Sunday, March 27, 2011

Tips For the Tax Season

If you're like me, you haven't finalized your 2010 taxes yet (I know a few folks who haven't even started them).   If that's the case, the tips below may come in handy, especially if you are a small business owner.  And the good news, this year tax returns are not due until April 18!

1. Business clothing with logos: You can deduct clothing you buy for business use only if it can't be used for ordinary street wear. This means you can't deduct a regular business suit. However, you may deduct the cost of a sport jacket, coat or other clothing item with a company logo on it.
2. Car expenses if you take standard mileage rate: If, like most small businesspeople, you use the standard mileage rate to deduct your car expenses, you get to deduct 50 cents for every business mile you drove in 2010. You don't get to separately deduct the cost of gas, insurance, depreciation and similar items because these are all included in the standard mileage rate.
However, you can still deduct certain expenses, including the interest you pay on a loan for your business car, parking and tolls. However, you can't deduct the cost of parking tickets.
3. Home telephone expenses: You get no deduction for a single phone in your home; but you may deduct the cost of long-distance phone calls and special phone services you use for business such as call waiting or message center. You may deduct the full cost of a second phone line you use at home for business, including a cell phone.
4. Business gifts: Gifts you purchase for clients are deductible as a business expense, but the deduction is limited to $25 per person per year. However, the $25 limit applies only to gifts to individuals.
It doesn't apply if you give a gift to an entire company, unless the gift was intended for a particular person or group of people within the company. Such companywide gifts are deductible in any amount, as long as it is reasonable.
5. Continuing-education courses: You can deduct the cost of continuing-education courses you must take each year to maintain a yearly license. Education that improves your knowledge and skills in your business is also deductible -- for example, you can deduct the cost of a webinar on how to use social media to find sales prospects.
6. Tax-preparation fees: You can deduct the cost of hiring a tax professional to prepare your business tax return. If the same tax pro prepares your personal and business return, you can deduct only the cost of preparing the business portion. Make sure that you get an itemized bill showing the portion of the tax preparation fee allocated to your business.
7. ATM fees, credit card fees, and interest: You can deduct ATM fees, credit card fees and other bank charges you paid during 2010 for all your business accounts.
8. Subscriptions: Trade publications are deductible. You can also deduct the cost of subscribing to an online trade services.
9. Greeting cards: Greeting cards you send to clients and sales prospects are a deductible advertising expense.
10. Websites: You can deduct the cost of designing and maintaining a website you use for business. You can also deduct your Internet hosting fees and the cost of obtaining a domain name for your business.

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