10 Do’s and Do Not’s for Filing and Lowering Your Taxes
1. Do keep good records of your expenditures.
2. Do keep your receipts, even if its in a shoe box. Its better to have the backup in case IRS ask questions.
3. If you are in business and you need to purchase equipment for your business, do so, and ask your Tax Professional to 179 the property. (The provisions of Internal Revenue Code Section 179 allow a sole proprietor, partnership or corporation to fully expense tangible property in the year it is purchased )- In 2006, a business can expense $108,000 in capital expenditures.
To qualify for the section 179 deduction, your property must meet all the following requirements.
* It must be eligible property.
* It must be acquired for business use.
* It must have been acquired by purchase.
4. Do not over estimate expenses that you don’t have receipts for.
5. Do not round you number off to $50, $100, $150 $200 - allow your numbers to be “real” $51, $108, $148, $203, etc.
6. Do attach an explanation if you have an extremely large deduction.
7. Don’t try and force the software if your e-file won’t go through - take your return to a Tax Professional. There is a reason the e-file didn’t go through.
8. Do file your taxes before April 15. Extensions give IRS more time to review your return since it is not filed during the season rush.
9. Do sign and date your return. You would be surprised at how many people forget to sign and date their return.
10. Do not take the home office expenses unless you know what you are doing, especially if you are planning on selling your home in the next 3 to 5 years.
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Cassandra Ingraham is a Tax Accountant and Instructor for Basic Tax Classes in the San Francisco Bay Area. During the balance of the year she can be found at http://www.taxeswilltravel.com providing Formal Introductions to Lenders for Accounts Receivable Funding (Factoring) and Purchase Order Funding. Tip! Participate in company retirement plans. Every dollar you contribute will reduce your taxable income and thus your income taxes.
Individuals with Tax issues can find dozens of self-help tax articles at: http://taxeswilltravel.com/article_index.htm |
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