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May 3, 2025

For Business, Personal Finance, Tax Central

9 Tax deductions for self-employed

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Being self-employed comes with a lot of responsibilities, including the responsibility to accurately file your taxes and claim all the deductions you qualify for. Here are nine tax deductions that self-employed individuals should keep in mind: Phone and internet costs: If you use your personal phone or internet for business purposes, you can deduct a portion of these expenses on your taxes. Keep track of your usage and the percentage of time you use these services for business purposes. Health insurance: Self-employed individuals can deduct the cost of their health insurance premiums on their taxes. This includes coverage for yourself, your spouse, and your dependents. Meals: If you entertain clients or customers as part of your business, you can deduct 50% of the cost of these meals. Just be sure to keep accurate records of who you entertained and the purpose of the meeting. Your car: If you use your personal car for business purposes, you can deduct the cost of gas, oil changes, repairs, and other expenses. Keep accurate records of your mileage, including the purpose of each trip, and the date and odometer reading. Subscriptions: If you subscribe to business-related publications or online services, you can deduct the cost of these subscriptions on your taxes. Business mileage: In addition to the cost of your car, you can also deduct the cost of business-related mileage. The current standard mileage rate for 2021 is 56 cents per mile. Rent: If you have a separate office space for your business, you can deduct a portion of your rent on your taxes. The percentage of your home that you use for business purposes should be proportionate to the size of your home. Educational expenses: If you take courses or attend seminars to maintain or improve your business skills, you can deduct the cost of these educational expenses on your taxes. Home office: If you have a dedicated space in your home that you use exclusively for your business, you can claim a home office deduction. This includes the cost of utilities, repairs, and other expenses related to the space. In conclusion, being self-employed comes with a lot of responsibilities, including the responsibility to accurately file your taxes and claim all the deductions you qualify for. By keeping in mind these 9 tax deductions for self-employed, you can reduce your tax bill and keep more of your hard-earned money. Remember that keeping accurate records and consulting with a tax professional is always recommended.

For Business, Personal Finance, Tax Central, Tips for Verticals & Niches

5 secret tax tricks the 1% richest use

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The 1% richest individuals in the world have access to resources and strategies that the average person may not be aware of to minimize their tax liability. Here are five secret tax tricks that the 1% use: Hire a tax professional to ensure you’re following the law: The 1% understand the importance of having a team of experts on their side. They hire tax professionals to make sure that they are following the law and taking advantage of all deductions and credits that they qualify for. Create an LLC for your business: Many wealthy individuals choose to create an LLC (Limited Liability Company) for their business. LLCs provide the personal liability protection of a corporation while allowing the business owners to take advantage of pass-through taxation. This can save them a significant amount of money on taxes. Invest in stocks or bonds that pay dividends: The wealthy often invest in stocks or bonds that pay dividends, which are taxed at a lower rate than regular income. This can help them save a significant amount of money on taxes. Pay off high-interest debt before filing taxes: The wealthy often make a point to pay off high-interest debt before filing their taxes. This is because the interest paid on high-interest debt can be tax-deductible, which can help them save money on taxes. Donate money to charity: The wealthy often choose to donate money to charity. Not only does this give them a sense of fulfillment and contribute to causes they care about, but it also allows them to claim charitable contribution deductions on their taxes. It is worth noting that these strategies are legal and are used by many individuals and businesses, not just the 1% richest. However, it’s important to keep in mind that tax laws and regulations can be complex and ever-changing, and it’s always a good idea to consult with a tax professional before making any decisions about your taxes. In conclusion, the 1% richest individuals in the world have access to resources and strategies that the average person may not be aware of to minimize their tax liability. By hiring a tax professional, creating an LLC for your business, investing in stocks or bonds that pay dividends, paying off high-interest debt before filing taxes and donating money to charity, you can take steps to reduce your tax bill and keep more of your hard-earned money.

For Business, Tax Central

Tax preparer responsibility

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Tax preparers play an important role in the tax filing process, and as such, they have a number of responsibilities that they must fulfill. Here are some of the key responsibilities of tax preparers: Helping taxpayers file their tax returns: Tax preparers are responsible for helping taxpayers understand and complete their tax returns. This includes providing guidance on which deductions and credits to claim, and ensuring that all necessary forms are completed and filed correctly. Ensuring that all available deductions and credits are claimed: Tax preparers are responsible for making sure that their clients claim all deductions and credits that they qualify for. This can include things like the earned income credit, the child tax credit, and deductions for student loan interest, charitable donations, and medical expenses. Accurately calculating taxes owed: One of the most important responsibilities of tax preparers is to ensure that the taxes owed are calculated accurately. This includes ensuring that all income is reported correctly, and that the correct deductions and credits are applied. Filing the return on time: Tax preparers are responsible for ensuring that the tax return is filed on time. This includes ensuring that all necessary forms are completed and filed before the deadline, and providing their clients with proof of filing. Keeping records: Tax preparers must keep records of the tax returns they prepare and the work they perform. This includes copies of the returns and any documents used to prepare the return. Ethics: Tax preparers must follow professional ethics standards set by the governing body of their profession, such as the IRS or a specific state board. This includes acting with integrity, objectivity, confidentiality, and professional competence. Compliance: Tax preparers must have a good knowledge of the tax laws and regulations and must ensure that the return they prepare complies with these laws and regulations. This includes understanding and applying the most recent tax laws and regulations, and keeping up-to-date with any changes to the tax code. In conclusion, tax preparers play an important role in the tax filing process, and as such, they have a number of responsibilities that they must fulfill. These include helping taxpayers file their tax returns, ensuring that all available deductions and credits are claimed, accurately calculating taxes owed, filing the return on time, keeping records, following professional ethics standards, and ensuring compliance with tax laws and regulations. By fulfilling these responsibilities, tax preparers can help their clients reduce their tax liability and ensure that their tax returns are filed correctly and on time. It’s important for taxpayers to choose a reputable and qualified tax preparer to ensure that their taxes are handled properly and that they receive the best possible outcome. Remember that as a taxpayer, you are ultimately responsible for the information that is on your tax return, even if it was prepared by a professional.

For Business, Tax Central

6 reasons to hire a tax pro

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Hiring a tax professional can be a wise decision for many individuals and businesses. Here are six reasons why you should consider hiring a tax pro: You don’t have the time or knowledge to do your own taxes: Tax laws and regulations can be complex and ever-changing, and it can be difficult to keep up with them. If you don’t have the time or knowledge to do your own taxes, it can be beneficial to hire a tax professional who can handle the process for you. Even if you do, it’s worth it to have a professional look over them: Even if you do have the time and knowledge to do your own taxes, it’s still a good idea to have a professional look over them. Tax professionals are trained to spot mistakes and missed deductions that you may not be aware of. This can help you save money and avoid potential problems down the road. They can help you find deductions and credits that you may not know about: Tax professionals are experts in the tax code and can help you find deductions and credits that you may not know about. They can also help you determine which deductions and credits you qualify for, and how to claim them on your tax return. They can help you file your taxes quickly and easily: Tax professionals are experienced in the tax filing process and can help you file your taxes quickly and easily. They can also ensure that your return is filed correctly and on time, and provide you with proof of filing. They can represent you in case of an audit: If your tax return is selected for an audit, a tax professional can represent you and communicate with the IRS on your behalf. They can also help you prepare the necessary documents and explain any discrepancies on your tax return. It’s one less thing to worry about during tax season: Tax season can be a stressful time, and one less thing to worry about can be a relief. Hiring a tax professional can take the burden of preparing and filing your taxes off your shoulders, allowing you to focus on your other responsibilities. In conclusion, hiring a tax professional can be a wise decision for many individuals and businesses. They can help you with your taxes, save you money, represent you in case of an audit, and take the burden of preparing and filing your taxes off your shoulders. If you’re not sure if you should hire a tax professional, it’s always a good idea to consult with one to see if they can help you. Remember, you are ultimately responsible for the information on your tax return, even if it was prepared by a professional.

For Business, Tax Central

Benefits of using a tax professional

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Tax season can be a stressful and confusing time for many individuals and businesses. However, one way to alleviate some of that stress is by using the services of a tax professional. Here are some of the benefits of using a tax professional: Tax professionals have the education and experience to help you file your taxes correctly: Tax laws and regulations are constantly changing, and it can be difficult to keep up with them. Tax professionals have the education and experience to ensure that your tax return is filed correctly and that you receive the best possible outcome. They can also ensure that your return is filed on time, and provide you with proof of filing. They can help you save money on your taxes: Tax professionals are experts in the tax code and can help you find deductions and credits that you may not have known about. This can help you save money on your taxes and ensure that you’re not overpaying. They can also help you determine which deductions and credits you qualify for, and how to claim them on your tax return. They can make the process of filing taxes less stressful and confusing: Tax season can be a stressful and confusing time, and one less thing to worry about can be a relief. Hiring a tax professional can take the burden of preparing and filing your taxes off your shoulders, allowing you to focus on your other responsibilities. They can provide clear and concise explanations of their services, the fee structure, and the estimated time required to complete the return. They can represent you in case of an audit: If your tax return is selected for an audit, a tax professional can represent you and communicate with the IRS on your behalf. They can also help you prepare the necessary documents and explain any discrepancies on your tax return. They can help you plan for the future: Tax professionals can also help you plan for the future. They can provide you with advice on how to reduce your tax liability in the future, and help you make financial decisions that will benefit you in the long run. They can also help you plan for retirement and other important life events. In conclusion, using a tax professional can provide many benefits. They can help you file your taxes correctly, save money on your taxes, make the process of filing taxes less stressful and confusing, represent you in case of an audit, and help you plan for the future. If you’re not sure if you should hire a tax professional, it’s always a good idea to consult with one to see if they can help you. Remember, you are ultimately responsible for the information on your tax return, even if it was prepared by a professional.

Tax Central

Is it possible to pay nothing in taxes?

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It is possible to pay nothing in taxes, but it depends on your income level and deductions. In general, if your income is low enough, you may not have to pay any taxes. Additionally, if you qualify for enough deductions and credits, you may be able to reduce your tax liability to zero. However, it’s important to note that while it may be possible to pay nothing in taxes, it is not legal to evade paying taxes. Low income earners: If your income is low enough, you may not have to pay any taxes. The IRS has a tax bracket system, and if your income falls below a certain threshold, you may not have to pay any taxes. Additionally, some states also have their own tax laws and exemptions for low-income earners. Deductions and credits: Deductions and credits are a way to reduce your tax liability. Deductions reduce your taxable income, while credits directly reduce the amount of taxes you owe. For example, the standard deduction, personal exemptions, and deductions for charitable contributions, mortgage interest, and state and local taxes can all reduce your taxable income. Tax credits such as the Earned Income Tax Credit, Child Tax Credit and the American Opportunity Tax Credit can also reduce the amount of taxes you owe. Retirement accounts: Contributions to certain retirement accounts, such as Traditional IRA and 401(k)s are tax-deductible and the money in the account grows tax-free, which can help you reduce your tax liability. Tax-free investments: Some investments, such as municipal bonds or certain types of annuities, are tax-free. Investing in these types of accounts can help you reduce your tax liability. Legal tax avoidance: While it’s not legal to evade paying taxes, it is legal to use the tax code to your advantage and reduce your tax liability. This is known as tax planning or tax avoidance. It’s important to note that there is a difference between legal tax avoidance and illegal tax evasion. Tax planning and taking advantage of deductions, credits, and other legal tax strategies to reduce your tax liability is perfectly legal and acceptable, however, it is illegal to hide income or falsify information on your tax return. It is also important to note that even if you manage to pay nothing in taxes in one year, you may still be required to pay taxes in the future. The tax code is constantly changing, and your income and deductions may change as well, so it’s important to stay informed and consult with a tax professional to ensure that you’re following the law and paying the correct amount of taxes. In conclusion, while it is possible to pay nothing in taxes, it is usually only possible for low-income earners or those who take advantage of deductions, credits, and other legal tax strategies. It is important to note that while it may be possible to pay nothing in taxes, it is not legal to evade paying taxes. It is always best to consult with a tax professional and stay informed about the tax laws to ensure that you’re paying the correct amount of taxes and avoiding any legal issues.

Tax Central, Tips for Verticals & Niches

The difference between a tax return and a tax refund

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When it comes to taxes, there are a few important terms to understand, including “tax return” and “tax refund.” While these terms are often used interchangeably, they actually have different meanings. A tax return is the document that individuals and businesses file with the Internal Revenue Service (IRS) each year to report their income, deductions, and credits. The purpose of a tax return is to calculate how much tax is owed or how much is due back to the taxpayer. Tax returns are typically due on April 15th of each year, but the deadline may be extended for certain individuals or businesses. A tax refund, on the other hand, is the amount of money that the taxpayer receives back from the government after filing their tax return. If a taxpayer has paid more in taxes than they owe, the difference is refunded to them in the form of a tax refund. Tax refunds can be received as a direct deposit to a bank account, a check in the mail, or via a prepaid debit card. It’s important to note that not everyone will receive a tax refund. If a taxpayer has not paid enough in taxes throughout the year, they may owe money to the government when they file their tax return. In this case, they will not receive a refund, and will instead need to pay the outstanding balance to the IRS. Another thing to consider is that tax refunds are not immediate, it may take a few weeks or months to receive them. It’s also important to note that if you owe money to the IRS or to state government you will not receive a refund. In conclusion, a tax return and a tax refund are two different things. A tax return is the document that individuals and businesses file with the IRS each year to report their income, deductions, and credits. A tax refund, on the other hand, is the amount of money that the taxpayer receives back from the government after filing their tax return. It’s important to note that not everyone will receive a tax refund and it may take a while to receive it. It is always a good idea to consult with a tax professional to understand your taxes and how to maximize your refund.

Tax Central

Understanding the Earned Income Tax Credit (EITC)

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The Earned Income Tax Credit (EITC) is a tax credit for low- to moderate-income individuals and families. The credit is designed to provide financial assistance to working individuals and families and help reduce poverty. Here’s what you need to know about the EITC: Who is eligible: To be eligible for the EITC, you must have earned income from wages, self-employment, or farming, and meet certain income and filing status requirements. The income limits and credit amounts vary depending on your filing status and number of qualifying children. How it works: The EITC is a refundable tax credit, which means that even if you don’t owe any taxes, you may still receive a refund. The credit amount is based on your income, filing status, and number of qualifying children. The maximum credit for the 2022 tax year is $6,728 for filers with three or more qualifying children. Qualifying children: To qualify for the EITC, you must have a qualifying child who meets certain requirements, such as age, relationship, residency, and support. You may be eligible for a larger credit if you have more than one qualifying child. How to claim the credit: To claim the EITC, you must file a tax return and fill out Schedule EIC. Make sure to provide accurate information and keep records of all income and expenses. If you qualify for the credit, it will be applied to your tax liability or refunded to you if you don’t owe any taxes. Benefits of the credit: The EITC can provide significant financial assistance to working individuals and families. It can help reduce poverty, improve child and family outcomes, and stimulate the economy. If you think you may be eligible for the EITC, make sure to research the requirements and consult with a tax professional to ensure that you’re claiming the credit correctly. By taking advantage of the EITC, you can receive valuable financial assistance and improve your financial situation.

Tax Central

How to Handle an IRS Audit – Tips and Strategies

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An IRS audit can be a stressful and intimidating process, but it’s important to handle it calmly and professionally. Here are some tips and strategies for handling an IRS audit: Understand the audit process: Before the audit begins, make sure to review the IRS audit process and understand your rights and responsibilities. You can find more information about the audit process on the IRS website. Gather and organize your records: The first step in handling an audit is to gather and organize all relevant records and documentation. This includes tax returns, receipts, invoices, and bank statements. Make sure to keep everything organized and easily accessible. Respond promptly and professionally: If you receive a notice of audit, respond promptly and professionally. Contact the IRS agent assigned to your case and schedule the audit at a convenient time and location. Seek professional help if needed: If you’re unsure how to handle an audit, consider hiring a tax professional to assist you. A tax professional can provide advice and guidance and represent you in meetings with the IRS. Be honest and transparent: During the audit, be honest and transparent with the IRS agent. Answer all questions truthfully and provide all requested documentation. If you don’t know the answer to a question, it’s better to say so than to provide incorrect information. Stay organized and keep copies of all documentation: During the audit, keep copies of all documentation provided to the IRS agent. This will help you keep track of what you’ve provided and assist in any follow-up communication. Review the audit findings: After the audit is complete, review the audit findings and determine if you agree with the results. If you disagree, you have the right to appeal the findings. Handling an IRS audit can be a daunting task, but with the right preparation and attitude, you can navigate the process successfully. Make sure to stay organized, seek professional help if needed, and be honest and transparent with the IRS agent. By following these tips and strategies, you can minimize stress and potentially achieve a positive outcome.

Personal Finance, Record Keeping Tips, Tax Central

6 Things to bring your tax preparer

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Tax season can be a stressful time, but by properly preparing and organizing your documents, you can make the process a lot smoother. Here are six things you should bring to your tax preparer to ensure that your taxes are filed correctly and that you’re taking advantage of all deductions and credits that you qualify for: Identification information: Be sure to bring a valid government-issued ID, such as a driver’s license or passport, to your tax preparer. This will be used to verify your identity and ensure that your tax return is filed under the correct name and Social Security number. Social Security card: Your Social Security card will be needed to verify your Social Security number. This is an important document that should be kept in a safe place, as it will be needed for a variety of other financial transactions as well. Wage statements: Be sure to bring all of your wage statements, including your W-2s and 1099s, to your tax preparer. These documents will show how much income you earned during the year and will be used to calculate your tax liability. Property tax statement: If you own property, be sure to bring your property tax statement to your tax preparer. This will be used to calculate any property tax deductions you may be eligible for. Additional income statements: In addition to wage statements, be sure to bring any other income statements, such as those for rental income, investment income, or business income, to your tax preparer. These documents will be used to calculate your total income for the year. Receipts for deductible expenses: Be sure to bring receipts for all expenses that may be deductible, such as charitable donations, medical expenses, and business expenses. These receipts will be used to calculate any deductions or credits you may be eligible for. In conclusion, tax season can be a stressful time, but by properly preparing and organizing your documents, you can make the process a lot smoother. By bringing identification information, Social Security card, wage statements, property tax statement, additional income statements, and receipts for deductible expenses to your tax preparer, you can ensure that your taxes are filed correctly and that you’re taking advantage of all deductions and credits that you qualify for. It’s important to consult with a tax professional to determine which deductions and credits you qualify for and how to claim them on your tax return.