Welcome to the middle of tax season. If you’ve filed by now, congrats! You are of the few who have mastered the art of diving into chore-like responsibilities head first. If you haven’t filed by now, also congrats! Because you can still use TaxDrop!
TaxDrop is a mobile app where users simply snap pics of their tax documents (e.g. Form W-2, Form 1099, loan interest statements, brokerage statements, et al. other fun tax documents), upload them, and a licensed CPA prepares your tax return for you. That’s right—you do what you do best: take pics and we do the rest. (The tax life chose us. *puts game face on*)
So in honor of tax season and shameless self-promotion of the best tax app there is out there, here are three things to look out for when preparing to do your taxes.
1. Make Money Back From Your Rent Payments
First of all, if this is what your home office looks like, you’ve made it. Talk about zen space goals. But what’s even better than simply having this beautiful office space is that you can totally deduct the portion of your apartment rent payments that you use for your business. You may have known about this deduction, but rarely do our clients remember to take advantage of it.
So whether you’re killing it in the candle-making business and have a pile of inventory stocked up across the room or invite clients over for your wellness and massage therapy practice, when you have space at home reserved specifically for your business use, you should totally deduct the respective rent.
Under the simplified deduction method, you can deduct up to $1,500. Take that, over-priced NYC rent.
2. Get Deductions for Your Out-of-Pocket Business Expenses
Your first thought when compiling your business year expenses is to look at the transactions conveniently listed on your business credit card or bank statements. However, those expenses made from your personal account on behalf of your business add up! Like that time you bought last minute refreshments for the meditation session you were hosting and you only brought your personal credit card.
They all count as eligible deductions, no matter how you paid.
Like the super cool Infinity Room that’s lined with mirrors and filled with lights to create the ultimate room-inception, sometimes the business of independent contractors means interacting with other independent contractors!
You have to issue a Form 1099-MISC, like the ones you may receive yourself for your business services, to any contractors (e.g. lawyers, accountants, programmers) that you paid over $600 in services for during the year. You must generally issue them by the end of January every year to these helpful friends.
The best way to turn these forms around in such short time is to stay organized on expenses and income every week (every couple of weeks if you must!). This substantiates the expenses you paid and will deduct.
May your organization be as mesmerizing as this starry scene.
For accounting and tax help, you can find Alice at firstname.lastname@example.org where she will be very excited to see your email.