Wednesday, April 02, 2008

Tax Tips for Work At Home Moms

Tax TipsAs we start our tax filing and getting our receipts and forms ready to file it got me thinking on how as Work At Home Mom’s we can make next years tax filing a little easier and more organized. If you are like me I was waiting until the last moments to gather all my paper work and receipts and I even had to search for a couple of my receipts.

As a work at home mom with a business generating income it is very important and almost crucial that you have some sort of financial software to help you keep track of your book keeping such as Quick Books or Quicken. The financial software will help you keep track of all your expenditures and income coming into your accounts from your online business. Which will make your tax time a snap next year?

Here are some tips to help you save a little money on your taxes for next year!

1-Purchase your high priced items that you may need to replace equipment this year by Dec 31st so that you can use this as a tax write off on your next years taxes. Another words if it is December and you know you need to purchase a new computer next year, buy it this year to help increase your expenses and thus lowering your taxes. Same goes with your household expenses if you work from home, pay all your bills in December instead of waiting for January just to add more deductions on your 2008 taxes for example your mortgage payment, insurance payments taxes and more.

2-Donations- Donate your old equipment or kids clothing or household items this year and keep a running total of everything you donated so that you can use it next year on your tax returns. Thus helping to increase your deductions.

3-Try to keep a separate checking account or paypal account for your business use, so at the end of the year it makes your book keeping much easier. Although I have paid for items out of my personal accounts I make sure if I paid for something out of my personal account that I keep my receipts and mark my receipt accordingly to show the purchases were for my business use.

4-Don’t overlook deductions that apply to you! One of the most overlooked deductions for Work At Home Moms is your mileage! YES you work from home but you can deduct your mileage attending workshops, running to the office supply store, the post office if you send out lots of packages and more! If you plan on deducting your mileage keep a mileage book in your car so that is within reach when you are driving for business purposes and can keep an accurate record of your mileage to and from your business stops.

5-Start Up Expenses if you were a new business in 2008 you can deduct up to $5000 in start up expenses the key is the deductions can only be made before you made your first dollar! These expenses can be advertising, attorney costs, accountant, supplies and equipment.

6-Home Office Expense- Don’t forget if you work from home remember you can deduct your area of home that use for your business. It use to be a HUGE red flag for the IRS but over the last five years this is not true as more people are starting to work home and this can be a huge deduction because you can deduct a portion of your utilities and mortgage payments and tax and insurance payments

7-Keep your tax books current and up to date you should try to site down once a month and make sure you have added all your expenses and income coming in so that at the end of the year you are not back tracking

8- Pay your taxes quarterly so that you are not having to owe a large sum of money at the end of year! The best way to do this is to figure out approximately what your income will be and pay in your taxes that way.

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