It’s time to start getting organized for tax season! April 15th will be here before you know it, so we’ve put together some tips that will save you time and money in the accountant’s office.
Contribute to Retirement Accounts
If you haven’t made your 2015 contribution to your traditional IRA or Roth IRA retirement account, you can do so until April 18, 2016. Making a deductible contribution will lower your tax bill, and your money will grow at a more profitable rate as opposed to growing in a taxable investment account. To qualify for the full annual IRA deduction in 2015, you must qualify for one of two options:
1. Not eligible for company retirement plan.
2. If you are eligible, you must have an adjusted gross income of $61,000 or less for singles, or $98,000 or less for married couples filing joint taxes.
Home Office Tax Deductions
Don’t assume you aren’t eligible for home office tax deductions! Qualifications have been revised to allow more claims to be filed for tax purposes. Even if you don’t have a fixed business location, you can claim a home office deduction if work is done there regardless of where you meet clients. Expenses associated with the area of your home where business is conducted can be written off, such as rent, utilities and insurance. The percentage of costs that is deductible is based on the square footage of the house to total area of the house.
Identify Tax IDs of Dependents
Ensure the IRS approves tax exemption of your dependents by including all children and other dependents’ Taxpayer Identification Numbers on your return. If you don’t, you could be missing out on $4,000 per dependent and the $1,000 child tax credit for each child under 17. If you are divorced or filing separately, children can only be claimed under one spouse or parent.
Prepare W9 Forms for Independent Contractors
Businesses who use independent contractors need a completed W9 form for any individual who was paid more than $600. This is important so that contractors can be issued the 1099 forms they need to report their income.
We’re all about making tax time easier. Being prepared to address these four simple areas can significantly decrease the stress and confusion that is often associated with this time of year.
But we know it’s still quite a bit to digest… If you’re looking for an accountant to call your own, Longcrier & Associates is a local firm with offices in San Luis Obispo and Paso Robles and can help you with all your accounting needs. You’ll make it through!