Start a Tax Folder - Depending on your particular circumstances you could be receiving lots of Tax Information Returns such as W-2s, 1099s for Miscellaneous Income, Dividend Income and Interest Income, 1098s for Mortgage Interest and Tuition Statements. Collect all of these important documents in a file or large envelope so that everything is in one place when it comes time to prepare your taxes.
Travel for business? If you are self-employed and travel for your business, be sure to keep a mileage log. A convenient method is to keep a calendar or date book in the console of your car, and write your destination and miles traveled on the specific date. Just remember that miles traveled from your home to your place of business are considered commuting miles and are not tax deductible. The rate for 2014 for business miles is $0.56/mile.
Do you eat out with clients? The IRS requires that if you want to take a business deduction for meals and entertainment, you must be able to substantiate who you were with and what business was discussed. An easy way to be in compliance is to simply write the information directly on the receipt as soon as you pay for the meal or event.
Did you pay sales tax? Nebraska state law requires that use tax be paid on items purchased online when the seller did not charge you sales tax, which is often the case on websites such as eBay. (Check with your state's law if you don't live in Nebraska.) Keep track of these purchase confirmation receipts in a separate folder marked “Use Tax” and at the end of the year you won’t have to go searching for all that paperwork.
Do you have health insurance? If you don’t, you could face a penalty. Enrollment for health insurance under the Affordable Healthcare Act (or Obamacare, as it is popularly known) goes through March 31, 2014. Go to healthcare.gov or call your local agent to find a plan that fits your budget.
Work from home? If you qualify to take a home office deduction, the rules for taking that deduction have gotten simpler. The new optional deduction is $5 for each square foot of home office space, up to a maximum of 300 square feet. That comes to a maximum $1,500 annual home office deduction.
Article by J’Nan L. Ensz, CPA, Managing Member, Accounting & Business Consulting Group, LLC, firstname.lastname@example.org
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