Work at Home Tips – Income Tax Organization

Is it really that time of year again? Time goes by so fast, especially if you’ve been relatively busy with your home business within the past year.There are so many things to remember when preparing your tax returns, as well as knowing exactly what is considered taxable. Let’s take a quick look at what may be taxable in your work at home situation.Here are just a few that I’ve listed below:1. Monthly Internet bill. I know this is the number one item on my list since I work at home and I have to use the Internet to make my income.2. Monthly hosting bill if you own your own domain name. This is another important write off for your business, especially if you own several domains/websites and your hosting bill is considerably high.3. Monthly phone bill. If you own a business and you use your phone to run your business, then yes, you need to write off your phone bill.4. Business transportation mileage. If you use your automobile for business, such as home parties, this is another important taxable write off. Fuel prices has went up considerably. You need to keep careful track of all your transportation expenses (including gas receipts), and file anything and everything that you can.5. Advertising expenses. Some people pay for advertising for promotion purposes and some do not. If you do pay for advertising, then you need to file these expenses on your taxes. Depending on the type of advertising, it may or may not be taxable, but it’s always safe to file all expenses.6. Charitable contributions. Your contributions must meet specific criteria to be considered taxable. It’s still important to record all contributions for the year and your tax adviser will sort it out accordingly.There are definitely more that need to be listed here. I just wanted to go over a few of the top ones to consider for your business. To do a more elaborate research on what is taxable, you can visit irs.gov.Tips for organizing your tax documentsDon’t wait until the end of the year to start getting those important documents together. Start at the beginning of the year and place all relevant papers in their proper place. There are so many people (and I used to be one of them) that just shove these documents into hiding anywhere they can find, and not where they are supposed to be kept for fast reference.For example I have a file folder in my file cabinet that houses my office expense receipts, ink cartridges, paper, pens, pencils, software receipts, new computer/printer receipts, and the like. When you purchase something for your business, immediately when you return home, place those receipts in their proper folder.Earnings and expense recordsI’ve learned over the years to keep a document for my earnings and also for my expenses in safe folders on my computer. I also actively backup all my files on a regular basis. You can of course figure out your earnings and expenses at the beginning of every year, but wouldn’t it make much more sense to do this as you go along with your business and record each transaction? It would definitely save you a considerable amount of time by doing this daily.Basic office supplies for organizing your work at home office calendar
file cabinets
interior or manila file folders
hanging file folders and labels
Microsoft Money or Quickbooks accounting software (if you choose), you can always keep active spreadsheets for business accounting purposes
sticky notesWith careful home business planning and organization skills, you will be more career productive.Important: Also with precise organization, you will know at a moment’s notice where these documents are if you are ever audited.