Where are your taxes at?
Where are your taxes?
Tax Tips - Steven Spangenberg, Home Based Business Tax Expert
Do you know where your taxes are?
It is now past July 1. Half the way through the year. Time for a tax check up. Do you know where your taxes are? Will you be getting a refund? Will you owe.
I have been doing income taxes for over 30 years now and I still have people sweating it out come tax time. Will a refund happen? If not, what will my spouse think? How can I explain that I owe money.
As with everything in life, proper planning is the key. Look at what happened on your 2011 taxes. If you owed, what steps have you taken so that will not happen again? If you only got a small refund, what will make it different this year?
What if you wanted a bigger refund? How will that happen for you?
If you just have a job only, it is pretty simple. If you want a bigger refund, adjust your withholding via a W-4 form and claim less dependents. This will result in a higher amount of taxes being withheld.
If you want less of a refund, adjust your W-4 form to higher dependents and have less taken out. Be careful, the number of “dependents” does not equal the number of children you have. The IRS just uses this word in a generic term for the form.
Usually a change of 1-2 dependents either way will make a significant change in your withholding. This is not an exact science. With all of the changes to the withholding tables, it is harder to be accurate when changing. You have to simply change it and see how it works out on your paycheck.
If you have a home based business, it can be tricky. You have to really be on top of where you are business wise. This means keeping track of your income and expenses on a monthly basis. I am still perplexed at the number of people that run a “business” and only do their bookkeeping ONCE a year…at tax time! How do you know if you made any money! Back to taxes.
Once you figure your net profit (or loss) for the first six months, you can do a projection for the remaining part of the year and see how that plays out on your taxes. Most people that have a home based business usually have a job as well. If you are showing a loss on paper, you can effectively shelter some of your job income and therefore, have less taken out on your paycheck.
This requires discipline. You must stick with your plan. Make sure you actually work your business in order to qualify for the expenses you deduct. In any case, having a home based business is a great way to reduce your taxes.
If you need assistance in this matter, please feel free to email me at firstname.lastname@example.org
You have a great day! Steve
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