As a professional, you are probably aware of the many deductions you may be entitled to when you file your tax return. Almost anything you buy for the company can be deducted if it is necessary for the company. The cost must also be reasonable. The deductions can really add up for small businesses and help save some on your bottom line. Think about it this way: Your business falls into a 25 percent bracket and you buy a computer for $1,000. If the computer is used for business purposes, you can save $250 in a tax deduction. You are not eligible to claim a personal deduction.
Some of the most common deductions are: Office costs: Keeping a company office can lead to serious deductions. Rent and utilities can be deducted, and if you work from home, you can deduct a portion of your monthly rent if you don’t own your home. Make sure your home office meets all the requirements to deduct them. Travel expenses: Travel in connection with business can be deducted as long as the trip is spent on business. You can deduct airfare, accommodation and other costs. Meals you take during your business are deductible by 50 percent. If you organize your trip properly, you can even deduct costs on a half-business and half-personal trip. Transport: The most common deduction for companies is deductions for cars and trucks. All driving you do for business purposes can be deducted, with the exception of driving from your home to your workplace. You can either split your expenses or choose a standard deduction of 0.54.5 / mile. Instead of gas and repair costs, the standard deduction only requires you to track your miles. Meals / entertainment: In the past, companies could write off many outings as a cost. However, the IRS recently ended these deductions unless you have a genuine legitimate business reason to attend the event. Before, during or immediately after the event, you must have an in-depth business conversation. Depreciation: Some properties, such as cars, furniture and computers, are subject to depreciation and you can gradually claim the cost over time. Thanks to the IRS Code Section 179, you don’t always have to depreciate. This allows small companies to deduct the entire property cost and at the same time create a larger deduction. Supplies: If you purchase items to keep your company operating, you can deduct them. Simple supply costs, such as rubber bands and paper clips, also count. Legal costs: At some point during the tax year, you probably used professional legal services. If you paid for these services, you can deduct the cost as long as it deals directly with the company. Insurance: If the policies apply to the company, liability and property insurance can be deducted. You may be eligible to deduct part of your homeowner’s insurance if you work from your home office. Individuals who are self-employed can also deduct health insurance costs.
If you want to deduct payment for any type of medical expenditure this year, you must be aware of some new rules that apply to these types of deductions, as they may affect your return. If you are looking for deductions for medical or dental expenses, you should know the following guidelines.
Adjusted gross income-Your medical expenditure must exceed 7.5 percent of your adjusted gross income for the current tax year.
You must specify your deductions to claim any medical or dental expenses. These types of deductions do not form part of your federal tax return’s standard deduction. Payments during the tax year-Payments made during the 2018 tax year can only be claimed. If you paid by check, the date is usually considered the day on which you sent the check and not the date on which it was cashed. Out of Pocket Costs-If a third party or insurance plan has reimbursed any of your payments, you can’t claim them for deduction. You can only claim expenses paid for yourself, your spouse or your qualified dependent for medical and dental procedures. Travel-You can deduct travel costs for medical care. These may include items such as public transport, tolls, parking or ambulance payments. The standard mile reimbursement rate is 18 cents per mile driven if you provide your own transport.
No double dipping-If you have paid medical or dental expenses with a flexible expenditure account or a health savings account, you can not deduct the payments. In general, these payments come from plans that provide tax-free funds.
You may be required to make estimated tax payments in certain circumstances, such as not having taxes withheld from your wages or paying too little each paycheck. Self-employed people generally pay taxes through estimated payments at the same time. If you are confused about the process of making estimated tax payments, these four tips can help answer some of your questions.
If you expect to pay more than $1,000 in federal income taxes in 2018, you should be prepared to pay estimated taxes. To determine how much you need to make in estimated payments, you should anticipate your full annual income, including any deductions or credits you may claim at the time of the tax. Some events in life, such as the marriage or birth of a dependent child, may change the amount of taxes you have to pay. If you rely on estimated tax payments, you usually pay four times a year. Payments are usually made on or about 15 April, June and September, and then again on 15 January of the following year. For estimated payments made for 2018, you will pay in April, June and September 2018, and your final payment will be due by 15 January 2019. Payments can be made online or by telephone. Alternatively, you can use Form 1040-ES, Estimated Tax for Individuals, which will provide vouchers for payment, if you decide to mail your payments.
As the real estate market begins to be positive, it is a good time to review the tax requirements for the sale of a home and any related tax breaks. If you sell your primary residence (the one you lived in full time), the sale may be free of taxes. All profits from the sale of a second or third home, however, are taxed. Tax break for married couples who file together can receive up to $500,000 ($ 250,000 for single filers) in tax-free profits from the sale of their first home. Profits above the threshold are taxed at long-term capital gains rates, which are currently 20% to 23.8%. The tax break applies only to individuals who sell their primary home and does not include home costs or improvements. It applies specifically to profits from the sale. Thanks to the $500,000 tax break, a married couple who bought a $200,000 home and spent $50,000 on improvements could sell for as much as $750,000 before owing federal taxes.
Eligibility: Homeowners can claim a tax break every two years, as long as they live in the home they sell for at least two of the last five years. Homes that meet the eligibility requirements may be duplexes, condos, boats or mobile homes, provided that they have standard plumbing, kitchens and sleeping facilities. Those who have been widowed in the last two years can claim the $500,000 exclusion if they sell the house within two years of the passing of their wife.
In addition, if the homeowner was required to move due to changes in employment, reasons related to health or an unexpected circumstance such as death or divorce, but did not comply with the two-year provision, he may be eligible for an exclusion. If you choose to use your holiday home as our main residence, the rules become a bit more complicated. The IRS will primarily determine the amount of time you spent on the property and prorate the amount of credit you are entitled to. Rental units that are part of the primary property of the homeowner, such as a basement or garage apartment, are not considered for the tax credit and only the percentage that the homeowner maintains specifically is eligible for the tax break.
There’s not much that can make you happy about paying taxes. But tax credits can help reduce your tax liability, it is a good idea to be informed about which credits you are eligible for and how you can claim them. You reduce the amount of taxes you owe for the tax year by using tax credits and some credit is even reimbursable to you. If you qualify for a refundable credit, you can still receive a refund even if you don’t have to pay taxes. These five tax credits can help to reduce the financial stress of tax time.
Earned income credit-This credit is available to taxpayers who work but do not have a large salary. Things like total income, status of filing and dependents determine eligibility for this credit. In certain circumstances, some taxpayers who file single with no dependents may also be eligible for this credit.
Credit for child and dependent care-This credit is available to taxpayers who take advantage of services for children under the age of 13. If you pay for care for disabled dependent adults or spouses, you can also claim this credit.
Child tax credit-This credit reduces your liability by $1,000 per admissible child. Each child must be under 17 years of age and dependent. There may be additional requirements for eligibility, but this credit can help raise children.
Credit from Saver-This is available if you contribute money through your employer to an IRA or qualified retirement plan. You may qualify for this credit if your income is less than $60,000 per tax year.
The American Opportunity Credit-This credit can help to reduce the cost of the first four years of college. If you are eligible for a full academic term, you can receive a credit of up to $2,500 if you are registered for at least half-time. A Form 8863, Education Credits and your tax return must be submitted. If you don’t owe anything, you can even qualify for this credit.
Your taxes have been deposited. Your repayment was deposited. You’re planning deductions and expenses for another year. So what should you do with the tax documents for this year? You may need to use the tax documents of your previous year as a reference or as evidence if you are audited. You should save your documents, but many taxpayers wonder exactly what the time frame is. The IRS says that it depends on the document, which means what the costs are and what the document proves. You should also keep copies of your previously filed tax returns, as they can help you in the future.
Records supporting revenue and deductions should be kept until the time limit for the submission of an amended return expires. If you want to claim additional credits or refunds you missed in your original return, you may need to file a modified return. There are different scenarios in which the timeframe for document retention changes. The best practice is to follow the IRS guidelines, which state: unreported income in excess of 25 percent of your gross return income requires you to keep related documents for 6 years. You must keep all records indefinitely if you have submitted a fraudulent return or if you have not submitted a return.
Returns that have been modified to claim additional credits should have records kept for three years from the date on which the original return was filed, or two years from the date on which the tax was paid, depending on the length of time. Seven years should be kept records that support the claim of losses on worthless securities or bad debt. Employer-related tax payments should be recorded for four years, depending on which date the tax was due or the date you paid.
There are not many things that make you happy about taxes. But tax credits can help to reduce your tax liability, it is a good idea to know what credits you are eligible for and how you can claim them. By using tax credits, you reduce the amount of taxes that you owe for the tax year and some credit can be reimbursed. Although you do not have to pay taxes if you qualify for a refundable credit, you can still receive a refund. These five tax credits can help to make taxation time a bit less stressful.
Earned income credit –This credit applies to taxpayers who work but have no large salary. You can earn up to $ 6,431, which can be refunded. Things like total income, status of filing and dependents determine the eligibility for this loan. Under certain circumstances, some taxpayers who file single with no dependents may also qualify for this credit. Child and
Dependent Care Credit –This credit is available to taxpayers who benefit from care services for children under the age of 13. You can also claim this credit if you pay for the care of adults or spouses with disabilities.
Child Tax Credit–This credit reduces the liability of your child by $ 2,000. Each child must be addicted and under the age of 17. There may be additional requirements for eligibility, but this credit can help to raise children.
Saver ‘s Credit–This is available if you contribute money through your employer to an IRA or qualified retirement plan. You can qualify for this credit if your income is less than $ 60,000 per tax year.
American Opportunity Credit–This credit can help to reduce the cost of the first four years of college. If you are eligible, you can receive a credit of up to $ 2,500 if you are enrolled for a full academic term at least half a time. You must submit Form 8863, Education Credits, together with your tax return. You can qualify for this credit even if you owe nothing.
Under certain circumstances, you may be required to make estimated tax payments, such as not having taxes withheld from your wages or paying too little each paycheck for your taxes. At the same time, self – employed people usually pay taxes by estimates. Four facts concerning the payment of estimated taxes These four tips can help to answer some of your questions if you are confused about the process of making estimated tax payments. If you expect federal income taxes to exceed $ 1,000 in 2018, you should be prepared to make estimated tax payments.
To decide how much you will need to make in estimated payments, you should anticipate your full annual revenue, including any deductions or credits you may claim at the time of taxation. Some life events like the marriage or birth of a dependent child can change the amount of taxes you have to pay. If you rely on estimated tax payments, you usually pay four times a year. Payments are usually made on or around 15 April, June and September and again on 15 January of the following year. You would pay April, June and September 2018 for estimated payments made for 2018, and your final payment would be due by 15 January 2019. Payments can either be made online or by phone. Alternatively, if you decide to send payments by mail, you can use Form 1040-ES, Estimated Tax for Individuals, which provides payment vouchers.
If you want to deduct the payment for any type of medical expenditure this year, you must be aware of some new rules that apply to these types of deductions because they can affect your return. If you are looking for deductions for medical or dental expenses, you should be familiar with the following guidelines. Gross adjusted income –Your medical expenses must exceed your adjusted gross income by 7.5 percent during the current tax year.
You must itemize your deductions in order to claim any medical or dental expenses. These types of deductions do not form part of your federal tax return ‘s standard deduction.
Payments During the tax year–payments made during the tax year 2018 can only be claimed. If you pay by check, the date is usually considered the day you sent the check and not the cash date.
Out of Pocket Costs–You can not claim deductions if any of your payments have been reimbursed by a third party or insurance plan. You can only claim medical and dental expenses for yourself, your spouse or qualified dependent.
Travel–You can deduct travel costs for medical care. These may include items such as public transport payments, tolls, parking or ambulance payments. If you deliver your own transport, the standard refund rate is 18 cents per mile.
No double dipping–You can not deduct the payments if you pay for any medical or dental expenses with a Flexible Spending or Health Savings account. Generally, these payments are from plans supplied with tax – free funds.