Last Minute Tax Tips From Micro-Business Expert
Small Business Informer:
It’s April, and tax day is right around the corner but small-business owners submitting their 2006 tax returns are in luck – everyone gets 2 extra days to submit their forms because April 15th falls on a weekend and April 16th, Emancipation Day, is a holiday in Washington, D.C. Those 2 extra days provide valuable time for entrepreneurs rushing to file.
‘Don’t be tempted to take shortcuts or make up numbers that you think you won’t have time to calculate correctly because that will increase your chances of making a math mistake,’ said Keith Hall, National Tax Advisor for the National Association for the Self-Employed (NASE). ‘It’s important to remember that you’re not alone since there are a number of resources out there to help micro-business owners, even for those last minute filers.’
For those micro-business owners who find themselves running out of time, the NASE offers these tips to help filers waiting until the April 17th deadline:
1. Check for hidden deductions: There are a number of deductions that small business owners and the self-employed forget when filing taxes. If you work out of your home, your office may qualify for a deduction. Do you drive to the post office or a client site? Those miles may add up to a sizable deduction too.
2. Retirement Savings: Retirement savings are deductible for last year’s tax return up until April 17th of this year. That means you can count money deposited into retirement savings in 2007, up until the day you file, on your 2006 tax return.
3. Filing Date: If, despite all your rushing around, you still can’t make the April deadline, relax. All tax filers can get an automatic 6-month extension by filing Form 4868 by April 17th, which you can download from the IRS Web site at http://www.irs.gov/. However, an extension of time to file is not an extension to pay. If you do not send the IRS what you think you owe in taxes by April 17th, you’ll be subject to late fees and interest.
4. Check your math: Most of the mistakes on tax returns are simple addition and subtraction errors. Check your math. Then, check your math again.
5. Start thinking about next year: While small business owners may be tempted to finish their return and not think about taxes again until next year, now is a great time to reflect on how to reduce your 2007 tax liability. Consider deductions for a home office or employing your children; create a medical reimbursement plan, which would enable the business to reimburse the employee for all out of pocket medical expenses; reconsider the tax implications of incorporating your business; and research retirement plans designed specifically for the self-employed, including an IRA, SIMPLE, SEP, Single 401(k), and Keogh plan.
6. Look for help: Sole proprietors doing their own taxes can find help from a number of sources, including Schedule C from A to Z, a line-by-line guide for completing the tax form Schedule C, available online at http://www.nase.org/. Additionally the IRS offers a Web site and toll- free help line, 1-800-829-1040, which offers assistance to small businesses.
Members of the National Association for the Self-Employed have several additional resources available year-round to help ease the burden of tax filing. Questions emailed to Tax Talk are answered by CPAs within one business day at no charge. Tax Central provides a personalized tax calendar and calculator to help estimate the amount of self-employment tax due. In addition, a newly launched NASE podcast allows micro-business owners to access advice from the NASE’s micro-business consultants anytime, anywhere, available at http://news.nase.org/nase_podcast.asp.
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