There is tax advice everywhere you turn. Deduct this, don’t claim that, use this percentage for this. What do you believe, and what do you take with a grain of salt? The IRS publishes many of booklets every year to help the average taxpayer, but most of them are written in legalese that confuses people more than they help.
Generally speaking, these five tips should make tax time a bit easier for the Quickbooks expert in you:
Net operating loss carryback
The carryback works like this: Say you lost $200,000 in 2008 after turning a $100,000 profit in each of the previous two years. You carry the loss backward by amending your 2007 tax return to offset that year’s entire profit. You would then be due a refund on any federal taxes you paid on that profit – and state taxes in roughly a third of the states. You would still show a loss balance of $100,000, which you can carry back to the previous year and offset your profit then as well.
Pro ratia is sort of a fancy term for writing off as much of your utility bills (water, gas, sewage, electric, etc.) as possible. You can write 100 percent of these bills off if you work out of an office where you pay rent and the space is only used for work; but if you work from home you can write off these payments pro ratia. To get this figure, measure the square footage of your home workspace and define this figure as a percentage against the total square footage of your house. Then, add up the sum of your utilities and apply this percentage – that’s the amount you can write off.
So, if you have a 2,000-square-foot house, and you use 500 square feet (or 25 percent of 2,000) for office space, you can write off 25 percent of your total household utility bills. That’s pro ratia.
All postage is tax deductible if it is for business mail. Keep every receipt.
Every meal where you have discussed business with someone can be considered advertising. Every free sample that you have given is considered advertising. Every discounted item that you have sold, the discounted part can be considered advertising. These marketing items, along with the normal forms of advertising, are business deductions that can save you hundreds if not thousands of dollars at the end of the year.
You do not need millions in sales to donate to charity. Simply donate 1 percent of net sales and the tax deduction could take you from sending a payment to receiving a refund; and the good work will enhance your reputation in the community.
Tax tips and marketing write offs for Quickbooks experts do not have to be legal maneuvers. Common sense can save you hundreds or thousands of dollars.