Tax Preparation Offices: How They Can Help
Today, just like in any other age, people hear things and repeat them without thinking. This is alll so obvious with the Internet and its far-reaching platform. Almost everyone is an expert on one thing or another and spout their views to the gullible and sometimes lazy recipients. When some people reach one of the tax preparation offices online or offline, they hold so many false truths about taxes that they make unreasonable claims. If you believe you have misinformation about income tax preparation, you can buy one of the online tax preparation software packages. Using these packages is a sure way to learning about income and deductions.
Read the following article to reinforce your knowledge about tax preparation.
Are you a victim of these 7 tax myths?
Distortions and just plain falsehoods are being told about income taxes. Believing them could be costing thousands of tax dollars!
Misconception #1: My professional tax preparer knows everything about taxes so I don’t have to.
Truth: Tax Preparers/CPA’s/Accountants are not uniformly informed about ALL tax laws. Most are able to file a personal income tax and know all the laws and how to apply them.
Thousands of excellent tax professionals are doing a good job and maybe yours is looking for ways to reduce your taxes. But the greatest majority only prepare your tax return. They know how to fill out the forms with their eyes closed.
Your tax preparer does a good job filling out your taxes with the figures YOU provide. Most do now ask questions in search of further deductions to reduce your taxes. Only by becoming informed about home business tax laws will you be assured of taking every deduction allowed by law.
Misconception #2: You cannot deduct home based business expenses unless you “itemize”.
Truth: All taxpayers have the opportunity to itemize if it is to their advantage. Whether you “itemize” or not has NO bearing on your Business. When you “itemize” your income tax you file Form A&B and take such things as medical, home mortgage interest etc. You will only “itemize” if the total of Form A is over the standard deduction (for 2008 taxes$5,450 single, $10,900 married).
Misconception #3: There is no advantage to filing business tax forms if you are not making a profit.
Truth: You should file a business tax especially if you are not making a profit. Home business expenses can be offset by income from your job. This reduces your taxable income which in turn reduces your tax liability.
Misconception #4: Your Internet marketing business is just a hobby because you hold a full time job.
Truth: The rules clearly state you have a business if you meet 8 rules. Four of the most important rules to meet are:
1. The knowledge of the taxpayer or his/her advisers. If you are developing a home-based business and actively learning and applying business principals to your business…you qualify.
2. The United States Federal Tax Court has ruled that 45 minutes a day, 4 to 5 days a week qualifies the Time and Effort stipulation.
3. The way you carry on your business activity. If you conduct your business mostly on the telephone, over the Internet and in-home presentations you’ll do fine. On the other hand if you do most of your business on the golf course, during lunch or at the bar you have a hobby not a business.
4. If your primary reason for having a business is to produce income instead of create tax write offs then you qualify. It does not make any difference if you actually make any profit. Just to show that you have the intent to produce a profit.
If you meet those 4 criteria then there is no reason your business would be classified as a hobby.
Misconception #5: In order to file home business taxes you must make a profit within 5 years.
Truth: That’s a generalization. Yes, the government would like to see you make a profit within 5 years but you are not penalized for not doing so. If you are following the above 4 rules and conducting yourself as a business you have nothing to worry about. You are a business and some businesses are not profitable for a number of years.
Myth #6: Learning how to reduce you taxes is hard and complicated.
Truth: Learning tax reduction strategies is not hard for the average person. There are good books written for the average business owner to learn what is available to them
Misconception #7: Tax documentation and accounting are not for a home business is not for the average person.
Truth: Documentation for the government is very easy if you use a pocket calendar and keep your receipts. In just 5-10 minutes a day you can have records that will withstand any government scrutiny.
Karin Russell has owned a home business specializing in tax preparation for home based businesses for 36 years. Her blog:Home Business Owners-Reap the Rewardsgives more tax tips for home business owners. She highly recommends the book ‘It’s How Much You KEEP, That Counts! Not how much you Make’for all her business associates.
Remember properly documenting your income tax details long before you begin your tax preparation can save you both time and money.
Originally posted 2009-03-13 20:32:45. Republished by Old Post Promoter
