Alright guys I know there are some tax experts on here and April 15th is coming soon soon so lets hear it. I started working as an independant contractor 2 years ago, my first year into it I had no idea what I was doing because I was used to being on a W2 and they always took taxes out for me. So when I started this new job, a co-worker, who also didn't know what he was doing, told me to just take out 30% each check and put it in a savings account and at the end of the year, use that money to pay my taxes. So I did, and at the end of the year I was shocked when I had to send in about 22K to the IRS. Plus a penalty of $260 (which was nothing) for not paying quarterly. So now i've learned better, I have a house so I can deduct interest, I opened two IRA's a Roth and a SEP, so the money I put in there just comes off my income. I have a room in my house that I have nothing but desks and computers, so I can deduct for a home office. I deduct my lunches, supplies, medical premiums, student loan interest, etc.... Can I deduct my vehicle expenses and mileage? I was never clear on this one because I just drive to my workplace and stay put, I don't actually use my vehicle as part of my job. I don't use a CPA currently, but probably should, anyone know a good one? Thx.
Are you sure about this one?? I think you can only claim a home office if your main business is out of your house, but you said you drive to work everyday so I'm guessing you don’t work from home.. I don’t have any real advice for because I have a CPA friend do mine..
You also have to make sure that the room is used for nothing but business purposes, I believe. We did an office thing in my apartment in Austin and I think that was the rule, then.
As I understand the rule, you are correct. For example, if you claim a room as an office and your child plays games in that room, it can no longer be claimed as an office. Do you deduct ALL lunches or just those that are business related?
What he said...If you had inventory and sold things and had to travel to and from, then I think you can deduct the mileage/lunches...I'm doing my taxes this weekend...I saved all of my reciepts to get a bigger Sales Tax Deduction...Good luck...
1. A ROTH IRA is NOT a deduction from your income, I believe. I think the ROTH is after taxes. Any distributions you pull out when you are 59 1/2 are tax free, however. The SEP IS a deduction however, and the rules for it are awesome. The tax savings can be huge with an SEP and you should MAX that out if that is financially feasible for you. 2. You can NOT deduct that room in your house unless you actually use it for an office and it is where you actually work from. Lots of people have a home office or study, but you can't deduct it unless that is your place of business. Since you have a full time office you drive to, you would have a hard time proving to the IRS that you could deduct this. 3. You can ONLY deduct lunches that are related to business expense. Just because you go buy lunch at work does not make it a business expense. 4. You can NOT deduct your vehicle expenses and mileage for driving to your place of work. You can only deduct personal vehicle expenses if the use of your personal vehicle is necessary to perform your job. Example: If you were a salesman and had to use your personal vehicle to drive from client to client. Driving to your office does not fit into this. All these little deductions bring up flags in the IRS computer system and make an audit much more likely. EDIT: I emailed my CPA wife to check on the home office thing. Here is what she says the rule is on home office: It has to be used exclusively on a regular basis as the principal place of a business, and the expenses are limited to the gross income from the activity reduced by directly and indirectly related expenses.
If you use the home office deduction, you also have a better chance of getting audited, and when you sell your house you have to figure out what percentage of it was your office, and then count that as business income, or capital gains or something like that. I've worked exclusively from home for 8 years, using 2 garages to store inventory and never claimed the home office deduction on the advice of my accountant. Get an accountant- they aren't that expensive. Mine charges $300 year.
My advise is to get one. I am obsessive and do my research, but my tax fellow always found stuff I never would have thought of that more than pays for his fee. He saves me money and gobs of time, and I am a pretty decent lay-person at most research or finance related tasks. Does anyone know if credit card receipts are sufficient for verification (in case of IRS audit), or do you need itemized food receipts. TIA
Credit card receipts should suffice, but you should also keep a calendar or journal of some sort indicating what the particular meal was for and who was in attendance.
I had a couple of questions. From the beggining of 2005 until november of 2005, I worked as an Indpt. contractor doing direct sales outside (BtoB, events, etc.) I used my car everyday to drive to specific event's and interviewee's along with me as well. I would say I put 20,000 miles on the car driving from events and to the office. Can i deduct when I had all of my tires changed, oil changes, matienence etc? And on other note can I deduct the lunches I had with all the people I interviewed on a daily basis? Thank you guys any help would be greatly appreciated.
can anyone please tell me if and what deductions there are for a single 25 yr. old. i remember last year that there was one but i was only 24. thanks a lot for the info.
If you own a home, there are property taxes and interest deductions. If you donate money, there is a charitable giving donation. It is only worth doing all this if your itemized deductions are worth more than your standard deduction. Being single and 25, if you don't own a home, your best bet will probably be to take the standard deduction rather than itemize.
oh ok yeah i got you. yeah i dont own a home i wish i did... anyways i was thinking that i understood there was some kind of extra cash you can get being 25 versus being 24. im probably wrong though.
Are you thinking about car insurance? Most car insurance drops at 25. I don't think there is any tax break for being 25. Oh, don't forget about your personal exemption AND the standard deduction. You get both.
