Personal Income Tax – Here is Practical Tax Advice For Self-Employed Individuals!
Personal income tax time is a confusing time of year, but if you’re self-employed, a difficult situation becomes even more challenging.
There is no way around it that if you are working for yourself then you must declare your income and you must complete a tax form.
Self employed individuals have a wide range of different needs when it’s time to do the taxes.
Although the task may seem overwhelming at first, there are many ways to ensure that you’re claiming your taxes properly and possibly even receive a hefty tax refund in return!
In regards to personal income tax, the most significant thing that self employed people should remember is to take documentation of all expenses and income and to save that documentation somewhere very safe.
Even a lunch bill that is from a business meeting ought to be saved as this expense can be inserted into tax deductions.
You could also run into a lot of trouble if you miss income on your tax return and it goes undeclared.
It’s important to understand what you can and can’t deduct on your tax form based on tax law, but some rather common items can be announced as tax deductions.
If you are using any part of your residence for business purposes, you can claim this on your tax form and get a deduction for it.
The amount to be deducted is dependent on a tax calculator but is normally the percentage of the total size, in square feet, of the house that is being used strictly for business purposes.
Which percentage is determined by the tax calculator can be used for all bills that pertain to that area. A percentage of power can be deducted as well as gas for heating purposes.
Other business expenses aren’t so complex to determine, and the whole amount can be deducted. By way of example, if the business has a separate phone line within the house, all costs about that phone number could be deducted.
Office expenses such as paper, computer supplies, stamps, and other miscellaneous items can also be declared if you have kept the receipts for them.
Be certain to buy things that the company will have the ability to use in the future like computer paper or printer ink cartridges.
For these items to be allowable, you need proof that item was bought with your receipt and it also should be a reasonable expense for the business.
If you use a vehicle at all for your business, it’s essential to maintain your travel expenses.
These include repairs, mileage, and a proportion of the insurance and car payments, if applicable. If you are self-employed and also seek childcare for your children while you are working, these expenses are also deductible.
If you’re in a higher personal tax bracket than you are comfortable with for tax purposes, you can defer income when you’re self employed, and this could significantly decrease the amount that you owe or greatly improve your tax refund.
If you are in full-time employment and you decide to start your own business, there is a good chance you are due a tax refund for overpaid payroll taxes. So it is a great idea to investigate this before the end of the year.
Did you know your partner can pass on some of their personal allowance to you if you are married?
Another fantastic option for anyone in a high tax bracket would be to invest in your private pension.
Also, it is important to bear in mind that although you have to get used to the personal income tax laws and know the basics, it is best to seek out a tax professional that’s familiar іn thе fіеld оf sеlf еmрlоуmеnt.
This will ensure that you are not only complying with all laws but it will also ensure that you pay the minimum amount needed or even better help you receive a tax refund if you are due one!
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