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| *Loan,banking and credit>>>business tax |
Any easy way to get a larger tax return if I have a business license? |
I don't know too much about taxes, but I'm doing mine right now with turbotax, and I owe quite a bit. Someone once told me that if you have a business license, you can qualify for much larger tax cuts. I haven't really had much active business activity, but I do have a license. I heard that since I do own a work at home business, I can take the money I pay for rent every month and claim that as a business expense, since this is where the business is located. Or something like that. Can someone explain this to me better, or give me ideas of other deductions I would qualify for being I own a home based business (even though I haven't had much business activity)? I live in washington Business related expenses are deducted on Schedule C. If you are not doing much with your business, it could be suspecious to have lots of business expenses. IRS is auditing more and more self-employees (i.e. Schedule C filers). Part II of Schedule C itself tells you what kind of stuff you can deduct. http://www.irs.gov/pub/irs-pdf/f1040sc.p... For detail explaination take a look at http://www.irs.gov/pub/irs-pdf/i1040sc.p... For home based business you can deduct a portion of rent, renter insurance, utilities etc. However, you have to be able to prove that a certain percentage of the entire square footage of your home was used for business. One thing about filing for extension. Although you can extend the deadline to file, you can't extend the deadline to pay IRS. If you owe IRS and do not pay them by April 17th, penalty and interest start accumulating as of April 18th. My suggestion to you is, take all your stuff and go down to a tax office like H&R Block. If your source for income is from the home based business only, it will cost you about $150. Make sure your print a coupon from their web site before you go. Best wishes. You need to get a professional accountant to give you advice and do your taxes. You can claim a portion of your home that you have devoted to business. There are all sorts of deductions you can claim but you need a professional to guide you. These tax software programs are really not that good and do not keep current with deductions. If you own your own business, your income is reported on a schedule C and you can deduct your business related expenses there. That includes your licensing costs, B&O taxes (not sales taxes you collect and remit!) inventory, etc. As far as rent, etc. goes, that would be for the business use of your home. The IRS has more info on how to do this, but I would go to an experienced tax preparer. Take them all of your information and expenses and they will be able to sort it all out for you. It is worth the expense to know they are done right. Yes, you can amend your return later if you need to. Turbo Tax and online tax programs are not very good for complicated situations unless you know exactly what you are doing. They may "ask" the questions, but a good preparer will take the time to both interpret the questions and get to know you and your business to optimize your deductions. A business license won't cut your tax bill much. You can deduct its cost but that's about it. You can't claim your home rent as a business expense. You might be able to claim PART of it if you have a home office but the rules on home offices are VERY strict and an audit flag. If you don't have much business activity, you won't pay much tax. But you won't have much income either -- they do tend to go hand-in-hand. You've been given good advice thus far. I want to help you with some terms. Perhaps the last thing I'd want is a larger tax return--i.e., more pages to file or to keep in a file. A return is a document--in this case, a tax return either filed electronically with the government or on paper through the mail. A refund is what you likely were referring to. You wanted a larger tax "refund" by using what some believe is a "license" to take all sorts of deductions at the business level. The Office in Home deduction has its merits, but it also has limitations and headaches. If your state or local jurisdiction requires you to have a business license for the work you do, that is a matter of state or local law. If I'm in a different business that doesn't require a business license, I may be entitled to take the same types of business deductions as you are. Just because you own and operate a business doesn't mean that you can suddenly start deducting many items that are really personal in nature. Masters in Tax--30+ years experience |
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