Articles by Wayne Davies on ArticleSnatch.com

Last Minute Tax Tips: How to File an Extension For Your Personal Tax Return

Thu, 02 Apr 2009 00:00:00 -0400

Do you need more time to prepare your personal tax return? Look no further than Form 4868. And if you need help completing Form 4868, look no further than this article. Here are five tips for completing the extension form without a glitch. Tip 1: Relax. This form is one of the easiest tax forms on the planet. Tip 2: Go to the IRS website to print out a copy of Form 4868. Or you can use your tax preparation software program to fill it out. Either way, have a copy of the form in front of you as you read the rest of this article. Tip 3: Do you know your full name, address and social security number? That's all there is to Part I. Put your name and address on Line 1, your social security number on Line 2, and your spouse's social security number on Line 3 (if you are married and are filing jointly). On to Part II. (There are only two parts to this form. I told you this would be easy.) Tip 4: For Part II, you must provide the following four numbers: Line 4 - An estimate of your 2008 tax liability. **End Summary** Topics: form 4868]]> personal income tax return extension]]> filing extension]]>]]> About the Author: ]]> Looking for more tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Form 4868: Should You File an Extension For Your Personal Income Tax Return?

Thu, 02 Apr 2009 00:00:00 -0400

April 15 is fast approaching but there's no way you can get your personal income tax return done by then. What's a procrastinator to do? File an extension, of course. But perhaps you are wondering whether this is the best option for you. Read on to find out. You can automatically extend the April 15 due date to October 15 by filing Form 4868, "Application for Automatic Extension of Time To File U.S. Individual Income Tax Return." So now you have six more months to file your personal income tax return. The nice thing about Form 4868 is that simply filing this form grants an automatic, no-questions-asked 6-month extension. You don't have to have a reason. Just sending this form to the IRS on or before April 15 gets you the extra six months. But here's another important point about Form 4868: This 6-month extension is NOT an extension to pay any tax you may owe on the tax return. Form 4868 only grants an extension of time to file the tax return. So, if you usually get a refund on your personal tax return, you are OK. **End Summary** Topics: form 4868]]> personal income tax return extension]]> filing an extension]]>]]> About the Author: ]]> Looking for more tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Form 4868: Top Five Reasons to File an Extension For Your Personal Tax Return

Thu, 02 Apr 2009 00:00:00 -0400

Looking for a reason for put off until October 15 what you can do on April 15? Do you need some encouragement to join America's largest group of procrastinators? Then read on to discover five good reasons to join millions of other loyal American taxpayers who legally file their tax return late, without any late filing penalties and without being harassed by the IRS. Reason 1: It's free. It won't cost you a dime to file Form 4868. Well, it's almost free. If you file Form 4868 by snail-mail, it will cost you a whopping 42 cents. Reason 2: It's automatic. You don't have to have a good reason, a bad reason, or any reason at all. Just send in the form and that's all there is to it. No need to come up with some lame excuse like "My dog ate my W-2." Reason 3: It's relaxing. Remember how you've spent April 14 or April 15 in previous years? It's way past your bedtime, coffee pot still brewing, an opened bottle of Tylenol on top of your calculator, papers strewn all over your desk, receipts everywhere. Is this anyway to prepare your tax return? Of course not. **End Summary** Topics: form 4868]]> personal income tax return extension]]> filing an extension]]>]]> About the Author: ]]> Looking for more tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Business Taxes: Top 10 Tips for Correctly Filing Extension Form 7004

Mon, 16 Mar 2009 00:00:00 -0400

Do you own a corporation but don't think you'll complete the 2008 corporate income tax return by the March 16 deadline? This article explains how to file an extension without a hitch, giving you until September 15 to file the return. If your small business is a corporation, your 2008 corporate income tax return is due on Monday, March 16, 2009. Normally the due date is March 15, but since that day is a Sunday, the due date is changed to the next business day. If you don't think you're going to have the return done on time, do not despair. As long as you file Form 7004 on or before March 16, you'll be given an automatic no-questions-asked 6-month extension of time to file the return. Here are ten of the most critical rules for filing Form 7004: 1. Be sure to input the corporation's full name, employer identification number (EIN), and address at the top of the form. 2. Form 7004 works for both regular C corporations filing Form 1120 as well as S corporations filing Form 1120S. In fact, Form 7004 is the extension form for a plethora of business returns, including both C and S corporations. **End Summary** Topics: business tax]]> form 7004]]> corporate tax return extension]]> form 1120]]> form 1120s]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Small Business Taxes: Should You File Form 2553 by March 15?

Mon, 09 Mar 2009 00:00:00 -0400

This article is for small business owners who currently run their business as a C corporation or limited liability company (LLC). If you fall into either of those categories, read on to find out why filing Form 2553 by March 15 could be the best thing you do this year. Form 2553 is called "Election by a Small Business Corporation", and it is the form you must file with the IRS if you want to be taxed as an S corporation. If you've been thinking about making the switch to S corporation status, now is the time to make a decision. Both C corporations and LLC's can avoid two notorious tax traps by becoming an S corporation. C corporations can avoid the dreaded double taxation of corporate profits because S corporation profits are only taxed once. And LLC owners who are currently being taxed as sole proprietorships or partnerships can reduce self-employment tax by paying themselves reasonable compensation as an employee of the S corporation. The rules for filing Form 2553 on time are a bit tricky, so let's review them. **End Summary** Topics: form 2553]]> s corporation election]]> s corporaton status]]> s corporation requirements]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Small Business Taxes: Are You Ready For the March 15 Deadline?

Thu, 05 Mar 2009 00:00:00 -0500

If your small business is a corporation, March 15 is the most critical tax return deadline of the year - even more important than April 15. Find out why in this article. First, some good news. The March 15 deadline is actually March 16. Go ahead and breathe a big sigh of relief, now that you know you have an extra 24 hours to get your act together. Here's why: Whenever a federal tax deadline falls on a Saturday, Sunday or federal holiday, the deadline is automatically moved to the next business day. Since March 15 is a Sunday, the deadline is changed to Monday March 16. Second, more good news. Keep in mind that to comply with the March 16 deadline, the appropriate tax forms discussed below must be postmarked on or before that date. To file on time does not mean that the IRS must receive the return on or before that date. Now let's move on to discuss what you must do by March 16. If your business is a corporation, whether a regular C corporation or an S corporation, March 16 is the deadline for filing your corporate income tax return. C corporations file Form 1120; **End Summary** Topics: small business taxes]]> corporate income tax returns]]> form 7004]]> corporate return extension]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Schedule C Tax Tips: 3 Easy Ways to Reduce Self-Employment Tax

Fri, 20 Feb 2009 00:00:00 -0500

Frustrated with the amount of self-employment (SE) tax you pay each year? You should be. The sole proprietor pays twice as much in SE tax (15.3%) as the employee pays in federal payroll taxes (7.65%). What's a Schedule C filer to do? Here are three ways to reduce the dreaded SE tax. 1. Take the home office deduction. Have you been mislead by the never-ending rumor that the home office deduction increases the chances of an audit? Such talk is bogus, and to believe it is to needlessly pay too much tax. Here's why: Don't forget that when you take a deduction on Schedule C, you are not only reducing income tax, you are also reducing SE tax. Some folks think that they are getting the same bang for their buck without the home office deduction because they can deduct mortgage interest and property taxes on Schedule A. But this is foolish thinking, because a Schedule A deduction only reduces income tax, while a Schedule C deduction reduces both income tax and SE tax. 2. Deduct tax preparation fees on Schedule C instead of Schedule A. The logic here is similar to Item #1 above. **End Summary** Topics: self-employment tax]]> se tax]]> schedule c]]> schedule se]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Schedule C Tax Tips: Are You Letting These 4 Myths Stop You From Taking the Home Office Deduction?

Wed, 18 Feb 2009 00:00:00 -0500

Are you afraid to take advantage of the home office deduction? Perhaps you are the victim of one or more of these common tax myths. Unfortunately, many self-employed folks shy away from taking the home office deductions for at least one of the following four reasons. 1. Fear of an IRS audit. There's been a rumor going around for years that the home office deduction increases the likelihood of an audit. I would love to know who started that rumor so I could give him a piece of my mind. For now, I'll just be thankful that you are reading this article so I can tell you: don't believe it! There is no basis for it. Treat the home office deduction like any other legitimate business expense: if you are entitled to take, by all means, take it. 2. Frustration over the record keeping requirements. Obviously, there are some numbers that must be compiled to take the home office deduction. For homeowners, they include the following: mortgage interest, real estate taxes, homeowner's insurance, utilities (gas, electricity, water, trash removal, etc.) and repairs. The first two are usually reported to you on your lender's annual Form 1098 statement. **End Summary** Topics: home office deduction]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Small Business Tax Deductions: "F" is For FICA, FUTA & FIDO

Tue, 17 Feb 2009 00:00:00 -0500

If you own a small business and are looking for deductions, don't miss out on these. The first two you've probably heard about but don't really understand (until now). The third one may seem far-fetched (pardon the pun) but is legitimate if the circumstances described below fit your situation. 1. FICA. This acronym stands for Federal Insurance Contributions Act, which is legal-eze for the employer's share of social security and Medicare tax. In 2008, all employees must pay 6.2% of their first $102,000 in compensation (wages, salary, bonuses, etc) to the federal government for social security tax. In 2009, they will pay the same percentage to the first $106,800. This 6.2% is deducted from the employee's gross wage, so while the gross wage is an employer expense, the social security deduction is not. Medicare works somewhat differently in that the tax rate is only 1.45%, but there is no limit to the amount of compensation subject to the tax. But the employer is obligated to match both the employee's social security and Medicare withholding amounts, and this is a deduction for the employer because it doesn't come out of the employee's paycheck. **End Summary** Topics: business tax deduction]]> FICA]]> FUTA]]> federal unemployment tax]]> social security tax]]> medicare tax]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Small Business Taxes: How to Reduce Your Taxes by Being Taxed As an "S" Corporation

Fri, 13 Feb 2009 00:00:00 -0500

Looking for an effective tax reduction strategy for your small business? This article explains how to reduce your taxes by choosing to be taxed as an S corporation. Question: What do all the following small business owners have in common? 1) C corporation shareholders; 2) sole proprietors; 3) partnership partners; and 4) limited liability company (LLC) owners who are being taxed like a sole proprietorship or a partnership. Answer: Each of these entity types has the potential to pay less tax by choosing to be taxed like an S corporation. C corporation owners face the dreaded double taxation of corporate profits. Any corporate profits are usually taxed twice. The corporation must pay its own corporate income tax on those profits. And if the corporation distributes those profits to the shareholders as dividends, those dividends get taxed a second time on the personal income tax returns of the individual shareholders. Ouch! Sole proprietors, partnership partners and LLC owners all face the dreaded self-employment (SE) tax on their business profits. And unlike an employee, they pay twice as much SE tax (15.3%) than their employee counterparts pay in payroll tax (7.65%). What are all these small business owners to do? **End Summary** Topics: s corporation]]> small business tax reduction strategy]]> form 2553]]> s corporation election]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Small Business Tax Deductions: "G" is For Gifts & Gas

Wed, 11 Feb 2009 00:00:00 -0500

Here are two valid expenses you can deduct on your small business income tax return, both beginning with the letter "G". Gifts. You can deduct the cost of gifts to customers and other business associates such as vendors, suppliers and service providers (like your accountant, attorney or insurance agent). Be careful, though, because the deduction is limited to $25 per individual recipient per year. Example: You purchase $60 fruit baskets and give them away over the holidays to your best customers. You only get to write off $25 per gift. The other $35 is non-deductible. There's more "fine print" to this rule. You and your spouse are considered one taxpayer for purposes of the gift-giving deduction, even if you work in separate businesses. Example: You and your spouse are both sole proprietors. You are a self-employed computer programmer; your mate is a self-employed website designer. Mr. Smith happens to be a customer of both your businesses, so you each give him a $60 fruit basket. Together you spent $120, but between the two of you, only $25 is deductible. (Is that a nit-picky rule, or what?) Gas. **End Summary** Topics: small business tax deductions]]> gift deduction]]> gas deduction]]> vehicle deductions]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Small Business Taxes: How to Pay Less Self-Employment Tax

Wed, 11 Feb 2009 00:00:00 -0500

If you fall into one of these three categories, this article is for you: 1) you own a sole proprietorship; 2) you are a partner in a partnership; or 3) you are the owner of a limited liability company being taxed like a sole proprietorship or a partnership. What do these three types of business owners have in common? They are all faced with the dreaded self-employment (SE) tax on the profits of their business. If you're new to the world of small business taxes, here's a quick review of self-employment tax. Sole proprietors and those taxed like sole proprietors (i.e. partnership partners and LLC owners who have not chosen to be taxed like a corporation) must pay 15.3% of their business profit in SE tax to the federal government. This consists of 12.4% social security tax and 2.9% Medicare tax. In effect, it is the self-employed person's version of the employee/employee federal payroll tax of 15.3%. But here's where frustration begins to rear its ugly head: employees and employers each pay one-half of the 15.3%. The self-employed person must pay the entire 15.3%. So what's a self-employed person to do? **End Summary** Topics: small business taxes]]> self-employment tax]]> se tax]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Small Business Tax Tips: How to Prepare Form 4562 in 5 Simple Steps

Mon, 09 Feb 2009 00:00:00 -0500

If you bought equipment for your business last year such as a computer or a printer, you can deduct those items on your business income tax return. Usually that means tackling Form 4562 and entering one of the most complicated areas of tax law, the dreaded world known as depreciation. For do-it-yourself-ers who abhor the thought of paying someone else to do your income tax return, this article will help you prepare Form 4562 without breaking into a sweat. Thanks to a tax rule known as Section 179, most small business owners can fully deduct the cost of equipment without going near those complex depreciation laws. But you still have to complete Form 4562, and then you have to transfer the amount of your Section 179 deduction from Form 4562 to your main business income tax form, whether that be Schedule C (sole proprietorship), Form 1065 (partnership), Form 1120 (regular corporation) or Form 1120S (S corporation). Here's how to do that: 1. Compile a list of all equipment purchased for the business last year. This list should include the purchase date, the cost and a brief description of the item. **End Summary** Topics: form 4562]]> section 179 expense deduction]]> depreciation]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Small Business Taxes: What Happens If You Don't Make Quarterly Estimated Tax Payments?

Mon, 09 Feb 2009 00:00:00 -0500

How about a quick multiple-choice question on the world's most complicated subject: taxes. Here's the question: As a sole proprietor or self-employed person, what will the IRS do to you if you don't make federal quarterly estimated tax payments? Here's the possible answers: a. Carry you off to prison b. Fifty lashes with a wet noodle c. Nothing d. Assess a penalty Depending on your particular tax situation, the correct answer is either "c" or "d". Yes, it is possible that nothing will happen. According to the instructions for Form 1040-ES (the form that's used to accompany federal quarterly estimated tax payments), you do not have to make quarterly estimated tax payments if you were a U.S. citizen or resident alien for all of the previous year, and you had no tax liability for that previous 12-month tax year. If you've been in business for a while, the above exception to the general rule probably doesn't apply to you. **End Summary** Topics: quarterly estimated tax payments]]> form 1040-es]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Small Business Taxes: What Are Quarterly Estimated Tax Payments and Why Must You Pay Them?

Mon, 09 Feb 2009 00:00:00 -0500

If you are a sole proprietor, a self-employed person or an independent contractor, you are faced with the probability of making federal quarterly estimated tax payments. These are called "quarterly" payments, but don't that word fool you. In typically confusing IRS jargon, here are the due dates: 1st Quarter payment is due April 15. (So far, so good. The first quarter corresponds with the calendar quarter.) 2nd Quarter payment is due June 15. (Confused? You should be, because the 2nd quarter, for purposes of these estimated tax payments, is only 2 months long - April and May.) 3rd Quarter payment is due September 15. (Please stick with me here. The 3rd quarter is the months of June, July and August. But hey, at least it's three months long.) 4th Quarter payment is due January 15. (The 4th quarter is four months long. Don't ask me why. Maybe it has something to do with the 2nd quarter only being two months long?) You make these quarterly payments electronically via EFTPS (the IRS Electronic Federal Tax Payment System) or by mail with Form 1040-ES. **End Summary** Topics: quarterly estimated tax payments]]> form 1040-es]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Small Business Tax Tips: 3 Key Changes For 2008 Income Tax Returns

Thu, 05 Feb 2009 00:00:00 -0500

Are you getting ready to prepare your 2008 small business income tax returns? Here are three important changes you don't want to miss. Two of them put more money in your pocket; the third gives more money to Uncle Sam. Mileage Rate Increase. Here's a good one. If you use the Mileage Method to calculate your vehicle deduction, the IRS has done you a favor by increasing the mileage rate. In 2007, the rate was 48.5 cents per mile. Effective January 1, 2008, the rate was increased to 50.5 cents per mile. On July 1, 2008, the rate was increased again, to 58.5 cents per mile. Because there are two rates for 2008, the most accurate way to calculate your mileage deduction is to do two calculations: January-June miles TIMES .505 PLUS July-December miles TIMES .585. If you did a good job of tracking your mileage during the year, this calculation should be no problem. You just add up your mileage for the first six months; then do the same for your mileage for the last six months. Section 179 Increase. More good news. **End Summary** Topics: 2008 income tax returns]]> small business taxes]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Small Business Tax Returns: 3 Critical Tax Mistakes You Don't Want to Make

Thu, 05 Feb 2009 00:00:00 -0500

Every year the IRS delays the processing of millions of income tax returns for the same reasons. Here's the scoop on three of the most common tax preparation blunders and how to avoid them. Mistake #1: Forgetting to sign the return. If you omit your signature, the IRS will not process the return. Instead, they'll send it back. And if you are married filing jointly, both spouses must sign, and if one spouse signs but the other doesn't, the IRS will treat such a return as invalid and return it. The solution: e-file your return and the signature issue disappears. Mistake #2: Math errors. Simple calculation errors are also quite common. With the proliferation of tax prep computer software programs, you would think this problem would have gone away by now. But plenty of folks still do their return the old-fashion way (i.e. via pencil and paper), so if your one of those types, what can I say? I respect you, but must insist you consider spending a few dollars this year on to automate the process. Not only will you eliminate the likelihood of a math error, but you'll save time and lots of it. **End Summary** Topics: small business tax returns]]> filing mistakes]]> tax return mistakes]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Schedule C Tax Deductions: "E" is For Employees, Education and Entertainment

Thu, 05 Feb 2009 00:00:00 -0500

Looking for legitimate tax deductions for your income tax returns this year? Here are three common expenses you can deduct on Schedule C, all starting with the letter "E". Employees. There are several legal deductions related to your employees. Obviously, the compensation you pay them is reported on Schedule C, Line 26. Even though the description for this item is "Wages", don't stop there. Salaries, commissions and bonuses are also deductible and should be put on Line 26 also. What about your own compensation as the sole proprietor? Don't make the mistake of reporting that on Line 26. Then where does it go? It doesn't go anywhere on Schedule C. The money you withdraw from the business out of profit, also known as "draw", is not a business expense. What about employee benefits? Things like health insurance, medical expenses that are paid via a Medical Reimbursement Plan, retirement plan contributions (such as the employer's payments on behalf of the employee into a SIMPLE IRA Plan or a SEP) are all deductible. These expenses can be added together and reported on Line 14, "Employee benefit programs." Only health insurance premiums for your employees are deductible on Schedule C. **End Summary** Topics: schedule c tax deductions]]> employee deductions]]> education deduction]]> entertainment deduction]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Schedule C Tax Deductions - "D" is For "Don't Do Depreciation"

Mon, 02 Feb 2009 00:00:00 -0500

Do your eyes glaze over at the thought of those mind-numbing depreciation rules? Well, take heart, sole proprietor. Thanks to a tax law known as Section 179, you can probably kiss those depreciation rules good-bye. Depreciation is the name we use for deducting the cost of business assets such as office equipment and furniture (computers, printers, fax machines, copiers, desks, bookcases, etc) and other items that the tax code says have a "useful life" of more than one year. The general rule for many decades was this: the cost of such business assets (aka fixed assets, capital assets, depreciable assets) cannot be fully deducted in the year of purchase. Instead, the purchase price must be deducted over several years (anywhere from 3 years to 39 years), depending on the type of asset. Then along came Section 179, which simply says that the total cost of certain business assets can be fully deducted in the year of purchase. **End Summary** Topics: schedule c tax deductions]]> depreciation]]> section 179 expense]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Small Business Tax Tips: I Forget to Send Out 1099's by January 31 -- What Do I Do Now?

Mon, 02 Feb 2009 00:00:00 -0500

Are you a small business owner who hires independent contractors? If so, you may be required by the IRS to send out a Form 1099-MISC to those people. This article will help you determine your obligation to issue those 1099's. The basic rule works like this: Form 1099-MISC is used to report total annual payments made to self-employed people who made at least $600 during the previous calendar year. This 1099 must be given or mailed to the contractor by January 31 of the following year. Note: For calendar year 2008, since January 31, 2009 is a Saturday, the deadline has been extended to the next business day (Monday, Feb. 2, 2009). The key here is whether or not the person who worked for you is self-employed. Obviously, this excludes employees. If you have employees, you give them a Form W-2 by January 31 (or Feb. 2) to report their compensation (wages, salaries, bonuses, and withholdings). And this also means you don't have to send out a 1099-MISC to corporations who provided services to your business. **End Summary** Topics: form 1099-misc]]> form 1096]]> independent contractor payments]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Small Business Taxes: What is Self-Employment Tax and Why Must You Pay It?

Mon, 02 Feb 2009 00:00:00 -0500

If you are new to the world of self-employment, it's time for you to meet an old nemesis known as Self-employment tax. Self-employment (SE) tax is the sole proprietor's version of the social security and Medicare tax paid by employees. In case you didn't realize it, in 2008 employees were required to pay 6.2% social security tax on the first $102,000 of wages or salary. In 2009, the amount subject to social security tax increases to $106,800. And they were also required to pay 1.45% Medicare tax on all their wages or salary, regardless of the amount. And since most employees earn less than $102,000, the end result is that most employees paid 7.65% of their compensation to the IRS. Both the social security and Medicare tax are deducted "off the top" - the employee never sees this money because it is taken out of their pay and sent directly to the IRS by their employer. (Keep in mind that we are talking only about social security and Medicare tax, which are separate from and different than federal income tax, which employees must pay, too.) The employer must then match the 7. **End Summary** Topics: self-employment tax]]> se tax]]> schedule se]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Small Business Tax Tips: I Received Form 1099-MISC -- Now What?

Mon, 02 Feb 2009 00:00:00 -0500

Did you receive a Form 1099-MISC and aren't sure what it means and/or what to do with it? This article will answer that question. Form 1099-MISC is one of the most common tax forms in the world of the self-employed. And it's most common use is to report income made by sole proprietors who have performed services for other businesses. By "sole proprietor" I'm referring to self-employed people such as independent contractors, consultants or free-lancers who are in business for themselves but do not run their business as a corporation, partnership or multi-owner limited liability company. If you fit that description of a self-employed person and performed services for another business, and that business paid you at least $600 during the year, the other business is required to send you a Form 1099-MISC by January 31 of the following year. The January 31, 2009 due date happens to fall on a Saturday, so the deadline for issuing 2008 1099's is automatically extended to the next business day of Monday, February 2, 2009. So you may have already received a Form 1099-MISC for 2008. If not, you could still get one soon. **End Summary** Topics: form 1099-misc]]> independent contractor payments]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Small Business Tax Tips: How to Find Hundreds of Deductions

Mon, 02 Feb 2009 00:00:00 -0500

Are you a small business owner who's frustrated about taxes? You face a mind-boggling array of choices when it comes to figuring out what is and is not deductible on your income tax return each year. And just when you think you've got this tax system figured out, new laws are passed and it feels like you've got to start all over. Perhaps the best place to begin this journey is the income tax return itself. Depending on what type of entity you own, here are the main income tax forms: Schedule C (sole proprietorship), Form 1065 (partnership), Form 1120 (C corporation), and Form 1120S (S Corporation). Note: If you own a limited liability company (LLC), you'll use one of those four forms, depending on how you choose to be treated for tax purposes. These tax forms are an excellent way to begin the process of answering the question: What's deductible? Notice that on each of these forms, there may only be 15 or 20 specific expense categories, or line items, to help you know what to deduct. **End Summary** Topics: small business tax deductions]]> sole proprietorship deductions]]> corporate deductions]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Small Business Taxes: 6 Compelling Reasons to Pay Your Taxes Electronically

Mon, 02 Feb 2009 00:00:00 -0500

Did you know that the IRS has made it significantly easier to make your federal tax payments on time? Let me introduce you to EFTPS - the Electronic Federal Tax Payment System. It's been running along quite smoothly for many years now, and if you're not using it, here are six compelling reasons to sign up today. Reason #1: It works. Millions of small businesses use it successfully every day. Reason #2: It saves time. No more last-minute trips to the bank or post office. No more writing out checks and filling out forms and adding to the never-ending pile of paperwork on your desk. You'll complete the painful task of paying your taxes much faster. Why make the process any more painful than necessary? Reason #3: It is user-friendly. You'll be so amazed at how easy it is, you'll have one less thing to complain about. And when it comes to the federal government, don't we all need at least one thing that we don't complain about? Reason #4: It prevents mistakes. It will greatly reduce the possibility of making an error or late payment on your tax payments. No more looking for lost checks. **End Summary** Topics: EFTPS]]> Electronic Federal Tax Payment System]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.

Small Business Taxes: How to Get an Employer Identification Number (EIN)

Mon, 02 Feb 2009 00:00:00 -0500

Do you need an Employer Identification Number (EIN) for your small business? You may be required to get an EIN for any number of reasons, such as: 1. Hiring employees 2. Forming a corporation 3. Forming a partnership 4. Buying a business 5. Starting a retirement plan 6. Filing excise tax returns 7. Opening a business bank account There are four ways to get an EIN. 1. Apply online. Go to the IRS website and complete the application online. This is the fastest way to obtain an EIN because once the application is completed, the information is validated during the online session, and an EIN is issued immediately. You can then download, save, and print your EIN confirmation notice. It doesn't take very long to do this, and the IRS screens are user-friendly. To insure you have all the information requested, you should print out Form SS-4 before starting the online application process and be sure you can answer all the questions on this form. You can get a copy of Form SS-4 at the IRS website. **End Summary** Topics: employer identification number]]> EIN]]>]]> About the Author: ]]> Looking for more small business tax tips? For a free copy of the Special Report "How To Instantly Double Your Deductions", visit www.YouSaveOnTaxes.com . Wayne M. Davies is author of 3 ebooks on small business tax reduction strategies.