Tax Tips for Procrastinators
Expert tax tips for increasing deductions and reducing liability
April is over, but for those tax procrastinators looking to make next year a little less of a headache, columnist Karen E. Klein recently asked several tax experts to discuss common issues and offer advice for tax-return procrastinators. |
Use Last Year's Tax Return.
When you sit down at that kitchen table with piles of paperwork, it can be overwhelming. Start by letting your 2006 return be a guideline for the documents you should have. "If you had an item of income or expense last year, you'll probably have the same thing or similar this year," says Keith Hall, a national tax adviser for the Dallas-based National Association for the Self-Employed. "It's a good way to check off the documents you need to file and go searching for the ones you're missing." |
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Hire a Pro.
Although most entrepreneurs are probably capable of preparing their own returns, especially with today's affordable software, having a professional put together your return is preferable. "I recommend a professional, given the current IRS environment where audits are getting more common," She says. Getting help is probably more cost-effective than you think. "Consider how many hours you'll have to spend, how much time it will take away from your business and your kids, and how much you'll spend on Advil," Hall advises. Next year if things are pretty much the same, you might be able to do it yourself by following your 2008 return.
Don't Leave Money on the Table.
Look through your business checkbook to find deductible business expenses, but don't forget there are legitimate expenses that don't turn up in your checkbook or your credit-card statements, like business use of your car or home office deduction. If your firm operates out of a home office that takes up 12% of the total space of your home, you can probably deduct 12% of your home mortgage expense, as well as additional expenses such as home repairs, utilities, and maintenance costs. If you use your car for business, Paul Stappas, a strategic planning consultant with Neshanic Station (N.J.)-based Bookkeeping Administration Management, says you can claim depreciation on your car, as well as deduct gasoline, oil, tolls, and vehicle repairs. Make sure you have a simple logbook where you document the business miles you put on your car, he says.
Pay Now.
Even if you filed for an extension on Apr. 15, get as much information to your tax preparer as possible and pay now what you think you're going to owe. Do your best possible calculation of your tax liability and send in that amount, along with your request for an extension. The extension allows you additional time to file your return—but not to pay your tax.
Originally written by Karen E. Klein for Business Week
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