Whether you are a sole proprietor, own a large business, or work for a corporation, when tax season rolls around, it can feel like a blessing and a curse. Depending on your circumstances, you may rejoice over a refund due to you or cringe when that bill you owe the IRS arrives in your mailbox. Regardless of where you stand when it comes to filing taxes, one thing is certain: Tax season can hurt if you are not properly prepared.
Staying One Step Ahead of the Game
To ensure you are looking out for your financial best interest and making the tax filing process as efficient - and painless - as possible, it is important to arm yourself with as much information as you can and prepare ahead of time, before you file. Looking under every rock and staying up-to-date on any potential tax breaks you may be eligible for months before you file can offer you an advantage when it’s time to report those numbers.
Here are some simple ways you can get ahead of the game and prepare for the upcoming tax season:
Explore miscellaneous expenses - Do yourself a favor and pull out your bank statements and receipts and start doing a full inventory sweep a few months before tax time. Around the holidays is a good time to start, as you are slowly closing in on the end of the year and are able to collect a good portion of your annual expenses by this point. Make a list of any and every expense that was related to your job in some way. If you are a freelance writer, for example, any supplies you purchased to complete your work, such as a new laptop purchase, would be considered a legitimate business expense.
Itemize your deductions - Once you have collected all your potential miscellaneous and business expenses, it is a good idea to itemize them. One main reason these deductions matter is because they have the power to help lower your overall income tax bill. If your expenses exceed two percent of your adjusted gross income, you may deduct them. These expenses can include everything from work clothes and uniforms and union dues and tools, to travel and transportation (as long as it is work related) and unreimbursed employee expenses.
In some cases, you may even be allowed to deduct any expenses that were incurred by searching for a new job in your profession. For example, if you spent money on training and educational materials or had travel expenses that were related to a new job search in some way, do not rule those costs out. They may count as valid deductions.
Consult with a professional - Having the right accountant and tax law attorney on your side is a good way to ensure success where taxes are concerned. A qualified legal professional can save you from potential issues with the IRS now and down the road, so it is helpful to speak with a knowledgeable Cook County tax law attorney sooner, rather than later, to make sure you have addressed your questions and concerns before it is time to file your return. Call the Law Offices of Eric G. Zelazny today at 708-888-2299 for a personal consultation.