Seven tax tips from Intuit pro Mike D’Avolio.
Tax tips for you and your small business can come in handy right now. Tax season is right around the corner. The first tax tip this year, is to pledge to start collecting and organizing your tax records, documents and QuickBooks files prior to the filing deadline in the spring, so you can avoid the last minute scramble and potential fees. Here are tax tips to help avoid any compliance headaches in April.
Seven Tax Tips
1. It may be tempting to classify an employee as a contractor to cut costs. Tax tip number one: Don’t. There are strict rules surrounding the proper classification of a worker and steep penalties for failure to apply the law properly. This infographic helps to distinguish between the two.
2. There are convenient electronic services like Intuit’s 1099 E-file that pre-fill business info and enable you to email or print forms. For example, the 1099-MISC is required if you’ve paid $600 or more for vendors like, subcontractors, attorneys or accountants.
3. You must file the Form W-2 Wage and Tax Statement to report employee wages, tips and other compensation to employees. Once the form is complete, send to the Social Security Administration (along with Form W-3) by March 31 if filing electronically.
4. Travel costs? Home office purchases? These items, and much more, are considered deductions for the cost of running a business. Refer to IRS Publication 535 to learn more tax tips on these deductions and find new ways to save.
5. Due to the Affordable Care Act, tax credits are now available to small businesses that offer health insurance to employees. Some qualifications apply. Check this IRS guide tax tips guide for more information.
6. There are a variety of retirement plans available to small businesses that allow both the employer and employee a tax-friendly way to save for retirement. For more information on these tax tips options, and how to capitalize on the government incentives, reference IRS Publication 560.
7. There is a simplified calculation for determining the deduction for using your home for business use. In general, you will figure the deduction by multiplying the area of your home used for business by $5, up to a maximum deduction of $1,500.
Mike D’Avolio – Senior Tax Analyst with the Intuit Professional Tax Group
Mike has worked for Intuit since 1987, and has been a small business tax expert for more than 20 years. In this role, Mike serves as the primary liaison with the Internal Revenue Service for tax law interpretation matters, manages all technical tax information, and supports Tax Development and other groups (including customers) by providing them with current tax law developments, analysis of tax legislation and in-depth product testing. Mike is a CPA and holds a BS in Business Administration and JD from Boston University.