If you use TurboTax, then here are some things to consider when putting together your return:
Contributions: The government has a variety of retirement plan options like the IRA. There is also the HSA program for healthcare expenses.
You have until April 15th to contribute to these. In fact, if you plan on contributing to a Keogh or SEP, the deadline is October 15th if you opt for an extension.
These programs can provide some great deductions. But of course, they can be extremely useful for hitting your retirement goals.
Audit: It’s scary stuff. Although, unless you earn over $200,000, the chances are slim that you will be audited.
Regardless, it is still a good idea to be diligent with your return, especially when it comes to deductions. As should be no surprise, the rules can get confusing. Can I deduct my commute to my office? What about the meal I had with my friend – who may turn into a client?
For the IRS, there are certain categories that are red flags. Some of the notable ones for businesses include: travel, entertainment, meals and vehicle use.
Of course, make sure you have receipts for all your deductions. You should also use some type of accounting app like QuickBooks or Xero.
Losses: If your business has posted losses for the past three years, the IRS may consider your business to be really a hobby. In this case, you may lose many of your deductions – and be on the hook for back taxes.
E-File: Yes, file your return electronically. It’s easy to do and will mean that the error rate will be lower.
Home Office Deduction: The IRS has become more lenient on this. For example, you do not have to meet with clients in your home (that’s good news!) Then again, the office must be used exclusively for business.
The IRS has even introduced a “simplified” home office option. It allows for a deduction of $5 for each square foot, up to a maximum of 300 square feet.
In fact, there is no need to file a Form 8829. Instead, you will use a worksheet on Schedule C.
Obamacare: You have until March 31st to either sign up for it or not. If you decline, you will be on the hook for a fine of either 1% of your yearly household income or $95 per uninsured adult ($47.50 per child). The cap per family is $285.
But if you do decide to get Obamacare, you might be eligible for tax credits, which will lower your premium.