Tax day is April 18 this year. Even if you’ve already filed, CPA Mari Ramirez undoubtedly shared something you didn’t know at the March Freelance Austin meeting, including these five frequently forgotten items on our personal and/or business returns.
#1. “You ain’t giving away right!”
When you drop off a trunk load at Goodwill, The Caring Place or another charity, do you estimate the value of every item?
Take 10 minutes before you leave home to take a photo of your donation en masse for documentation, then spend no more than 10 minutes – on the whole pile – estimating the value of each item. You can find a ready-made spreadsheet to make it easier at donationcalculator.com.
“As long as you have some basic evidence like this, I’ve never had an issue in an audit,” Ramirez said.
#2. Reconsider paying estimated taxes.
By paying estimated quarterly taxes, you’re allowing the IRS to use your money, Ramirez said – and you may be paying more than you’d be required to on Tax Day. Instead, she recommends saving 20 percent of your income from every job specifically for taxes.
#3. Take a class for your business and deduct it!
When you take a class for your business, 100% of the tuition and fees are deductible. For other types of classes – you or your child’s – the deduction is lower, but there’s still a deduction, so talk to your accountant.
Remember, in the spirit of saving paper and postage, the 1098-T tuition tax form isn’t mailed to you anymore. Print it from the school’s website.
#4. Travel and deduct.
If you’re spending all your working time traveling within the U.S., then your expenses are 100-percent deductible (minus meals and entertainment, which are at 50 percent).
When you’re abroad for seven days or less, you can deduct 100 percent of your transportation costs as long as you’re working for part of the time. Don’t try to deduct meals and entertainment, though, unless they’re an integral part of the working.
Abroad more than seven days? Spend more than 75 percent of your time on business, and your transportation and living expenses are 100-percent deductible.
Cover yourself in case of an audit, though: Keep track of where you’re working on your electronic calendar and save it. Talk about your worksite on social media, with pictures. In other words, be able to document your whereabouts!
#5. Bring the food.
If you bring food to a meeting, the goodies are 100-percent deductible. If you go out for a meeting, the meals and entertainment are only 50-percent deductible. Oh, and don’t give your clients “gifts” – distribute “promotional items.” (They’re much more deductible.)
One last word of caution for us late filers: The weekend before the tax deadline this year is when Easter falls, so you may not want to depend on your accountant being available then.
Freelance Austin does not intend this to be tax advice; each individual is encouraged to seek the counsel of their own accountant or financial advisor.
Mari Ramirez, CPA, has been in public accounting for more than 10 years and is the owner of Mari Ramirez CPA, with clients in Austin and surrounding areas. She’s worked in a wide range of industries from tech startups and real estate to nonprofits, retail stores and service industries. She is proficient in all types of software and considers herself a software nerd. She received the 2005 Humanitarian of The Year award from Texas A&M International University for educating high school students on the political process. She is president of Georgetown Art Works, treasurer for the Foundation for Learning and Youth Travel Education, and an advisory member of Cedar Ridge High School.
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