Well, it’s that time again. You’ve received your W2’s or 1099’s and you’re getting ready to file your taxes. But before you do, take note of these tips that can save you money and help you avoid audits by keeping your return off the IRS’s “radar screen.”
File Your Taxes for Free
Was your gross income for 2008 $56,000 or less? If your answer’s yes, you can take advantage of a new service provided by the IRS that allows you to use TurboTax, TaxAct, TaxSlayer or other tax preparation software to file your taxes for free. If you qualify, you get full use of these products without paying a cent! So before you pay for tax software, go to www.irs.gov and click on “Free File is Now Available.”
If you click on “I Will Choose a Company,” you get a list of all the companies that offer free tax prep. But since each of them have different requirements, choosing this option means you have to check out each company to see if you qualify.
The easiest way to find out which companies will do your taxes for free is to click on “Help Me Find a Company.” You just fill out a form that asks stuff like your age, your state of residence, your adjusted gross income, etc., and click “Submit” to get a list of companies you can use based on your answers.
So check it out. Tax software isn’t expensive, but why pay if you don’t have to?
Avoid Audit “Red Flags”
The latest issue of the AMTA’s Massage Therapy Journal (MTJ) has a GREAT article called “Taking Care of Your Taxes.” You can even get 2 CEUs for completing it! Cool!
If you’re self-employed or work at a clinic or spa as an independent contractor and fill out a Schedule C, this article is a must read. I thought I knew what I was doing with my taxes, but I learned that I was actually raising some red flags based on how I was categorizing some of my expenses. For example, an accountant told me that the expenses for my web site should be put under Advertising, on Line 8 of my Schedule C, and that’s what I’ve been doing for years. Well, that’s not exactly wrong, but I found out from this article that advertising expenses average about 3.8% of total income for a typical small business like mine. By grouping everything that could loosely be classified as advertising in this category, I was exceeding this percentage and potentially causing the IRS to take a closer look at my return. BUT, without doing anything sneaky, if I just move the web expenses and a few other things to the Other Expenses category (which is perfectly legitimate), my expenses fall in line with the IRS’s averages and I’m less likely to be audited.
This article has tons of tips like that. So get a couple of CEUs and take the stress out of filing your taxes, all at the same time!
Armed with my newfound knowledge, I’m off to file my taxes (for free of course). Bye for now!