized if I haven't paid estimated taxes quarterly throughout the year?
How To Do a Quick Estimate of Your Self-Employment Taxes - This article may be freely published online or hard copy print in its entirety and exactly as it appears. No alterations or changes are allowed, and the author signature must remain with the article just as it appears. The author retains all copyright to the article.
Handling a Windfall Profit - Help! I've earned more money than I anticipated this year from freelance writing, and haven't paid any estimated taxes on this money. Is it too late to pay estimated taxes, and will I be penalized for not doing so? What can I do?
Estimated Taxes: Another Deadline Coming Up - Who needs to make estimated payments? Individuals with income from sources not subject to withholding.
How To Avoid Paying Too Much Estimated Tax Now that we're past the year's half-way point, this is a good time to take a look at how much you've paid in so far, and whether you need to make any adjustments to this year's remaining two quarterly estimated tax payments
How To Avoid Paying Too Much Estimated Tax Now that we're past the year's half-way point, this is a good time to take a look at how much you've paid in so far, and whether you need to make any adjustments to this year's remaining two quarterly estimated tax payments.
Deductions (and Home Office Deductions) Articles for Self-Employed Freelancers, Small Businesses & Home Business:
A dozen deductions for your small business - Deductions But that doesn't mean you should cheat yourself. Take every legal deduction you can. Here are a dozen that even savvy small-business owners and entrepreneurs sometimes forget:
Business Deductions - Digging up every legitimate deduction you have is usually your best bet for reducing your taxable income, and therefore your tax bill, as much as possible in the short run.
Home Office Deductions for Freelancers - Home office deductions are one of the perks of working from home, however, there are clear drawbacks too. If you meet the IRS guidelines for deducting your home office, you can expect to get a hefty tax break. On the other hand, deducting your home office can increase your chances of getting audited.
Home Office Deductions Calculator - Figure out home office deductions with this handy calculator.
Do You Have a Deductible Home Office? - Whether you are self-employed or an employee, if you use a portion of your home exclusively and regularly for business purposes, you may be able to take a home office deduction.
Do you work from home? Deduct your home office - Whether you are self-employed or an employee, if you use a portion of your home for business, you may be able to deduct the associated costs.
Understanding Small-Business Tax Deductions - Thankfully, you can reduce your tax burden by deducting most of what you spend in the course of business.
Business Use of Home - Whether you are self–employed or are an employee, you may be able to deduct certain expenses for the part of your home you use for business. To deduct business–use–of–the–home expenses, part of your home must be used regularly and exclusively as one of the following.
Taking Business Tax Deductions - What kind of small business tax deductions can I take for a business expense tax? You may be able to take more small & home based business tax deductions than you thought.
Home office: Tax perk or trap? - A third of the U.S. employees regularly work out of a home office but most don't claim a deduction.
Taxing Matters for the Home Office - A new set of rules from Congress in 1999 broadened the guidelines for home office deductions. Do you qualify?
Home Office Deduction Calculator - The following two-part calculator will help you estimate the amount of your home office deduction.
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Factors to Consider Before Taking the Home Office Deduction - You could save money if you do — but perhaps not as much as you hope. Here are some pros and cons to ponder, when deciding whether to take the home office deduction.
Planning Equipment Purchases to Your Tax Advantage - How to use depreciation and Section 179 asset expensing to deduct the cost of additional equipment for your business
How to Claim Home Office Deductions - New rules were instituted in 1999 for claiming an office-in-home deduction on your tax return. If you couldn't deduct these expenses under the old tax law, you may be able to do so now.
Home Office Deductions - Are They Dead? - The history of the home office deduction is filled with controversy. The Internal Revenue Code (the law) states, in part, that to be deductible the portion of the dwelling unit which is used exclusively and regularly for the following purposes may be considered a deductible business expense, if it is.
Tax Deductions and Your Small Business - Taxes are an inevitable — and painful — part of every business owner's life. But there are ways to reduce, if not eliminate, your company's tax burden if you know how to use business-expense tax deductions to your advantage
Rules for Taking the Home Office Deduction - You have to pass several tough tests to qualify for the home office deduction.
Home Office Deductions - The first way is if your home office is your principal place of business, meaning you do most of the work that earns your keep there. This is no problem for people like freelance writers and accountants.
Deductions Your Small Business Shouldn't Miss - When you're toting up your business's expenses at the end of the year, don't overlook these 13 common business deductions.
Home-Office Deduction for Telecommuters - If you telecommute from home, it may be worth figuring out the deduction for a home office. Here's how to do it.
Tax Deductions for Home Office Utilities - I've been advised not to try to write-off the physical space for my home office. However, I just received my first water and power bill, and it is *MUCH* higher than the same period last year. Obviously, I'm using more power and water by working out of my home.
The First Principles of Small Business Deductions - A good start would be to consider what the Internal Revenue considers to be a legitimate, bona fide tax deduction.
The Home Office Tax Deduction - Running a business from home can help you lower your tax bill.
Full Time Freelance & Taxes - This past year was my first year as a full-time freelance employee. I will be filing a 1099 at tax time. What kinds of home-office deductions are standard? Also, will I be penalized if I haven't paid estimated taxes quarterly throughout the year?
Overlooked Business Deductions, Part 1 - You didn't forget these, did you - As a business owner, it's easy to overlook legitimate business tax deductions. After all, so much of your life likely has some element of tax-deductibility. Keep in mind that many things not normally tax-deductible for individuals become deductible to you as a business owner. Here are a few examples:
You deserve a tax break on your home office costs - If your home is a place of business, many of your personal expenses can be deducted as business expenses. Here are tips on what qualifies, and how to avoid an audit.
Tips on Understanding Home Office Deductions - Tips on Home Office Deductions
Taxing Times - The Home Office Deduction - Yay! It's tax time again (or near enough). I can't wait. Just love this stuff. Not! OK, I know it's boring, I know your eyes glaze over at the mere thought of all those forms and paperwork but it has to be done so let's just bite the bullet and get on with it.
The Home Office Deduction - If you run your business out of your home, then you may be able to claim your home office and deduct a portion of the expenses associated with maintaining your home. The home office deduction consists of a series of small deductions for a portion of your utility bills, mortgage interest, repairs and home depreciation.
Home Office Deduction Simplification - Increasingly, entrepreneurs are utilizing their home as a primary place of business. Many home-based business owners do not make use of the home office deduction due to the complexity of the criteria they must meet. The NASE believes that the home office deduction must be simplified and expanded to allow home-based businesses to easily utilize the deduction.
Can You Deduct Home Office Costs? - Unless the economy begins to perk up soon, more people are likely to be working out of their homes and ordering new business cards embossed with the word "consultant."
Rules for Taking the Home Office Deduction - You have to pass several tough tests to qualify for the home office deduction.
Audits Articles for Self-Employed Freelancers, Small Businesses & Home Business:
Avoiding an Audit - How likely are you to be audited?
Why the Self-Employed Are Audit Targets - The IRS keeps a close eye on self-employed individuals. Here's what it looks for.
Self-Employed as Audit Targets - The IRS keeps a close eye on self-employed individuals. Here's what it looks for.
Beware of the small business audit - Who's afraid of a federal tax audit? Just about every small business owner should be. Few events are as stressful, expensive, and time-consuming as a tax audit.
The audit of a small business: war stories and dreams - This articles is for CPAs but it can help you, the freelancer, see what an Audit entails. A small-business audit should include extensive verification, confirmation, and performance. Four case studies of troublesome audits are included.
Freelancers, Avoid That Audit! -You probably aren't too concerned about being selected for an audit. Well, if you are a freelancer, avoiding an audit should always be on your mind as you are filing your taxes. Why? Because, no matter how straight you play it, freelancers get audited much more than salaried employees do. No - the IRS doesn't have it in for independents, but the numerous deductions that we file set us apart from other taxpayers.
Small Business Notes on Audits - Audits by the Internal Revenue Service (IRS) can be the bane of any business. The time and expense alone can be a devastating blow. Knowing in advance what can trigger an audit and what auditors are looking for if you do get audited can help you structure your systems to clearly demonstrate the validity of your business practices.
Daniel Detlaf
Daniel Detlaf is a lifelong student and one-time Day Trader with a few things to say about internet marketing. Visit the home of his ebook "Make An Honest Living" at http://www.makeanhonestliving.com
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