Friday, May 9, 2008
If you decide to file an online tax return, visit sites like www.turbotax.com or www.hrblock.com where you can enter your information and do your taxes at your own pace. Amazon at www.amazon.com sells different tax preparation software programs that can save you the fees associated with online filing services. Doing your own taxes really isn’t that difficult if you have all the necessary documents and are somewhat organized. Most of the tax software programs used by online tax return preparation services, and that sold outright use basically the same formatting and follow the guidelines mandated by the Internal Revenue Service on the appropriate forms. Once an entry is made the program takes the user to the next step depending on the information entered, so that all pertinent information is included. There are also many opportunities to ask questions about a certain step at any time and to get answers to other tax-related inquiries as you complete the process.
To file an online tax return you will need in addition to all the necessary documentation, a credit card to pay the fees at the time of filing, which vary according to the type of filing features you are requesting. If you need assistance while computing your taxes, just send a quick email or phone the customer service center with your question. You may find that filing an online tax return is less stressful than other methods, because you can stop to find something that you may be missing, and go back and pick up where you left off. The software is very user friendly and even the most intimidated should have no problem filing an online tax return.
For a long time our IRS tax refund was smaller, but still welcome. Once we added a child to our home, our refund got much bigger. I really didn’t give it much thought, but I thought it would be the same every year. It was always nice to get the IRS tax refund because I could use it for things my little girl needs. I thought this year I would get her a new bed and dresser, and put some of it away for her school clothes next fall. That was not meant to be.
My husband was always in a hurry to get our IRS tax refund back, so we always did our taxes in January, or at least as soon as we both had our tax information together. This year when he did the taxes on our software to get an idea of what we might expect to get back, he was puzzled. Though we knew we might have to pay some in because of my income, we had no idea how much it would be. He had a rather large refund coming from his income, but my tax ate that up, and I still owe quite a bit more. It was something of a shock, and we have delayed doing our taxes until we have to.
Normally, we would have already filed our taxes and we would have gotten our IRS tax refund back by now. This year we haven’t filed yet. I know we are coming up on the deadline, but it’s much harder to part with my hard earned money than I thought it would be. I know I have to pay taxes, and I know that there is no way around it, but that doesn’t make it any easier to do.
Monday, March 24, 2008
Paying your income tax when you are self employed is really simple if you simply plan ahead. You will pay quarterly, and you will need to estimate what your earnings will be for the upcoming quarter. This is usually not all that difficult, you can use your tax papers from the previous year, or you can over estimate what you have made in the previous quarter. A good tip is to over estimate by a couple hundred dollars. This will help to protect you from owing at the end of the year, and you may very well see a refund if you overpay.
Filing your quarterly online tax return is a really good idea because you will make short work for you self employment tax work. Online programs can walk you through all of the steps that you need to follow to be sure that you are entering accurate information that is not likely to be audited at the end of the year, which everyone wants to enjoy. Creating a very organized system and paying quarterly for your self owned business are the best tips that one can have.
No one wants to be audited or to pay more than they have to, and when you are organized you can avoid extra fees. If you don’t pay your taxes on time you will find it regrettable because you will end up owing and you can be charged for not following self employment tax laws. Organization will help keep you up to date and will help keep you on the good side of the IRS! If you keep an open mind and a positive attitude about your self employment you will find that it doesn’t have to be difficult and can actually be a very positive way to pay taxes. Tax services can help you stay organized, too!
The Federal "death" tax is in flux, as to what's going on. Under the Economic Growth and Tax Relief Reconciliation Act of 2001, The tax is completely gone for the year 2010. But the estate tax will go right back into effect in 2011 if congress doesn't act to make it permanent. With the Democratic party the majority in Congress after the 2006 election, it's unlikely that the estate tax will be repealed, although changes to the exclusions and rates will probably take place. So we're most likely right back to facing the estate tax again, in one form or an other.
This has lead commentators to have some fun with our system. Tax gone in 2010 and back in 2011, Makes 2010 the best time to pass on if you have a large estate.
Your financial planning will change over the years,so it's something you need to stay on top of. There can be times when giving a "gift" would work out better. As a gift the asset would be subject to the capital gains tax,which is capped at 15% vs estate tax that can go as high as 47%.This is especially true if you have large holdings, that go over the tax excluded limit. Set at 2 million the next two years, but no one knows where it will be in 2011. Some suggest it will be set at 1 million.
To protect what you've worked so hard for,I suggest getting started on it right away,no matter what age your at now. It can start as a simple will and grow and change as your needs change. I would recommend reading up on the subject then seek out an estate attorney. Here I'd ask friends or someone that has had experience with this if they would have any recommendations. I would study up on the subject so I didn't go into it blindly.
I could only touch on the very basic parts of this tax. But I do want to emphasize the importance of getting an estate plan together,so as not to pay more than needed on Estate taxes,and a possible burden to loved ones. This should also take into account your state tax if it has one. Right now 24 states have an inheritance tax and more will likely follow.
Wednesday, February 27, 2008
What impact can a home-based business have on your taxes?
April 15th is the day that most American's look towards with doom. Are you one of them? Are you sick of working hard every day, and having to give such a large percentage of your money to the government? Do you wish there was a way to beat the IRS, but legally? If so, you are one of millions.
There IS an under-utilized solution to this problem. I would like to take this opportunity to educate you about the benefit that a home based business can have on your tax burden.
When people think about the benefits of a home-based business, they often first think of the following: Financial gain, independence (not having to rely on your boss or a company to provide you with everything you need), and a sense of self worth and accomplishment.
Have you ever thought of a home-based business as a venue for Tax Relief? Most people don't realize how much money they can save by starting their own home-based business. Even if your business doesn't turn a profit right away, you can still benefit from the mere fact that your business exists and that you are attempting to turn a profit.
Also, your home-based business doesn't have to be a full time deal. It is something that you can fit into your current lifestyle. You can continue to do what you are doing today, and add a home business.
The fact is that many people struggle with finances. But there are things that you can do legally to ease that burden. If you operate a home-based business, there are many deductions you will be able to take that will dramatically decrease the amount you have to pay to the IRS. I recommend that you consult with an accountant to find out exactly what you are legally able to deduct for your home-based business, but here are some possibilities:
Home Office Expenses:
Business expenses can include a portion of your rent or mortgage, real estate taxes, utilities, insurance, painting and repairs. The actually amount you can deduct depends on the percentage of your home used for business.
You can deduct your traveling expenses. This such as airfare, transportation, hotel, and other lodging expenses are all included. There is a limit to meal deductions. The best part is, if you plan properly, you can mix pleasure with business and still get benefits.
You can deduct 50% of the cost of meals in restaurants, or an entertainment/sporting event as long as business take place before, during, or soon after the event.
You can deduct property you purchase for the business that is intended to last longer than a year. This includes things such as: computers, office furniture, and machinery. You have the option of deducting a little each year or all at once.
Professional Services Expenses:
You may need help getting your business established. Fortunately, you can deduct any fees you pay for attorneys, accountants, consultants, and any other professionals related to the operation of your business.
The key to any business is advertisement. There are countless ways to advertise free, especially on the Internet. However, any advertising that you do will count as a business expense, and therefore can be deducted.
Taking a Loss:
Most home businesses do not turn a profit right away. Due to this, your home business expenses may exceed your income for a while. You may not deduct more than you make in any one tax year, but you may carry a loss over to the next year if it cannot be used in the tax year in which it occurs.
Starting Your Own Home Business
As you have read, there are many tax benefits to starting a home business. You don't even have to return a profit immediately to take advantage of these benefits. Starting your own business is something that everyone should take into consideration.
If you have very simple taxes, you can skip the professional tax preparation. You can buy inexpensive software that can help you with your taxes, or you can do it by hand. You do have to know how to read through the instructions though. If you just can’t seem to get a grip on how to figure out your deduction, you are going to have problems, and you are going to have an erroneous tax return. We all know that can lead to trouble. If you really can’t handle it, you should get professional tax preparation. However, if you can use simple software, it does all of the work for you.
I am self-employed, and that means that if I don’t get professional tax preparation, I am more likely to be audited, and I know I am going to make a mistake. I am pretty sure my mistake would be to my own detriment however, and I might never get it right. I am very likely to miss deductions, or to get the wrong amounts. There are parts of the tax law that I am sure even the smartest people could mess up, and I don’t want to have to deal with an audit or with having to re-file to fix a mistake.
When you need professional tax preparation done, you can shop around for a good price. You might be better off going with a smaller company. I have heard that H&R Block employees might not know anything more than you do, but they do have software to guide them. We found a local place that charges us half of what H&R Block has in years past, and they did a great job with finding deductions I didn’t know I could take. If you already know that you have to pay in money for your taxes, finding the best deal for quality professional tax preparation can save you money in more than one way.