Don't Overpay Uncle Sam!
By Peg Bastin
Congress has told the IRS to give huge refunds and
deductions to taxpayers 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:
1. GAS receipts for 2004
2. TOLL receipts for 2004
3. REPAIRS & MAINTENANCE for 2004
4. 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:
1. Date
2. Destination
3. Purpose of trip
4. 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.
***** ***** ***** ***** *****
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
***** ***** ***** ***** *****
You have permission to publish this article electronically
or in print, free of charge, as long as the bylines are
included. A courtesy copy of your publication would be
appreciated.
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