Tax deductions are a relatively easy way to save money. The key is to be aware of what is tax deductible and then to keep track of any tax deductible spending. Apart from the usual deductions, there are many more available for those who are self-employed. Here are some simple tax deductions that you might not be taking advantage of.
Whenever you make a donation to a charitable organization, whether cash or non-cash, make sure to save proof of the contribution. You can’t deduct what you can’t prove. If you receive a good or service, such as entrance to a ball, in exchange for your donation, remember that you can only deduct the amount donated above the fair market value of what you received.
One of the most important tax deductions for those who are self-employed is mileage. The IRS provides a standard tax deduction rate per mile for those who meet certain requirements. By simply keeping records of the number of miles you drive for business purposes, you can save quite a bit each year. If you are a self-employed consultant or sales-person who does a lot of driving, this deduction can up to a considerable amount.
If your medical expenses exceed a certain percentage of your gross income, you may be able to deduct the extra amount from your taxes. It is important to note that over-the-counter expenses may not be deducted.
If you are self-employed don’t forget to keep a record of all the business related expenses. Some of the expenses that can be written off on your taxes are mileage, meal expenses, purchases of business supplies and equipment.
Business Use of Home
If you are self-employed and part of your home is exclusively used as a home office, you may be able to deduct a portion of expenses like real estate taxes or rent. Even a portion of utilities can be deducted. It is essential that the area of your home is only ever used for your business. Using your living room as an occasional home office does not meet IRS requirements.
How to Keep Track with Finovera
It’s easy to lose documentation of tax deductible expenses or charitable contributions. They get mixed in with other papers are end up who knows where. When tax season comes around you might spend countless hours looking for those records. Finovera offers an easy-to-use way of saving and organizing them. The service lets you link accounts and link online billing accounts. It also lets you upload copies of any and all financial and tax records.
With Finovera, you can easily create online folders for each tax year and then scan and upload any documents or paperwork you need to keep track of, and prove, if necessary, your tax deductible payments. The mobile version of Finovera even allows you to take pictures of receipts and other documents and upload them straight to your Finovera account for safekeeping. No more digging through your pockets for crumpled receipts after taking a client out for lunch. Just take a picture, upload it, and you’re good to go. Finovera can simplify your financial life and save you money when it comes time to file taxes again.
This post was originally published on October 25, 2013