As I’ve just recently started my own business, I’ve spent more time researching taxes than I ever cared to spend. And if you lean right (creatively speaking, mind you) like me – then you know how dull and confusing it can be. According to this fun little test, I use my right brain 68% of the time.
So, if you, too, are fairly new to the Small Business game, here are a few helpful hints for you when preparing to pay your taxes:
Tip #1 Know the Standard Deductions. If you don’t itemize your deductions you can take the 2013 standard deduction:
Filing Status Deduction
Married filing joint (or qualifying widower) $12,200
Head of Household $ 8,950
Single (or Married filing separately) $ 6,100
#2 Check for Earned Income Credit. You might be eligible for EIC (Earned Income Credit) if…
- 3+ children lived with you and you earned less than $46,227 (or $51,567 if married filing jointly)
- 2 children lived with you and you earned less than $37,870 ($43,210 if married filing jointly)
- 1 child lived with you and you earned less than $14,340 ($19,680 if married filing jointly)
Find out more about EIC here: http://www.irs.gov/Individuals/EITC,-Earned-Income-Tax-Credit,-Questions-and-Answers
#3 Know the Current Mileage Rates… and Claiming Categories. The current rate for business mileage is 56 ½ cents/mile. Most small business owners know they can claim mileage used for business, but many don’t know that if you have private insurance, you can claim mileage used to get medical care at 24 cents/mile. You can also claim mileage for any charitable work at 14 cents/mile.
#4 Understand Potential Deductions. Mileage, restaurants, airfare and travel expenses are all fairly common business expenses that can be deducted from your business profit. There are others though, that may not be obvious. For example, did you know you can deduct payments to your IRA? Check with your financial advisor regarding any limitations on the amount you can deposit in a calendar year.
Please note that I am not a CPA or tax advisor! You can find more details on this information, and answers to all your small business tax questions at http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed