I get asked by my clients all the time" How can I make more money while optimizing my tax deductions?  And my answer always is: “Start a Home Based Business” Then the question always falls to: “But what would I do? “ My answer “This is America people, what can’t you do?” If you are a health nut sell vitamins, if you love looking like a Diva sell Mary Kay or Avon, if you love to go to garage sales and flea markets, sell on Ebay, if you are a tech geek start a consulting service , an artist sell on etsy and the list goes on.  This is the land of opportunity so why not take advantage of it? In the process you can earn a little cash, learn about self employment and save on taxes. If you are opting to start a home based business and your empire can grow slowly, then you won’t need to worry about setting up a complicated entity like an S corp. or C corp. or even a Partnership! All you need is something simple like a Sole Proprietorship, or a Single Member LLC this way you can qualify for some great deductions without having to follow difficult tax rules and file separate complicated returns. All you will need to file  is a  Schedule C  tucked inside your 1040. I will be hosting FREE webinars (FLORIDA ONLY RIGHT NOW) on Google+  on how you can get started in a home based business so send me an email if you want the schedule click here: Free Small Business Start Up Webinar If you would like more Free Tax Tips sign up for me Newsletter ( see link above) 6 REASONS YOU SHOULD START A HOME BASED BUSINESS The Home Office Deduction Write Off A Portion Of Your Mileage Or Vehicle Expenses Deductible Travel and Entertainment Expenses Save On Healthcare Costs Hire Your Spouse and Kids and Save for Education and Retirement All Those Other Deductible Expenses 1.     The Home Office Deduction If you plan on starting a small business you will most likely be running it from home that will most likely allow you to take some valuable tax deduction with the Home Office Deduction. . But be careful! A home office is not your kitchen table, or your bedroom, and not that cute little closet redo you saw in Decorating Magazine. A home office is just that an area in your home that is used exclusively for business. Starting in 2013 The IRS has two ways you can take the home office deduction, either a flat $5.00 per square foot of your home office (max 300 square feet) known as The Simplified Method or a percentage of your qualified expenses based on square footage.  Here are the factors the IRS uses to determine a home office space: Whether you are self-employed or an employee, if you use a portion of your home for business, you may be able to take a home office deduction.  To take the home office deduction your home office must be:   Your principal place of business   As a place to meet or deal with patients, clients or customers in the normal course of your business   In any connection with your trade or business where the business portion of your home is a separate structure not attached to your home Generally, the amount you can deduct depends on the percentage of your home used for business. Your deduction for certain expenses will be limited if your gross income from your business is less than your total business expenses. There are special rules for qualified daycare providers and for persons storing business inventory or product samples. In my home I have dedicated an entire bedroom to a home office; it has a desk, file cabinets, computer etc.  It definitely meets the IRS description of” home office”, therefore I get to take a portion of my indirect expenses and all of my home expenses directly related to my business, I choose the percentage method for me because I get a larger deduction.  If you want to know more on the home office deduction see The Home Office Deduction In Detail  , here it will explain how you need to set your new office up or if your current home office will qualify for the Home Office Deduction even how to qualify for the home office deduction  as an employee. 2.    Write Off A Portion Of Your Mileage Or Vehicle Expenses If you need to use your vehicle for business like driving to hold sales parties, meet clients pick up inventory, shop for inventory etc.  You get to take a portion of your auto expenses as a deduction. This can either be calculated as actual expenses or the standard mileage rate. Mileage and Auto expenses are a red flag item for the IRS because folks like to abuse the mileage rate. So it is important that if you plan on taking auto expenses you keep a log of your vehicle use. There are some great phone apps out there you can use like, TripLOg Pro and Mileage Tracker  that can assist in helping you keep track of those expenses.  For more on using your auto for business you can go to: http://www.irs.gov/taxtopics/tc510.html 3.     Travel  and Entertainment Expenses I have a client that has invested in an MLM that sells vitamins, and they have meetings all over the country, she attends the meeting to assist in her sales, but she also has time after the meetings to see the sites.  Because she spends more than half of a workday in meetings which is her primary purpose for being there her meals, lodging and transportation expenses are fully deductible.  There are a lot of rules when it comes to business travel, so you will want to give us a call or consult your accountant before taking off, but once you understand them business travel is a breeze.  To give you an idea of what is deductible during business travel here is a list directly from the IRS Website: Deductible away-from-home travel expenses: ·         Meals (limited to 50%) and lodging while traveling or once you get to your away-from-home business destination. ·         The cost of having your clothes cleaned and pressed away from home. ·         Costs for telephone, fax or modem usage. ·         Costs for secretarial services away-from-home. ·         The costs of transportation between job sites or to and from hotels and terminals. ·         Airfare, bus fare, rail fare, and charges related to shipping baggage or taking it with you. ·         The cost of bringing or sending samples or displays, and of renting sample display rooms. ·         The costs of keeping and operating a car, including garaging costs. ·         The cost of keeping and operating an airplane, including hangar costs. ·         Transportation costs between "temporary" job sites and hotels and restaurants. ·         Incidentals, including computer rentals, stenographers' fees. On my website I have some great tips on ways to travel on the weekends and  Make Money While On Vacation  : I also have described in detail Maximizing Travel Benefits For Business.  I highly recommend you take a look at all the smart ways you can deduct business travel.  Plus don’t miss my blog How to Deduct a Cruise for business purposes. All of these tips and more will show you how owning a business is a great idea. 4.     Save On Healthcare Costs Because of Obama Care On October 1 2013 we are going to see some major changes in Health Care costs, but that doesn’t mean you can’t do better! If your employer pays your insurance you may not need the additional insurance or the deduction but: 1.       If you are paying for your own health coverage 2.       Your employer does not cover your spouse and/or children 3.       Your current coverage with your employer is costly You may want to consider a health plan available to small business called a Section 105 plan, A Section 105 plan, or Medical Expense Reimbursement Plan is available to employees of your business, in this case your spouse, or your children! (More on that next) If you qualify, you can write off just about any legitimate medical expense: Health insurance, long-term care coverage, Medicare, and “Medigap” insurance, Co-pays, deductibles, and prescriptions.  The best part is, this is money you would have spent anyway, whether you get a deduction or not. You’re just moving it from a nondeductible place on your return, to a deductible place. You’ll save income tax on whatever you deduct. You may even save self-employment tax too. If you do not have any employees then you will still qualify for an above the line deduction for a portion of your costs on your tax return.  See Don’t Miss Out On Health Insurance Deductions For the Self Employed. 5.     Hire Your Spouse and Kids and Save for Education and Retirement Hiring your Spouse, children or even your grandchildren can be a great way to cut taxes on your income by shifting it to someone who pays less. Just make sure they are performing legitimate services in your business. Like packing boxes to mail, calling customers, answering emails, etc.  Kids: When you hire your kids you can set aside their wages to pay for their private school tuition, college tuition, aftercare or even retirement. The minimum age for hiring a child is just seven years old. That lets you get started saving early, and even helps teach your kids good work habits early on. Wages to your children are also not subject to self employment tax, lowering your tax liability. We can help you determine how to pay your child, how to document it, and even where to put the money once you’ve paid them. Spouse: Hiring your spouse is a no brainer if they are involved in your business and currently unemployed. By hiring your spouse you can set up that health insurance Section 105 plan to deduct all your medical expenses,  If your spouse wants to go back to school you can deduct education expenses related to the job,  If your spouse was not working they can now have wages to save for retirement and qualify for social security. And even better now that you both are working for the same company, you now qualify to take the childcare deduction and also deduct certain travel expenses if you travel on business together. 6.     What about all those other deductible business expenses? As a self employed individual you qualify for all sorts of tax deductions related to your business that in turn will help you lower your taxable business income. If you have to buy something, employ someone, or use a service to keep your business in operation, it will most likely qualify for a tax deduction! Below is a list of items commonly deducted by a small business: ·         Adverting ·         Inventory ·         Bank fees ·         Shipping fees and supplies ·         Postage ·         Office supplies ·         Phone ·         Accounting and legal fees ·         Computer and software ·         Internet, website and faxing services ·         Payroll ·         Contract labor ·         Furniture and office equipment ·         Continuing education So there you have it.. Opening a home based business is an excellent way to tap into your entrepreneur skills, make some extra cash and save big time on allowable tax deductions.  Thousands of people are starting home based businesses every week and still keep their full time job and so can you.  All you need is an idea, a little determination and a great accountant to guide you through. For more assistance don’t hesitate to give us a call ( 941)377-6797 or attend one of my Free Google +Webinars ( schedule coming soon) Contact Robin@thetaxhandler.com for more information on how to get started.  Connect with Robin on Google+ ...read more

DEADLINE APPROACHES: Obamacare is open for business October 1, 2013... Are you aware of the Plans, Scams and what you need to do next to avoid costly tax penalties? On October 1 2013 The Affordable Care Act officially rolls and by Jan 1, 2014 everyone must officially have health insurance coverage or face a tax penalty. But the good news is everyone must be able to get coverage no matter if they were denied in the past due to pre-existing conditions.  This is the largest overhaul to our healthcare system since Medicare was launched in 1966. So what does this mean for you? What are my coverage options? Every state has an online Marketplace where you will be able to compare policies. The options are Bronze, Silver, Gold and Platinum and if you are under 30 there is a low cost catastrophic option. Your rate and co pays will depend on what plan you choose.   Do I qualify for a subsidy? The amount you save depends on your family size and how much money your family earns. In general, if your income falls within the following ranges you'll qualify to save money on your premiums in 2014. The lower your income within these ranges, the more you'll save. (The amounts below are based on 2013 numbers and are likely to be slightly higher in 2014.) $11,490 to $45,960 for individuals $15,510 to $62,040 for a family of 2 $19,530 to $78,120 for a family of 3 $23,550 to $94,200 for a family of 4 $27,570 to $110,280 for a family of 5 $31,590 to $126,360 for a family of 6 $35,610 to $142,440 for a family of 7 $39,630 to $158,520 for a family of 8 You can get an estimate of your costs and savings before October 1 Until October 1, you can get a rough estimate of costs and savings by using this link to the Kaiser Family Foundation  they have set up an amazing tool to help you with cost estimates. I already have insurance with my job what does this mean for me? Well if you already have insurance with your current company you are probably already receiving a good rate and decent coverage. If you feel your coverage is lacking and are comfortable, talk to your employer about how the Affordable Care Act will affect your coverage.  Many small employers are also being offered plans with Tax Credits so your insurance may improve, but if not The Marketplace may be a more affordable answer for you. I am a small business owner what are my options in The Affordable Healthcare Marketplace? You can get health insurance for your employees through The Small Business Health Options Program (SHOP) here you can browse option for high-quality health insurance for your employees. It opens for business October 1, 2013. You can get all of your questions answered by going to Healthcare.gov/small business  . What is the fine if I choose not to purchase healthcare? Most Americans will need to have insurance by March 31, 2014 or a penalty will be added to your tax bill, right now the penalty is the greater of $95 per adult or 1% of household income in 2014, but this number is climbing to $695 per adult or 2.5% of your household income by 2016. If you make too little to file a tax return or you earn so much that you have to spend more than 8% of your income for the bronze plan then you are off the proverbial “Hook”. I am retired what should I do? If you are retired and currently receiving Medicare, don’t worry about getting involved in the hoopla. You are already covered but BEWARE identity thieves are on the prowl, calling seniors and saying they are with” Obamacare” and must confirm personal information to receive coverage.  If you receive this call it is a phishing scam, DO NOT GIVE OUT YOUR PERSONAL INFO!  So where do I go to sign up and get more information? The government has set up a really nice and interactive website  Healthcare.gov  to answer all your questions on the new Affordable Healthcare act and the HealthCare Market place.  I went on the site and it took me less than 5 minutes to navigate through to the Florida Market Place and sign up for a new account. I went to the site and this is what I learned:  I found out here based on 5 questions what options would be available to me and my son about how much the plans would cost me, and what my next step should be. The process was easy, educational and in my case good news because I am potentially saving over $530 a year on health insurance!  I highly recommend you start educating yourself now on your Health plan options so you can make the best choices for yourself and your family members.  Happy Health Plan Shopping!!!  Again the Important links Are: Healthcare.gov Healthcare.gov For subsidy information: http://kff.org/health-reform/ Like the Tax Handlers on Facebook to get more tax saving articles Tax Handlers Facebook ...read more