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Title: Don't Overpay Uncle Sam!
Written By: Peg Bastin
Web Site: http://www.BastinMarket.com
© 2005 Peg Bastin
Congress has told the IRS to give huge refunds and deductions to taxpapers who have a home-based business, AND anyone who operated one any time in the past three years.
It's true! If you had a home-business in any of the past three years, you can easily file an Amended Tax Return (Form 1040x), and get a refund for up to thousands of dollars or more ...PLUS interest!
In most cases, home business tax deductions (including vehicle deductions) can reduce your taxes by $3,000 to $5,000. If you had a home-based business during 2003, that may mean you're owed a $3,000-$5,000 refund.
In 2004, it may mean you could reduce the amount of taxes being withheld from your paychecks, putting an extra $200-$500 or more extra cash in your pocket, every single month.
All of these deductions are the direct result of Congressional Laws, IRS Tax Code and U.S. Tax Court Rulings.
To qualify for the deductions the taxpayer has to be able to prove that they are running their home-business like a business (not like a hobby), and that they are trying to make a profit.
Congress wants taxpayers to run home-based businesses because it helps strengthen the overall economy. So they told the IRS to authorize deductions, even if the business does NOT make a profit.
Here are some more tips you can use:
If you employ your family members in your business, you must have an Employer Identification Number (EIN) from the IRS.
The new IRS procedures for obtaining an EIN, are both easy and free. The easiest way is to do it online by going to http://www.irs.gov, and then, in the field on the left, labeled "Search for Forms or Publications", type in: SS-4.
Even if you don't have any employees, just having an EIN helps show the IRS that you are operating a Business, not a hobby. Use that number (instead of your Social Security Number) for filing all future Tax Returns.
Getting the Most Out of Your Vehicle Deductions
Get 4 file folders or envelopes. Label them:
- GAS receipts for 2004
- TOLL receipts for 2004
- REPAIRS & MAINTENANCE for 2004
- OTHER Vehicle Expenses for 2004
All year long, whenever you incur expenses related to the use of your car (business OR personal), get a receipt and place it into one of these folders. At the end of the year, you and your tax preparer will be able to pick the best method for you.
The IRS only requires four pieces of data in your Vehicle Use Log:
- Date
- Destination
- Purpose of trip
- Starting/ending odometer readings, OR total number of miles for that trip.
You do NOT need to record every movement of your car all year long. The IRS gives you four options for documenting the business use of your vehicle(s).
Option 1. Keep daily records for a "typical 90-day period". Then apply the business-use percentage to your annual mileage total. You can use any consecutive 90-day period of the year, as long as it represents the average use of your car(s).
Option 2. Keep daily records for the same week of every month of the year. Say, the third week of each month. Then apply those results to your annual mileage total.
Option 3. Keep records all year long, but just record the trips that are EITHER "personal" OR "business". Let's say you keep records just of the personal use of your vehicle(s).
If the odometer reading on December 31, 2004 is 15,000 miles higher than it was on January 1, 2004, and your total "personal" use of the vehicle(s) was 3,000 miles, 20% of your mileage was "personal", so your tax-deductible business mileage will be 80%, or 12,000 miles.
Option 4. You can still record every movement of your vehicle all year long if you want to.
There are many other tax tips that will benefit you, such as:
Writing-Off Meals and Entertainment...
Yes, you can tax deduct Rent...
Make ALL medical costs tax-deductible...
Some over-the-counter drugs can now be tax-deductible...
I hope that these tips will help you save more of your hard-earned money this year. Don't wait any longer to help yourself to the money you've earned this year. I'll be back soon with another installment of IRS tips and tricks for you.
About the Author
Written by Peg Bastin, who is an avid internet marketer, glad to help others get started in their own online biz, with Ron Mueller, author of "It's How Much You KEEP, That Counts! Not How Much You Make" © 01/01/2004.
Warning: Do Not File Your Tax Return Until...
You Find Out How To Keep What's Yours. Free details http://www.bastinmarket.com/taxpreparation.html
Free report mailto:hbtaxreport@getresponse.com
Today's article was originally received for publication in January 2004. The author has given full permission to publish it either electronically or in print, free of charge in its entirety as long as the article content remains unchanged as is published here today and that the authors copyright with resource box are included.
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