Professionals Filing in 2018
If you’ve had preparation for tax season in the front of your mind for all of 2017, receipts and all, good for you – you’re ahead of the game.
But if you’re like the majority of professionals to file in 2018, you’ve probably given your taxes little attention. Not to worry. It isn’t too late to get ahead of the potential headaches. Segmenting the process for yourself goes a long way. The following approach is both simple and effective.
The earlier you file, the better chance you have of not only getting it right, but also of getting the most out of your efforts. Simple. In order to be early, you’ll need to know the deadlines. Surprisingly, this detail often gets overlooked. There can be various deadlines for businesses aside from the big one in April, so knowing your status as a business and the corresponding due dates are a must. From here, you can carve out the right amount of time to prepare, instead of sweating/crying at the last minute.
If need be, Form 4868 can give you a six month extension on your personal return when filed by April 17th.
Again, no worries if you haven’t been keeping track all year. It’d be better if you did, but you may be able to follow the breadcrumbs.Those crumbs will be easier to find and interpret the less time has elapsed since you dropped them.
Even for a non-business filer, “Miscellaneous Expenses” related to your employment or other financial categories that together make up over 2% of your adjusted gross income are tax deductible. Keeping track of your business expenses is therefore not only a good practice for staying on top of your costs, but can also be a great opportunity come tax season, when itemized. You’ll also want to keep up with any donations made to charities, as well as dues paid to professional organizations, as they are also deductible.
Speaking of deductions, keep in mind there are all kinds of deductions and credits floating around, just waiting to be utilized, which frequently come into play for hard-working professionals.
One of the most beneficial is the Child and Dependant Care Credit. When you pay daycare centers or other care providers to care for qualifying children under age 13, or a disabled dependant of any age, you may be eligible for a tax credit of up to 35% of qualifying expenses. The Saver’s Credit is for low and moderate income taxpayers who are saving for retirement.
Student loan interest, as well as general education expenses spent to maintain or improve your job skills are both tax advantaged. The Lifetime Learning Tax Credit offers a tax credit of up to $2,000 per taxpayer for education expenses paid that year.
More deductions available to professionals include: penalty paid on early withdrawal of savings, alimony paid (not child support), points paid on mortgage or refinancing property, medical transportation costs (tolls, parking and mileage), home office expenses, job seeking expenses and cell phones (when used for work).
The saying goes that if you do side work, you’re a small business. While this phrase can sometimes be a stretch, the IRS sees it as no exaggeration, as you’re able to write off many qualifying side work expenses.
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