Tag Archives: tax deductions

Track Business Travel Properly If A Car Is Involved

Business travel has always been a godsend when it comes to writing off expenses. Whether you’re driving out of town or you’re all around the area you work in, being able to write off mileage has always been helpful in reducing your taxes.

With that said, something most people might not know is that the rules have changed when it comes to tracking your driving expenses. It might feel like a nightmare because there’s more paperwork while you’re doing it, but come tax time you’ll still get a nice benefit, even if it’s a bit dicier than it used to be.
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Business Tax Information You Need For 2014

As we come to the close of another year, we’d like to highlight a few things you might need to know as we head into 2015. A quick disclaimer up front is that some of this information is geared towards New York state residents.

* New York state’s Corporate Minimum Fixed Dollar amount is based on gross receipts. Extensions should be filed by the beginning of March. A few things to know regarding this are:

  • Fixed dollar minimum tax for general business taxpayers under $100,000 is $25;
  • More than $100,000 but not over $250,000 is $75;
  • More than $250,000 but not over $500,000 is $175

* The penalty for those who don’t have health care coverage will be paid out in 2015. The minimum penalty amount is $95 for singles, upwards of $1,000 for married couples with dependent children. It’s all based on your tax return. You need to know that this counts as income, not what you’ll actually have to pay so don’t panic. Still, it’s something to look at for 2015 because the rates will be much higher come 2016. Also, if you paid for health care insurance through the program this year, didn’t get any upfront adjustments and didn’t have any of it paid by an employer, you’re probably going to get a nice deduction, as well as be qualified to write off other health care expenses.

* Business mileage for 2014 is 56 cents a mile. The minimum allowable payment for meal expenses is $46.

* If you have kids in college, you can still get the American Opportunity Credit up to $2,500, which can be used for the normal 4 years it takes to get a bachelor’s degree. Out of that, 40% of it may be refundable. The student loan interest deductible is still $2,500 a year.

* The maximum Earned Income Credit for 3 children is $6,143 and $5,460 for 2 children.

There are many other changes this year, which includes many deductions taken away. As always, we recommend seeing an accountant to try to get the maximum benefit possible.

What To Know About Taxes & Health Insurance For 2014

The Affordable Care Act mandate that everyone needs to have health insurance or pay a penalty starts in 2014. The requirement is that individuals must be covered for at least 9 months of the year to avoid having to pay a penalty. In actual costs, if you’re single or married with spouse and no kids you’ll have to pay either $95 or 1% of your total income, whichever is higher, and if you’re a family of 3 or more the cost is around $380 or 1% once again. Those are the actual dollars; it’s not much but it’s still money out of your pocket, and it goes up in 2015.

Here are a few more things you should know about what’s going on, including what’s happening in New York:

1. New York state is broken into multiple coverage areas, and each area offers something different, although some insurance companies cover multiple areas. Without a discount, plan costs seem to be running between $400 and $1,800, with the major differences being deductible and pharmaceutical costs. The lowest level plans, known as bronze level, don’t offer anything for pharmaceuticals, while the costliest plans don’t have a deductible that you must reach. Start thinking of health insurance like car insurance if you have to purchase one of these plans.

2. The range for qualifying for a discount on health insurance is pretty vast. For single or self + spouse the dollar amount is around $49,000, for larger families it goes all the way up to around $94,000. It’s nice to qualify for a discount but it comes with a warning that most people don’t know about. If you get a discount but the next year your income takes you above that level by a certain percentage (which hasn’t been released yet), you not only lose the discount but you might be required to pay back whatever discount you received beforehand. That doesn’t seem quite fair but it’s in one of those pieces of paper that experts have read so be warned about it.

3. Experts have gone back and forth as to whether consumers or small businesses will be able to deduct the cost of premiums in 2014. Supposedly if you’re getting a discount you won’t be eligible but if you’re not… still a bone of contention. The recommendation is to keep all receipts for those services that are presently allowed to be deducted if their cost is high enough which includes physician visits, dental visits, medical equipment and vision care; sorry but no sunglasses unless they’re prescription.

Unfortunately even now there are lots of questions yet to be answered, but as with most other things it’s important to keep all your receipts and share them with your accountant. At some point we will have all the answers we need.

Trip Expenses You Can Deduct For Your Business

One of the best things about being in business for yourself is that you get to write off a lot of expenses. This includes travel; not everything, but a lot of things. We will cover some of the things you get to write off and when.

Air Travel – if you have to fly anywhere you get to write off the cost of your flight and your bags if you have to pay for that. You even get to write it off if you get to the airport and upgrade to first class because the airline is offering a deal.

Car Rental – if you have to rent a car it’s covered, but you don’t get to write off any mileage if you go that route.

Mileage – if you don’t rent a car and drive instead, you get to write off all mileage associated with your trip. Here’s the other side. While you’re out of town, you get to write off all mileage, which includes weekends. Say you’re an hour away from a beach and you’re using your own car because it’s too far to drive home every weekend. It all counts as part of mileage.

Hotel – your hotel costs are covered for write offs. Any clothing you wear for business is covered if you need to have it cleaned and pressed. However, your personal clothing isn’t covered specifically, although you might be able to get a package that includes everything but that’s rare. Meals that you eat in the hotel are covered, but not personal convenience items or snack items you might buy in the hotel store.

Meals/Food – all of your meals are covered whether you eat in the hotel or not. If you stop for ice cream or a milkshake, that’s not considered a meal so that doesn’t count. If you’re staying in an extended stay hotel and you decide to buy food at the grocery store, you can write that off.

Clothing – if you need to buy new clothes to go to your client’s office those items are covered. But if you buy something like t-shirts, shorts or sunglasses, those items won’t be covered.

5 Items You Can Deduct From Your Taxes

Most people don’t itemize, but for those that do, especially if you’re self employed, you will find that there are lots of little ways you can save some money on your taxes, which could end up gifting you a refund if you’re lucky. Let’s look at 5 of these things.

1. Health care costs. Actually, you won’t save money on medical bills per se, but you can write off any health insurance you pay for right now if it’s a business expense, and once the health care bill kicks in you can write that off if you end up having to pay out of pocket for it. Right now you can also write off some of your expenses if you have a Health Savings Account.

2. Mileage. Almost everyone with a small business knows that they can write off mileage, but many people forget to track it. You might need to either start carrying around a notebook or track the mileage once for those places you visit often and then remember to track that whenever you go to those places again.

3. Cell phone costs. If you pay for your cellphone and you use it for business you can write off certain portions of your bill. You won’t be able to write off the entire amount if you’re on a family plan but you can certainly write off half of it. If your bills are exorbitant you might be asked to prove which calls were for business and which ones weren’t, but if you’re under control you should be fine.

4. Home office expenses. Not only can you write off all the things you buy to use in your home office but you can also write off a portion of the house expenses that you use while you’re in your office. This includes your mortgage, electricity, if you have someone who cleans the house and even if you have someone who cuts your grass, although that one might be harder to track. If you have any maintenance done in your office such as painting the walls you can write that off. Don’t push things like trying to get a discount on your cable because you have a TV in your office though.

5. Travel. If you’re a small business you actually get to write off one business trip a year whether you really take one or not. You have to be incorporated to do this however, and it’s a way to get a deduction from taking a family trip. You get to claim at least one night of your trip as a shareholders meeting, and if you conduct any type of business at all you can claim other days as well. However, you won’t get away with claiming an entire cruise as a business trip unless you were hired by the cruise line so don’t even try.