Tips for Maximizing Your Tax Deductions

Tips for Maximizing Your Tax DeductionsBy Deborah Sweeney

The deadline for filing your returns is a little under a month away. And, with around 20-25% of all returns filed within two-three weeks of that April 15th deadline, it’s probably safe to assume that a few of you are still working on those returns. A lot of small business owners depend on a solid refund to help get the year off to a good start. But to get that big refund, you have to claim every deduction and credit available.

Don’t overlook anything

Most people will know enough to claim a few, common deductions – mileage, office supplies, and other regular business expenses. But there are some tax deductions that you may be missing out on. If you started your business last year, you can claim start-up costs like market research or office repairs. Anything you had to pay, up to $5,000, before you opened your doors can be claimed. Fees paid to consultants, money spent on business-books, and your marketing can all be deducted as well. Some of these expenses may seem small compared to what you spend on, say, new equipment or software, but they really do add up.

Compare the ways to deduct your home office

The home office deduction is pretty well known. But did you know there are two ways you can calculate it? Until a few years ago, the only method was to fill out Form 8829 and file it with your Schedule C. But this form is notoriously complicated, so the IRS simplified this deduction by allowing filers to claim $5 for every square foot of their home office, up to 300 square-feet. But that means you can only claim a maximum of $1,500. Those who usually get more than that, or who have never calculated a home office deduction, should complete Form 8829 and see if they are able to claim more than the simplified option’s limit.

Ask for an extension!

Anyone can ask for an extension to filing their returns, provided they’ve paid at least 90% of their tax burden. Since small business owners have to send in estimated payments throughout the year, that shouldn’t be an issue. Filing for an extension is super easy too – those filing their individual returns just need to fill out and send in Form 4868. This will give you six more months to work on your returns. Now, like I mentioned, in order to qualify you have to have paid at least 90% of what you owe. So this isn’t a way to get out of paying taxes for six months. Rather, it just gives you more time so you can properly and accurately calculate your returns and get back the money you are owed.

Despite what some may say, there aren’t any tricks to getting a big tax refund. At the end of the day, simply knowing what deductions and credits you can claim is your best tool. Unfortunately, that means you have to put in a lot of extra effort to uncover all of the deductions you qualify for. But as long as you take your time, do your research, and explore all of your options, you should have no trouble maximizing your refund.

Deborah Sweeney is the CEO of MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best. Follow her on Google+ and on Twitter @mycorporation.

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