NEW YORK (AP) — AVOIDING LAST-MINUTE TAX MISTAKES
Business owners can find it a tall order to complete their tax returns while also running their companies. When an owner is distracted, or not paying close attention to IRS rules, that’s when mistakes happen. Some of the common ones to avoid:
—If you’re a freelancer or independent contractor, make sure you have all the 1099 forms you need from people or companies you’ve worked for. If you file your return and you’re missing any of your 1099s, you’ll be hearing from the IRS. The government cross-checks the 1099 copies it gets with the amount of income you report, and if there’s a discrepancy, the IRS will want to know why.
—If your business is a partnership, be sure the income and deductions reported to the IRS on your firm’s Schedule K-1, Partner’s Share of Income, Deductions, Credits, etc., matches what you report on your Form 1040. If you find an error on the K-1, make sure the form is corrected before you file your return.
—If you’re deducting the cost of business meals and entertainment, you can claim only half the amount you spent.
—If you want to take a deduction for a home office, you must have been using the office exclusively and regularly as your principal place of business. If the office is a desk in the corner of your family room, it’s not likely to pass muster with the IRS.
—If you drive your car for business and personal use, make sure you get as big a deduction as the law allows. The IRS gives you two choices; the first is a standard deduction of 53.5 cents per mile the car was driven for business. The second alternative is a portion of expenses like gas, insurance, lease payments and maintenance that is prorated to the amount the car was used for business. You should calculate your costs using both methods to be sure you get the biggest deduction allowable.
STARTING A BUSINESS ON A TIGHT BUDGET
Many people who want to start a company say they can’t, because they don’t have enough startup funds. SCORE, the organization that gives free counseling to small businesses, is sponsoring an online seminar on how to launch a company on a tight budget. It will be held Tuesday, March 27, at 1 p.m. Eastern time. You can learn more and register at http://bit.ly/2pr3H5p .
Follow Joyce Rosenberg at www.twitter.com/JoyceMRosenberg . Her work can be found here: https://apnews.com/search/joyce%20rosenberg