Before we begin, there is one fact you absolutely need to know; if you plan on running a home business and want to be both successful and confident if the IRS ever comes knocking at your door, you need to keep detailed records on everything. A general rule when keeping records is to follow the “who, what, when, where, and for how much rule.” Keep these kinds of records, along with receipts, and you’ll be less likely to have problems finding and presenting information if you’re ever audited. A great way of maintaining records is to either create a simple recording and filing system with files and folders or you can purchase computer software which will make your job easier.

3 Home Business Tax Deductions To Help You Save

1 – Home Business Expenses

Most of the expenses you incur while running your home business are tax deductable. Things like business stationery–pens, paper, printer ink, etc; phone lines, internet connection service charges, utility expenses, gasoline used for business, client meals, etc can be deductible. A big plus of keeping good records, is that you can easily look back at these expenses and claim the deductions.

2 – Business Equipment

If you have a home business that uses equipment, you can get a deduction for that. This means your business car (if exclusively used for business), any specialized uniforms, fax machines, computers, diagnostic equipment, etc can all be deducted.

3 – Home Office Business Deduction

This can be one of the bigger tax deductions, but if you plan on claiming this deduction, you can only use your home office exclusively for your business. If you’re using your office for anything other than for your home business, you cannot claim this deduction.

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Recently the Wall Street Journal did opinion piece on the amount of times that a dollar really gets taxed. This information opened Pandora’s Box with regards to real estate investing, and the level of taxation that is placed upon a real estate investor’s dollar.

If you look at an individual dollar from the time that it is earned throughout an entire year, there are at least three distinct times that this dollar can get a bite taken out of it by local and federal gluttons.

The first bite comes as personal earnings are taxed by federal and state income taxes. The next bite comes in the form of the “Capital Gains Tax”. If you invest your once bitten dollar into a real estate deal, and you are fortunate enough to receive a profit back, your dollar gets munched on for the second time by the capital gains tax. The third and final bite is the federal death (estate) tax. The federal death tax is applied to those who have accumulated a personal wealth that exceeds the threshold of $3.5 million

The amount of taxation that is addressed above does not include additional nips like; property taxes, sales taxes, and excise taxes. The current system that is in place has been carefully structured to “take a little here and a little there”. When you look at eh whole picture you may just be amazed at how little you have left of your hard earned dollar.

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Before the economy hit the skids many taxpayers opted to pay someone else to do their taxes for them. Then all they had to do was the really painful part: writing the check. Now the file for free online program saves you money and time.

Each year more and more people turn to the computer to help them complete their tax return and now that is only accelerated by the desire to cut back on expenses. Naturally I field a lot of questions as to which tax preparation software I recommend.

Let me first mention that there are two basic ways to do your taxes on your computer. First, you can buy some tax preparation software that you install on your computer either via download or a CD. This has been a very popular method for about 20 years now.

Second, you can now securely prepare, print and efile your taxes completely online with any computer, an internet browser, and an internet connection. This is especially attractive for individuals with only one tax return to complete in the household and few tax complications. Regardless of the complexity of your tax return, though, doing your taxes online is now a viable option for almost everyone.

Many people do not realize it, but the U.S. Government actually started a program called FreeFile. With the FreeFile program the government asked tax preparation software companies to partner with them to provide most taxpayers the opportunity to prepare, print and efile their federal income tax return at no cost.

FreeFile is a great way to do your taxes online and get your refund in as little as 10 days via direct deposit. Companies like TurboTax Intuit bring this opportunity to you with their TurboTax Federal Free Edition.

The online tax preparation software paired with the FreeFile program use a simple interview process where you answer simple questions about your income and expenses. The software puts the answers in all of the right places on the right forms and makes all of the calculations for you. You just cannot beat the file for free online program.

Doing your income taxes this way can actually get you a larger refund as well. Since you just answer questions, you do not have to decide which forms to use, the software chooses the right ones for you and will ask additional questions if it appears you qualify for a certain deduction; possibly a tax deduction you had never even heard of!

In a similar fashion, the online tax software will skip questions that do not pertain to your tax situation based on the questions already asked. This prevents you from having to read and skip over what does not apply.

While not everyone qualifies for a free tax return online, the companies participating in the FreeFile program will still help you with your tax return. If your return is more complex than allowed in the free program, you will be offered another low cost option that will take care of you. Naturally, this is how the company hopes to cover their cost of the FreeFile program, but the costs are reasonable.

Doing your own taxes with a computer online is a better option than ever before. Now with FreeFile it might not even cost you a cent when you File For Free Online with TurboTax Federal Free Edition.

Get started right now at http://www.FileForFreeOnline.com.

When you file for free online you can save time and money doing your own taxes. Get your largest refund possible and get it back fast when you file for free online at http://www.FileForFreeOnline.com.

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Here are 10 steps to lower your taxes in 2010.

1.) Buy a home. You can take advantage of a devastated real estate market and buy a home at prices not seen for years. First time buyers – individuals who haven’t owned a residence in the last three years – can claim up to $8,000. Current homeowners who’ve lived in their residence for five of the eight years before buying can get up to $6,500.

Do not delay, though, you must have a contract in place by April 30, 2010, and the deal closed by June 30 to qualify for this outstanding credit.

2.) Don’t get caught by the Making Work Pay trap. This tax break was designed to put more money in consumer hands quicker, but if you work two jobs it may come back to bite. If you work more than one job, check with a tax advisor or the payroll department at work to make sure your W-4 is filled out properly at each job.

3.) Convert your traditional IRA to a Roth. Now in 2010, anyone can now convert a traditional IRA to a Roth retirement account. The $100,000 income limit has been removed.

If you decide this is the right retirement move for you, note that you will have to pay taxes on the previously untaxed amounts in your traditional IRA that you convert. The good news is you can choose to pay half the conversion costs on your 2011 taxes and the other half in 2012.

4.) Get tax benefits from increasing your home’s energy efficiency. You can be more comfortable in your home and have some of the costs returned on your taxes with special tax credits.

Homeowners can claim up to 30 percent of the first $5,000 spent on qualifying residential energy upgrades, or up to $1,500 in tax credits. A solar home heating system can get you even bigger tax credits.

Be advised, this might be the last year so if you need to make home repairs, consider energy-efficient upgrades now.

5.) Get that hybrid car now. The hybrid credit is good through 2010, but only with manufacturers that have not sold 60,000 eligible cars. So shop carefully to make sure the hybrid you are looking at qualifies.

6.) See an Estate Tax Professional. Congress has really messed this area up and you can expect that money hungry legislators will want to reclaim more of your money they don’t deserve. A qualified estate tax professional can help you arrange your affairs to make sure you and your heirs do not get bitten any more badly than necessary.

7.) Required minimum distributions are back on retirement accounts. Tax-deferred savings plans such as traditional IRAs or workplace 401(k)s are great ways to save for retirement.

But Uncle Sam will not wait for its cut of these accounts forever. Once you turn 70-1/2, tax law demands you start taking money out of these accounts via required minimum distributions, or RMDs. They were absent from the law in 2009, but back in 2010.

8.) Take capital gains at lower rates now. George W. Bush’s tax cuts included reductions in capital gains tax rates based on taxpayer adjusted gross income. Right now the highest rate is 15 percent for individuals in the 25 percent to 35 percent tax brackets. Taxpayers in the 10 percent and 15 percent tax brackets pay no capital gains tax at all.

That’s scheduled to change in 2011. The top rate will return to 20 percent; the zero rate will revert to 10 percent. And with this administration and the party controlling Congress, this could get worse. There is no guarantee they won’t make retroactive changes, either.

9.) Watch out for rising income tax rates. The Bush tax cuts expire at the end of 2010. Tax rates go up for higher income earners and the 10 percent rate is eliminated for lower earners.

Who knows what Congress will do in the light of trillion dollar deficits, but keep an eye out and plan accordingly. Do not be afraid to call your Senators and Congressperson and let them know how you feel about tax hikes.

10.) Watch out for health care changes. In light of the Massachusetts special election going to a Republican, health care changes could jump off the fast track; but nevertheless there could be ramifications for you tax wise if something does finally pass.

Keep your eye on this and stay out from under the knife on this one!

There is nothing like a good tax advisor, and it pays to be as informed as possible. Save money on your taxes and choose an online tax preparation option that will get you every deduction you qualify for and your largest refund.

Come to our website for online tax preparation and advice, the address is http://www.FileForFreeOnline.com.

When you file for free online you can save time and money doing your own taxes. Get your largest refund possible and get it back fast when you file for free online at http://www.FileForFreeOnline.com.

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The Costs

After all the recent changes, the Congressional Budget Office estimates that the legislation would cost $871 billion over the next ten years. It is reported that the plan will be paid for by $483 billion in spending cuts, as well as $498 billion in new revenue. The budget office asserts that it will reduce the federal deficit by around $130 billion over the next decade.

Individual Mandate Tax

One of the first tactics the Senate is using to fund the legislation is through an individual mandate tax. Beginning in 2014, anyone who does not have a “qualifying” health insurance plan must pay an income surtax. The tax is expected to generate over $15 billion in federal revenue, and will begin as a 0.5% tax in 2014. However, it will increase to 1% in 2015, then 2% in 2016.

Employer Mandate Tax

In addition to levying taxes on individuals, the new bill will create an employer mandate tax that is expected to generate $28 billion over the next decade. It will force all employers with 50 or more employees to either provide health care coverage, or pay a non-deductible tax of $750 for each full time employee.

Cadillac Health Care Plans

Just like the initial bill the Senate proposed, the final legislation will include a new 40% tax on “Cadillac” health insurance plans beginning in 2013. According to the legislation, this will include plans valued at $8,500 for individuals, and $23,000 for families. However, there are a few exceptions, such as Longshoremen who lobbied heavily to have members of their union excluded from this new tax.

Cosmetic Tax No, Tanning Tax Yes

After immense pressure from the cosmetic surgery industry, the 5% tax on elective cosmetic procedures was removed from the Senate’s bill. However, in its place Democratic leaders added a 10% tax on tanning salons.

Small Business Credits

Starting in 2010 – a year sooner than originally proposed – tax credits will become available to small businesses with less than 25 employees, and an average salary of $50,000 to encourage them to offer health insurance benefits. Businesses with 10 or less employees and an average wage of $25,000 will be able to take advantage of an even larger federal credit.

Increased Medicare Payroll Tax

The original Senate bill had called for a 0.5% Medicare payroll tax increase for individuals earning more than $200,000 and married couples earning over $250,000. However, the recent amendments have raised the tax to 0.9%.

Taxes on Insurers and Medical Device Manufacturers

A whole new set of taxes will get levied on health insurance companies and medical device manufacturers. The federal government is expecting to generate over $60 billion in additional revenue over the next decade by imposing taxes on firms with $50 million or more in profit. Additionally, they also plan to levy a $2 billion per year tax on the medical device industry starting in 2011 that will increase to $3 billion in 2017.

Increased Medical Deduction Limit

Currently, if a taxpayer spends more than 7.5% of their adjusted gross income on medical expenses they can deduct the amount from their taxable income. However, the Senate’s bill will raise this to 10% but provide an exception for taxpayers over the age of 65 until the year 2016.

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You can think of availing the benefits of using Free File program provided by the IRS for e-filing your return but you have to make sure whether you’re qualified for that or not. Suppose your adjusted gross income (i.e. AGI) is less than certain amount – $56,000 or less – then you’re eligible for using this Free File program. If your income exceeds the amount mentioned, then you can think of other the IRS approved tax preparation services.

Using free online tax preparation software is easy and comfortable. Those who are in habit of using online banking services may find it extremely easy to file tax return electronically. The tax program will automatically suggest you which tax credits and deductions you may qualify for. You just have to enter the tax related information asked by the tax program and fill up the forms. E-filing is much easier, you just have to follow the steps and instructions set by the program.

There are certain benefits of filing tax return electronically. You can prepare your return fast and accurately with an ease and submit your e-file to the IRS conveniently. As you send your file, you’ll get confirmation note from the IRS about the acceptance of your file within 48 hours. If you choose direct deposit option, then you’ll get your IRS refund directly deposited into your bank account. You may get your state or federal income tax refund within as few as 10 days if you submit your e-file to the IRS before the deadline!

If you have uncomplicated tax situation and are good at numbers and calculations, then you can easily prepare taxes on your own. File your return electronically and submit it to the IRS well before the time and get your federal or state income tax refund fastest way possible.

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It’s not surprising that the majority of taxpayers now filing their taxes on their own to the IRS using free e-file preparation software programs. Compare to paper filing taxes, preparing online income tax return is easy and convenient because you have to fill up the forms by using required information and tax data. Tax software programs will help you search through the possible income tax credits and deductions that can suit your situations. What you have to do is to claim for necessary deductions so that there’s no risk of unnecessary audits.

For the purpose of preparing taxes and electronically filing your return for free, there are IRS Free File websites you can use. The IRS has teamed up with many software companies with a view to make tax preparation free or low-cost. You can use Free File program provided by the IRS if your adjusted gross income, which is known as AGI, is less than $56,000 as recorded in 2008. If you explore the internet, you’ll come across tons of online income tax preparation services offering tax preparation and e-filing services that you can benefit from.

Once you’ve prepared your income tax filing online, you can submit e-file easily to the IRS. The benefit of e-filing tax return is that your information is instantly sent to the IRS in an electronic format. Moreover, the IRS service center does not have to re-type your file if it is in electronic format and this may increase the chances of processing your return file faster. You can get your refunds faster within as few as 10 days by getting your refund directly deposited into your bank account.

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The IRS advises taxpayers to be careful when it comes to choosing a professional Income Tax Preparer. Although someone else prepares a tax return, the taxpayer is finally responsible for all the information filled in the return. Therefore, taxpayers should examine the return before signing it.

Like best tax preparer, you can also prepare taxes on your own when you have to deal with uncomplicated taxes. You need to have a computer with internet access and tax preparation software for doing taxes on your own.  In 2009, it is reported by the IRS that more than 32 million returns were e-filed from home computers.

Now you can prepare and e-file your federal income tax return free using Free File program provided by the IRS if you’re eligible for that. There are several IRS-tested and -approved software companies that can help you prepare taxes on your and assist you submit your e-file to the IRS easily before the deadline.

If you do not qualify for using Free File Program, then you can work with the IRS approved tax preparation services. What you need to so is to electronically file your income tax return, you don’t have to worry about your mail being lost. Moreover, e-file delivers a fast refund, in as few as 10 days with Direct Deposit. Please remember that there may be fees for tax preparation. Some online tax preparers may charge a nominal fee to give IRS e-file.

Prepare and e-file your taxes online with Internet Tax Preparer. The most taxpayers believe they benefited from using a professional Tax Preparers, but it is a bit expensive. Internet Tax Preparer lets you do it yourself easily and efficiently using internet facilities.

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2009 was a unique year when it came to personal finance because of the unheard of tax relief given to taxpayers. There were obvious government efforts like the cash for clunkers program to rejuvenate the auto industry and the first-time homebuyer’s tax credit to do the same for housing. Then there were smaller things like the IRS allowing businesses to retroactively apply losses for up to five past years to gain big refunds. The goal of all these programs was to stabilize the economy and help us all survive a brutal period of time.

While the 2009 tax breaks were great, all things come to end in finance. 2010 is the year we will see this happen. Most programs are going to run out in the first quarter or half of the year and there will be no further extensions. Why? There simply can’t be. The government has tried to spend its way out of the economic mess, but all indications are we are nearing the point where borrowing is starting to become difficult. Many Americans are worried about our soaring national debt and devalued dollar and it now appears investors may be as well. This will necessarily lead to the government pulling back on tax incentives.

The other big tax event that seems primed to be implemented in 2010 is the internet sales tax. If the federal government has debt problems, nearly a third of all states are in massive trouble with California and Arizona leading the way. These states are getting pummeled as property tax revenue dries up with the housing debacle and are looking for new revenue sources. Most web businesses do not pay sales tax on their sales, which gives them an advantage over local brick and mortar shops.

Some states have already started trying to go after online sales tax. New York famously passed a law allowing for the recovery of it so long as the online business had a single affiliate sale in the state. Instead of garnering a tax windfall for the state, large entities like Amazon and Overstock simply terminated all their affiliates in the state! Still, this is a battle that will eventually lead to a universal online sales tax being implemented. Given the big shortfalls faced by many states, 2010 seems to be the year it comes to a head.

Vice taxes are also possibilities in 2010. Online poker seems peaked for a return with Barney Frank pushing it in exchange for a tax benefit. Other states are seriously considering expanded gambling options and even that funny grass smoked by hippies is on the ballot in some progressive states like California, Oregon and what have you. Will they pass? My crystal ball is a bit fuzzy, but it would seem that some will.

2010 is shaping up to be the year the bill comes due for all the efforts made by state and federal government to deal with the economic collapse. Practically speaking, that means fewer tax breaks and more incremental taxes wherever you look.

Richard A. Chapo writes for BusinessTaxRecovery.com – where you can find more information on taxes than you ever would really want to know.

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If you are on active duty and have to move because of a permanent change of station, you are entitled to deduct the unreimbursed expenses incurred by you and your family during your reassignment.

If you serve in a combat zone for any part of a month, your income for that entire month is not taxable.  The monthly exclusion is capped for officers at the highest rate of enlisted pay, plus hostile fire or imminent danger pay received.

Qualifying members of the military can have certain tax matters postponed.  For example, tax deadlines for filing an income tax return, filing claims for refund, and paying taxes can be extended for those in the military service.

If military regulations require that you do not wear certain uniforms while off duty, you can deduct the maintenance and cost of those uniforms minus any allowance or reimbursement.

Married couples filing jointly may use power of attorney in substitution for the signature of a spouse engaged in active military duty.

If you are a member of the United States Armed Forces Reserves and must travel more than one hundred miles to perform duties as a reservist, you can deduct the cost of that travel on your income tax return.

ROTC students participating in advanced training and receiving a subsistence allowance do not pay tax on that allowance.  Active duty pay for ROTC students, such as received during summer advanced camp, is taxable.

Some costs of transitioning to civilian life may be tax deductible, especially those associated with looking for employment or locating to a specific area because of work.

Military installations offer free preparation and tax filing services during tax season.

IRS Tax Information Publication 3 is an Armed Services Guide to taxes.  It is available at the IRS website.

Chintamani Abhyankar, is a well known expert in the field of finance and taxation for last 25 years. His famous Tax eBook “Stop donating your money to IRS” which is now running in its second edition, provides intricate knowledge and valuable tips on personal finance and income tax. Just visit his website http://www.planningyourtax.com/ and claim your FREE eBook.

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