Every builder has go-to tools for certain jobs. Getting your taxes done is no different. Here are six tips to help you through this tax season:
(1) You may be able to deduct your home office. But there’s a catch: You can claim the deduction only if you have a room, or a distinct portion of a room, dedicated exclusively and regularly for your main place of business. Running your business from the workbench won’t cut it. But if you can document your use of a qualifying space, you should be able to claim the deduction. Also keep in mind that the rules differ slightly depending on whether you are self-employed or an employee.
(2) Look to see if you’re eligible for the self-employed health insurance deduction. This deduction allows the self-employed to reduce their adjusted gross income by the amount they pay in health insurance premiums during a given year. You can file for it if you were self-employed, paid health insurance premiums for yourself and your family, and showed a profit for the year. You can also deduct your health insurance premiums from your income for purposes of calculating self-employment tax.
If you are a small business owner who needs help figuring out the potential impact of the new health care law on your business, including premium costs and employee coverage requirements, the Internal Revenue Service provides some helpful tips.
(3) Don’t forget that mobile phone expenses can be deducted. If you are self-employed and use your mobile device exclusively for business purposes, you can claim that usage as a tax deduction. For example, if you purchased a mobile device in 2015 for $200, and you only used the phone for business purposes, you can deduct the $200. Or if you used your personal cell phone 30% of the time for business purposes, you can deduct 30% of the cost of your bill. We’d advise showing your expenses on your pay stub, using software such as Paychex Flex. This can help to keep your expenses and finance in check, should you ever be inspected.
(4) If you started a new business in 2015, you may be able to take advantage of the start-up business expense deduction. New business owners can deduct up to $5,000 for start-up costs and $5,000 for organizational costs paid or incurred after Oct. 22, 2004, which includes expenditures for things such as advertising and employee training.
(5) You may qualify for the Energy Efficient Home Credit. Eligible contractors can claim a credit for each qualified energy-efficient home sold or leased to another person during the tax year for use as a residence. The amount of the credit ($2,000 or $1,000) is based the extent to which each new energy-efficient home meets the energy saving requirements set by the IRS.
Last but not least:
(6) Don’t forget that the filing deadline to submit 2015 tax returns is Monday, April 18,rather than the traditional April 15 date this year. Keep in mind too that some state filing deadlines will remain on Friday, April 15. Fees for filing late can add up. Make sure to get your paperwork in on time!
Article reprinted with permission from NAHB