| I will show you how to save at least $3,000.00 on your | | | | auto-related expenses, says Zobel. Remember to |
| taxes this year! Saving on your taxes alone would be | | | | include gas, repairs and insurance. |
| great by it’s self, but I will also show you how to | | | | If you are leasing, include those payments. If you buying |
| save up to 70% on your travel and vacations as a | | | | the car, factor in the interest on your loan and |
| kicker. | | | | depreciation on your vehicle. |
| Would you be willing to invest just $495.00 and $49.00 | | | | And if your company's office is at your house, you get |
| a month to save $3,000.00 on your taxes this year | | | | a bit more of a break. You can deduct the entire |
| and every year? | | | | business-related mileage, from the minute you pull out |
| YTB Travelmore, now offers you the ability to start | | | | of the driveway until you return home, says Gary W. |
| your own home based travel business complete with | | | | Carter, author of J.K. Lasser's Taxes Made Easy for |
| your own online travel booking website. | | | | Your Home-Based Business: The Ultimate Tax |
| "Click" Join YTB, to you sign up, you immediately qualify | | | | Handbook for the Self-employed |
| for more than a dozen tax deductions for your small | | | | If your business is not home-based, your mileage |
| business, but you must do so by December 31, 2007. | | | | meter starts at your first business-related destination |
| Click here to save on your 2007 taxes and save up to | | | | and ends at your last. You can't include the drive to |
| 70% on travel, which is also tax deductable. | | | | and from home, says Carter, a CPA and professor at |
| A dozen deductions for your small business | | | | the University of Minnesota. In this case, try to schedule |
| Small-business tax rule No. 1: Don't mess with the IRS. | | | | several business appointments on the same day to |
| But that doesn't mean you should cheat yourself. Take | | | | allow you to take the mileage between stops as a tax |
| every legal deduction you can. Here are a dozen that | | | | write-off. |
| even savvy small-business owners and entrepreneurs | | | | 7. Travel, meals, entertainment and gifts |
| sometimes forget: | | | | Good news, small-business travelers. You might as |
| 1. Home office | | | | well stay in a nice hotel, because the entire cost is tax |
| Concerned that claiming a home-office deduction is | | | | deductible. Likewise, the cost of travel -- air, rail or auto |
| tantamount to sending an engraved invitation to an | | | | -- is 100 percent deductible, as are costs associated |
| Internal Revenue Service auditor? Don't be, says Jan | | | | with life on the road (dry cleaning, rental cars and |
| Zobel, author of Minding Her Own Business: The | | | | tipping the bellboy). |
| Self-Employed Woman's Guide to Taxes and | | | | The only exception is eating out. You can deduct only |
| Recordkeeping. | | | | 50 percent of your meals while traveling. So stay at |
| "I don't agree that chances of getting audited are | | | | the Ritz and eat at Wendy's. |
| greater with a home-office deduction," says Zobel, a | | | | Once you get home, your on-the-job meals aren't |
| San Francisco Bay-area tax expert, who specializes in | | | | deductible -- unless you bring along a client to talk |
| serving the self-employed. In her own practice, she has | | | | business. In this case, you might consider splurging on a |
| prepared more than 400 returns a year for the last 25 | | | | fancier meal because then you can write off half such |
| years. And while at least half of her clients claim a | | | | work-related dining costs. |
| home-office deduction, only one home-based | | | | The 50-percent deduction limit applies to most other |
| entrepreneur has been audited. | | | | client entertainment expenses, too. But a direct gift to a |
| The key here is that you use the term "home office" | | | | client or employee is 100 percent deductible, says |
| the same way the IRS does. The tax agency says it | | | | Zobel, up to $25 per person per year. |
| must be a space devoted to your business and | | | | 8. Insurance premiums |
| absolutely nothing else. Deducting the den that houses | | | | Self-employed and paying your own health insurance |
| the family computer and serves as a guest bedroom | | | | premiums? These costs are 100 percent deductible. |
| won't fly with Uncle Sam. | | | | This break primarily benefits proprietorships, but there |
| "If you only have one computer and you have a child | | | | are limits. The deduction can't be more than your |
| over four, the IRS is going to be pretty certain that the | | | | business' net profit. And it's not allowed if you were |
| child is using the computer," says Zobel. "And the | | | | eligible for other health care coverage, including that |
| burden of proof is on you." | | | | offered by your employed spouse's medical plan. |
| The deduction, however, isn't limited to a full room. | | | | Did your spouse work for you last year? Then, says |
| Your home office can be part of a room. | | | | Carter says, you can get the full medical premiums |
| Just how much of the space is deductible? Measure | | | | deduction on your return. As an employee, your |
| your work area and divide by the square footage of | | | | spouse's premiums are 100 percent deductible; if you |
| your home. That percentage is the fraction of your | | | | and the children were on her policy as dependents, so |
| home-related business expenses -- rent, mortgage, | | | | are those costs. |
| insurance, electricity, etc.-- that you can claim. | | | | Two caveats: 1) Your spouse's employment must be |
| 2. Office supplies | | | | real, not in name only, and you must offer coverage |
| Even if you don't take the home-office deduction, you | | | | equally to any other employees. 2) Failure to meet |
| can deduct the business supplies you buy. Hang onto | | | | these requirements could result in a lawsuit, an audit or |
| those receipts, because these expenditures will offset | | | | both. |
| your taxable business income. | | | | You also can include some of the premiums you pay |
| 3. Furniture | | | | for long-term care insurance for yourself, your spouse |
| When your office supplies are more than just pens | | | | or dependents. |
| and paper, you have another tax-cutting opportunity. | | | | 9. Retirement contributions |
| Office-furniture acquisitions provide a couple of | | | | Are you self-employed and saving for your own |
| choices. Deduct 100 percent of the cost in the year of | | | | retirement with a SEP-IRA or Keogh? Don't forget to |
| the purchase or deduct a portion of the expense over | | | | deduct your contribution on your personal income tax |
| seven years, also known as depreciation. | | | | return. |
| To take the whole cost in one tax year you'll use the | | | | 10. Social Security |
| Section 179 deduction (named for the part of the tax | | | | The bad news: If you're self-employed or starting a |
| code where the law appears). Recent tax-law | | | | small business, you have to pay double the Social |
| changes have made this deduction even more | | | | Security contributions you would as an employee. |
| attractive. For the 2006 tax year, a business owner | | | | That's because federal law requires the employer pay |
| can expense up to $108,000. | | | | half and the employee pay half. Self-employed |
| If you choose instead to depreciate the desks and | | | | workers are both, meaning the total will equal 15.3 |
| filing cabinets, you can't simply split the cost into equal | | | | percent of your net profits. |
| portions over the depreciation period. Instead, you must | | | | The good news: You can deduct half of the |
| use an IRS chart to make separate calculations each | | | | contribution on your 1040. |
| year. | | | | 11. Telephone charges |
| Which is better for you? Anticipate the times that your | | | | You can deduct the cost of the business calls that you |
| business will need these deductions the most. Both | | | | make for business from home. When your bill comes |
| options are reported on IRS Form 4562. | | | | in, circle the business-related calls, total them up and |
| 4. Other equipment | | | | keep a copy. At the end of the year, tally your 12 bills |
| Items such as computers, copiers, fax machines and | | | | and deduct 100 percent. |
| scanners also are tax deductible. As with furniture, you | | | | The IRS assumes that you will have a phone in your |
| can take 100 percent up front or depreciate (this time | | | | house anyway, so Zobel cautions that regular fees |
| over five years). | | | | and charges don't count toward your deduction. But if |
| 5. Software and subscriptions | | | | you have a second line installed and use it only for |
| The recently increased Section 179 provides another | | | | business, all of these charges are deductible |
| tax break in this area of business expenses. | | | | . |
| Previously, a company had to depreciate the cost of | | | | 12. Child labor |
| computer software over three years. Now, | | | | "It's always good to employ your kids," says Carter. |
| off-the-shelf software a business buys can be fully | | | | Depending upon how much you paid them, they might |
| expensed in the year purchased. | | | | be able to avoid income taxes. Plus, there is no Social |
| The rules for deducting business and industry-related | | | | Security tax when you hire your child who is 17 or |
| magazine subscriptions weren't changed. You can | | | | younger and you can deduct the salary as a business |
| continue to take the total costs as a full deduction in | | | | expense. This break is available, however, only if you |
| the year spent. | | | | operate as a sole proprietor or as a partnership in |
| 6. Mileage | | | | which you and your spouse are the only partners. If |
| If you drive for business, the IRS wants to give you | | | | your business runs as a corporation, then it, not you, |
| some of your money back. But Uncle Sam loves | | | | are considered the employer and the corporation is not |
| documentation, so keep a notebook in your vehicle to | | | | relieved of the tax liabilities. |
| record the date, mileage, tolls, parking costs and the | | | | Make the money go even further. Have your child |
| purpose of your trip. | | | | contribute to a Roth IRA, says Carter. Not only have |
| At the end of the year, you have two choices. You | | | | you gotten a nice tax deduction from the salary and |
| can total the mileage and add in the tolls and parking to | | | | trained your youngster to save, you've also help |
| calculate your deduction. Once you have your mileage | | | | establish a nest egg for his or her future. |
| total, multiply it by 44.5 cents for your 2006 deduction. | | | | Dana Dratch is a freelance writer based in Georgia. |
| For 2007 business tax purposes, the rate goes to 48.5 | | | | The information contained in this article is of a general |
| cents a mile. | | | | nature. It should not be construed as legal advice nor |
| Or you can measure your business usage against | | | | should it be acted upon in your specific situation |
| your personal driving and deduct that portion of your | | | | without further details and/or professional assistance. |