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My #1 Tax Tip of the Day

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Tax Time is Neigh

Originally, this post was going to be about some Tax Tips for the Work at Home Business Person. I thought I knew a little about taxes and I found out I know Very Little about taxes.

I do know that you can deduct a percentage of your home that is used for business. It must be an exact percentage And it must be Exclusive. It can Only be used for Business. ie. you Can Not Deduct for Office Space if you conduct your business from the Kitchen Table. Duel Use doesn’t count.

The same goes if you sit on your couch with your Laptop to deal with Clients. You can use the Computer for a deduction (as long as you don’t play solitaire), but not the space you are sitting in. Again Duel Use.

I know you can take the exact percentage of the Utilities Used like electricity, heat and things of that nature, but you Cannot use the Telephone as a tax deduction unless it is ONLY used for business. The House Phone is Duel Use.

The Tax Code changes almost as much as the Weather. What you could claim on your taxes Last year May Not Apply This year.

So, My #1 Tax Tip for the Self-Employed Home Business Owner…

GET AN ACCOUNTANT

(Preferably, a Self-Employed Home Business Accountant.)

You’ll be Glad you did.

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    March 13th, 2007 at 12:23pm | Posted by Joe | Basics, Management, Tips, Work at Home | 6 reader remarks | Print This Post

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    6 Reader Remarks

    1. You are frazzled, aren’t ya? (It’s duAl use… not duEl like bang bang you’re dead dueling) ;)

      I know that my accountant is my lifesaver come tax time. He’s also the person I can ring up on the phone whenever I have a question during the year.

      The thing to remember is that what you file this year, may wind up setting you up for quarterly payments next year. So be prepared, and grab yourself a savings account or something to put a percentage of business income in all year long. I love my INGDirect account for this very thing - out of sight out of mind until tax time.

      I declare 1/8 of the household bills. Electricity, fuel, and would be the mortgage interest and property taxes if the house were in my name. (We don’t have a water tax, we have an artesian well, or I could deduct part of that as well.) I deduct 100% of the internet cost, plus my business lines. My computer and other peripherals are on a deprication of use deduction. The first year I deduct the most, then lesser for consequent years. That’s why you’ll find a lot of businesses grabbing up the new stuff - because their old stuff stopped giving them a cut back on the taxes.

      Bottom line? All this is in my accountant’s brain filing cabinet. I just know it because I hand it all over to him, pay him a nominal fee to do the work for me, and it’s all set. All I have to do is gather my receipts, bank statements, and give him a total “income vs. payout” post-it. It’s fan-freakin-tastic!

      Input by Lara | March 13, 2007 @ 2:54 pm

    2. Hey Lara,
      I hope people read comments on this one, your response deserves a post of it’s own. ;-)
      My expertise is NOT taxes, that’s why Accountants have jobs. They can tell us things we wouldn’t think of when it comes to dealing with Uncle Sam.
      Oh, and one good correction deserves another… Subsequent years… ;-) (Spellcheck doesn’t pick up on improper grammer or usage, only spelling.)
      Thanks for your insight, you always contribute more than what is contained in my articles.
      Joe

      Input by Joe | March 13, 2007 @ 5:04 pm

    3. Lara, you may have noticed I didn’t correct either of our mistakes. I want to see if anyone else notices. ;-)

      Input by Joe | March 13, 2007 @ 5:24 pm

    4. LOL You’re so right - Guess I’m pretty frazzled too! LOL Though I was at one time one of those people who used the word “irregardless” until it was slammed into my brain that the word doesn’t exist. LOL

      Thanks for the compliments on the comment though - it’s your fault for getting my brain going! ;)

      Input by Lara | March 14, 2007 @ 6:18 am

    5. Hey Lara,
      I used to be on of those people also. Got it from my Mom, her favorite was “irregardless and never-the-less”.
      I’m glad I don’t use that one anymore. ;-)

      Input by Joe | March 14, 2007 @ 7:50 am

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