Money, Debt and Taxes

The IRS is calling this Saturday, March 21, 2009, Super Saturday and is offering free tax preparation for people earning less than $42,000 per year. There are over 250 Taxpayer Assistance sites, and hundreds more community sites where trained volunteers will prepare your Federal income tax returns for free.

You will need to bring all your tax papers with you, including social security cards for everyone on the tax return, a photo ID for the taxpayer (and spouse if married), and all your income and expense paperwork.

This is also a good time to get help from the IRS if you can’t pay your tax bill, or if you have other unresolved issues with the IRS. Whatever your income, on Super Saturday, you can go to any of the IRS sites and set up a payment plan to pay your tax bill, or talk to an IRS representative about your tax problems. The IRS says it is committed in these tough times to make it easier for tax payers to pay their taxes.

To find out where you can have your taxes prepared for free, visit the IRS Website.

Have you filed your 2005 Income tax return yet? That is not a typo, I am asking about your 2005 tax return, not your 2008. The reason I am asking, is because I don’t want the IRS to be able to keep over a billion dollars in uncollected refunds. (Of course, used right that might make a small dent in the national debt.)

According to the Internal Revenue Service over 1 million people who may be due refunds did not file a 2005 tax return. The average estimated refund is over $500. If all of those people do not file a 2005 tax return by April 15, 2009, the IRS gets to keep the money. That would be a shame. I am sure you can put the money to better use than the IRS can.

Many of these refunds are due to people that had tax withheld from their paychecks, but didn’t make enough money to require a tax return. Lower income tax payers may also qualify for the Earned Income Credit which could make their refunds even larger.

So if you didn’t file a 2005 tax return because you didn’t think you needed to, you might want to look into it. What is really nice is that the IRS can give you information on how much was reported to them in income and withholding, so you don’t have to dig through all your old papers trying to find your 2005 W-2′s. But you do need to hurry. Your 2005 tax return must be filed by April 15, 2009, or the IRS gets to keep the money.

You can get current and prior year tax forms and instructions on the Forms and Publications web page of IRS.gov or by calling 1-800-TAX-FORM (1-800-829-3676). Information about the Earned Income Tax Credit and how to claim it is also available on IRS.gov. Taxpayers who need help also can call the toll-free IRS help line at 1-800-829-1040.

Last year I wrote a post called 101 Tax Deductions for Your Online Business.   I was looking it over today, and thought I would point out a few of my favorites.

#10. Business related webinars and seminar fees. This is one of my all time favorite deductions, because I love to travel, and I love to be able to write off my travel. As long as the main purpose of your trip is business, and you spend the majority of your time in business related activities, you can write off all your travel expenses. So for example if your business is web design, and you go to a seminar for web designers where you can meet vendors, potential clients, and learn more about the latest advance in web design, you can write off your airline tickets, hotel fees, and 50% of your meals. Just make sure you have a real business purpose for the trip.

#58 – 66 Start up and organizational costs. Until you actually open your virtual doors and are “in business” you can’t deduct the expenses you incur while getting your business started. However, once the business is started you can take your start up and organization costs, and amortize them over “not less than 60 months”. With amortization, you don’t get to deduct all your expenses at once, but you do get to take a portion each year for 5 years. This can be to your advantage, because you will be deducting expenses in later years, when you will probably be making more money.

#98-101. Qualified Home Office. Sometimes thought of as an audit flag, a qualified home office done right is a great tax deduction. If you have a place in your home that is used regularly and exclusively for business, you can write off a portion of your mortgage, rent, utilities and home improvements. Just make sure you follow all the rules carefully and you will have a great tax deduction that will stand up to an auditor.

What are your favorite tax deductions for online businesses? What are the strangest things you have heard of people deducting for their business?