How Home-Based Businesses Can Avoid Giving Uncle Sam More than His Share
How Home-Based Businesses Can Avoid Giving Uncle Sam More than His Share
By Darren Oliver
With the rush to file your taxes by April 15th, you probably did not consider the possibility that you overpaid. According to the General Accounting Office, in 1998 alone, there was $311 million paid unnecessarily to the IRS. Do not count on the IRS to tell you if you have overpaid because they are not required to but you can file an amended return for up to three years.
Chances are, you either prepare your business taxes yourself or have your tax preparer or CPA does them. There a number of issues surrounding either tax preparation method, which can result in your tax liability being calculated as higher than it actually is including missed deductions, numerous changes in tax laws or being given incorrect advice.
As a home-based business professional, there are a number of deductions you are entitled to which many tax preparers often miss. For example, if you run a home office you are entitled to deduct expenses for the percentage of square footage the home office is occupying. Expenses include the combined total of mortgage interest, property taxes, utilities, repairs, etc. For example, if 250 square feet of a 1,000 square foot house is being used for a home office, you are entitled to deduct a quarter of your total expenses.
Although some deductions may seem minor, over an entire year, they can add up to thousands of dollars that you are unnecessarily paying the IRS. That is money that you could be using to grow your business.
Karen McClafflin, owner of home-based Secret Canyon Realty in Colorado Springs, CO, was able to recover $11,000 when her tax preparer failed to include home office and automobile deductions in her past returns.
Another area, which causes many business owners to overpay, is being given incorrect advice by their CPA, tax preparer or even the IRS directly. In a poll performed by Money Magazine, the average tax preparer, prepares an average of 480 returns between February 1st and April 15th, that is a lot of returns in a relatively short amount of time which makes it difficult for your return to get the time and attention it deserves. This same poll also found there was an average discrepancy of 300% between what the tax preparers said was due and what was actually due. Moreover, in a poll of 50 professional tax preparers, consisting of 10 basic tax questions, none answered all 10 questions correctly and only 34 got at least half correct.
This problem does not extend to just tax preparers or CPA's. In the IRS's 2001 assessment of their own 544 call centers, they found that 50% of the time, their representatives gave incorrect or insufficient advice. Whether you do your taxes yourself and had to call the IRS for clarification on an issue or your CPA did, odds are the answer was not accurate.
The United States tax law is one of the most complex in the world. Not to mention, tax laws change every year and have changed tremendously in the last couple of years. Even the best tax preparer, CPA or even IRS representative can easily make a mistake or, forget to use an exemption which could reduce your tax liability.
If you have not yet filed your taxes, it is a good idea to get a second opinion from an independent source. The extra money and time spent in doing this could save you thousands. Look for someone or a company who:
· Has sufficient years preparing home-based business tax returns
· Prepares less than the average number of returns between January and April so that your return gets sufficient time and attention.
· Have had clients get a second opinion. In addition, talk to those clients to get there first hand insight.
· Is willing to pay for a second review of your tax returns to ensure accuracy.
· Is willing to take MSN's online Tax IQ Test at http://moneycentral.msn.com/investor/calcs/n_taxq/main.asp. Although designed for consumers, this test contains basic tax information that even junior level tax preparers should know.
Just as you trust a surgeon with your life, you trust this individual or company with your money and confidential information. Be highly selective and do not be afraid to put them through a rigorous qualification. If they are not willing to participate in your qualification then either they do not know their stuff or, your business is not that important to them.
If you already filed your taxes or think you might have missed out on deductions, have been given bad advice or failed to take advantage of a tax law change which could reduce your liability for previous tax years, what can you do? The good news is that by law, the IRS is required, for up to three years, to review your returns and records as many times as needed to find errors. You have the same three years to get a second opinion and file an amended return. In fact, in 2002, 3.3 million taxpayers filed an amended return.
Samuel Rowley, owner of Muffler Masters in Colorado Springs, was able to recover $14,500 through the filing of an amended return when it was found that he overpaid FICA and payroll taxes.
You may worry that an amended return will trigger an audit however; the IRS itself admits this is not the case. In 2002 alone, 3.3 million taxpayers filed an amended return. The IRS is not the big, bad agency we used to know. In fact, statistics show that audits are down and continue to decline.
Businesses throughout the U.S. overpay their taxes to the tune of billions each year and your money could be part of the billions that is overpaid. When it comes to your taxes, always get a second opinion to ensure you are not paying more than you should and, you can even hit pay dirt by looking back.
Darren Oliver is the Chairman and COO of Tax Recovery Systems (TRS) which he founded in 1995. Through their network of sales partners and franchisees, TRS is dedicated to recovering overpaid taxes for home-based and small to medium sized businesses all over the U.S. This commitment has resulted in an average $8,000 recovery for over 60% of qualified reviews. For more information, visit www.trs-esp.com or call (800) 714-3504.
Warning: include(inc/ads-body.inc) [function.include]: failed to open stream: No such file or directory in /home/accounta/public_html/265_business_personal_taxes.php on line 95
Warning: include(inc/ads-body.inc) [function.include]: failed to open stream: No such file or directory in /home/accounta/public_html/265_business_personal_taxes.php on line 95
Warning: include() [function.include]: Failed opening 'inc/ads-body.inc' for inclusion (include_path='.:/usr/lib/php:/usr/local/lib/php') in /home/accounta/public_html/265_business_personal_taxes.php on line 95
MORE RESOURCES:
 Financial Post | Tax shelters unearthed Vancouver Sun For the world's major economies it's open season on tax havens and the clients who flock to them. ... Roseman: Nine years later, taxman offers apology, refund This could be the year for a nice, big refund from Ottawa |
Washington lawmakers offer new tax-hike packages Seattle Times The Legislature's tax negotiations picked up speed Friday, with House and Senate officials offering competing plans to raise roughly $800 million toward ... Gregoire tax compromise avoids sales tax State House votes to boost cigarette taxes by $1 a pack Washington senators approve tax increases |
Ottawa to collect unpaid fines via tax bills CBC.ca Starting in May, the city will have the power to tag unpaid municipal and provincial fines onto property tax bills. The legislative change allows ... |
The tax man cometh National Post The Ontario government is introducing the Harmonized Sales Tax (HST). The existing Provincial Sales Tax and federal Goods and Services Tax will be combined ... Sales Tax Harmonization reduces your bottom line? With her dying breath, this letter writer will be paying the taxman |
 Moneywise Magazine | Taxes frozen as Government warms up for the election WalesOnline ACCORDING to tax manager Kate Moore of ktsowensthom- as, while spring may be on the horizon, the Government is still frozen and not much movement is ... Budget 2010: Tax has doubled under Labour Against a value-added tax F&C: Increase VAT not income tax |
 National Post | Health Plan Means Bigger Deficits and Higher Taxes The Gouverneur Times And that, as the CBO has said, means deficits around 5 percent of GDP as far as the eye can see — or higher taxes. Pelosi and other Democrats have been ... Democrats Move Toward Vote on Health Bill With New Taxes, Fees How Does It Cost $940 Billion—and Cut Deficit? Obama rallies support for bill |
Mayors fear province will create new tax for TransLink Globe and Mail Mr. Trasolini said provincial representatives have been saying for years that they believed the region could put more into transit costs from property taxes ... Bond, mayors head talk TransLink |
 NY1 | Figuring out college tax breaks: American Opportunity Credit USA Today Lawmakers, eager to show their enthusiasm for higher education, have enacted numerous tax credits and deductions to help families defray college costs. ... Daw: Americans in Canada eligible for US tax refunds Tax Assistance for Low Income and Elderly Tax help available in Lincoln March 27 |
 CBC.ca | 4.5% property tax hike proposed for Regina CBC.ca (CBC) The City of Regina portion of property taxes could go up 4.5 per cent, a budget proposal released Friday says. That's the amount the city says it ... Regina residents facing biggest tax hike since Mayor Pat Fiacco took office |
 CBC.ca | MP3 tax bill opposed by Conservatives CBC.ca (CBC) Conservatives voiced their opposition Wednesday to a private member's bill that would add a tax to MP3 players and extend users' rights to make copies ... Don't tax iPods Canadian MP: Tax media devices to pay for copyright infringement NDP's Angus unveils copyright bill |
How To Get An Instant Pay Raise
As a gentleman was leaving my class recently, he wanted me to clarify something I had said. He was making sure that he should take his four or five thousand dollar tax refund and pay off debt.
Tax Trap #5 -- Ignoring The IRS (and the 5 best ways to contact them!)
We all love to criticize the IRS, don't we? And I'm just as guilty as anyone. It's easy to ridicule a huge organization of government bureaucrats who often seem to be Public Enemy #1.
Know A Tax Cheat? Get Paid To Tell The IRS
According to the IRS, taxpayers underpay their taxes by some $300 billion. If you know someone that is contributing to that deficit, the IRS may be willing to pay you up to $10 million for the information you provide.
The Annual Gift Tax Exclusion: Getting The Edge
Whether helping the kids with a down payment on their first home, paying the premiums on a life insurance policy in an irrevocable trust, or moving appreciated assets to a younger generation, annual gifting will touch the lives of millions of Americans. But before the transfer is made, an investor should spend some time looking at the investment and the tax ramifications of the property to be passed.
Tax Reform, My Way
We need real tax reform and we need it now. Previous attempts have been made at tax reform, but they have only provided band-aid solutions that have still left us with too many quirks, complication, and read tape.
How Home-Based Businesses Can Avoid Giving Uncle Sam More than His Share
How Home-Based Businesses Can Avoid Giving Uncle Sam More than His Share By Darren Oliver With the rush to file your taxes by April 15th, you probably did not consider the possibility that you overpaid. According to the General Accounting Office, in 1998 alone, there was $311 million paid unnecessarily to the IRS.
Tax Records - What You Should Keep And For How Long
Many taxpayers are confused about how long they should keep tax records. The term "tax records" refers to your tax returns and the documents that support the information in the returns.
Amending Procedural Laws for Collection of E-taxation
The electronic transaction ordinance defines the certificated copies in which are to be presented for adjudication. Where any law requires or permits the production of certified copies of any records, such requirement or permission shall extend to print outs or other forms of display of electronic documents where, in addition to fulfillment of the requirements as may be specified in such law relating to certification, it is verified in the manner laid down by the appropriate authority.
Save Money on Taxes - Let Uncle Sam Pay for Your Fun!
"Deducting Meals and Entertainment"O.K.
Are You An Innocent Victim of These Popular Myths?
Misconceptions, misinterpretations and just plain "untruths" are floating about income taxes. Believing them could be costing thousands of tax dollars!Myth: A Professional Tax Preparer knows all there is to know about taxes so you don't have to know anything them.
Are You Overpaying Taxes If You Use Tax Preparation Software?
For many business owners the answer to this quandary is tax preparation software. Fill out a fairly simple interview, click "print" and out comes a completed return that will pass muster with the IRS.
Navigating The Internet Sales Tax Laws
QUESTION: I have been contacted by my local city government to say that my business is scheduled to be audited to determine if I owe any sales tax from items purchased on the Internet. Can they really make me pay this tax? I thought you could buy things online tax free? -- Katie R.
Business Tax Deductions
As we enter mid-March, taxpayers begin to become very interested in deductions. Following are a few that you may be entitled to claim.
Tips and Simple Guidelines on How to Calculate Payroll Taxes
Managing a business small, medium or big requires you to pay your taxes, as well as your employees taxes. Managing a payroll can be an arduous and taxing job, no pun intended.
Take Control of Your Taxes
As everyone in the U.S.
Uncle Sam is Ready...Are You? Organizing Tips for Tax Time
Anyone who is closely related to an accountant knows that there are not four, but five seasons in a year: Spring, Summer, Fall, Winter, and 'Tax Season.' During the other seasons, we accumulate leaves, snow, and mosquito bites.
Tax Deduction for Alimony Payments? - Yes!
Over 50% of marriages end in divorce in the United States. Many divorce decrees include provisions for the payment of alimony.
2005 Ford Escape Hybrid Certified For Clean-Fuel Deduction
If you are environmentally conscious and purchase a 2005 Ford Escape Hybrid vehicle that combines a gasoline-powered engine with alternative power methods, you are in line for a nice tax deduction.Ostensibly, the government uses clean power tax deductions as a method to promote the use of vehicles that are less harmful to the environment.
IRS Statute of Limitations: Do Taxes Ever Expire?
Many Americans believe that an IRS debt is a debt for life and that the tax collector can hound them to the grave. Thankfully, that is not the case and there are statutory time limits on the ability of the IRS to examine and collect taxes.
What to Do If You Can't Pay Your Taxes
The end of tax filing extensions is quickly approaching. What do you do if you can't pay the amounts you owe? You should still file your return by the due date and pay as much as you can.