5 Steps that Make Tax Season a Breeze
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Step 4: Document your business expenses. If you are self-employed, you will want to keep track of your business expenses as well as the bills or receipts that go along with those expenses. What’s a deductible business expense? According to the IRS, deductible business expenses must be ordinary and necessary, meaning they are helpful and appropriate for your trade of business. Expenses don’t have to be indispensable to be considered necessary. You can learn more about which expenses are deductible, how to categorize them as well as how to deduct the business use of your home and car at the deducting business expense page of the IRS website (www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Deducting-Business-Expenses).
Step 5: Create a system for next year. If you waited until year-end to go through steps 1-5, it most likely took you some time. You probably had to rack your brain to remember what you were spending in January and search through old emails to find proof of your donations. To make your life easier in the coming years, you will want to create a system so that you are gathering the necessary information year round. You may want to track deductible expenses and business expenses each month. Take photos of important receipts or keep hard copies in a certain place so that you know where to find them when it’s time to do your taxes. It can also be helpful to find a resource like a tax preparation checklist (http://images.turbotax.intuit.com/iqcms/marketing/lib/TurboTax_TaxPrepChecklist.pdf) to help you track what you need.
Ashley Feinstein is a certified money coach and founder of Knowing Your Worth, where she empowers her clients to redefine success on their own terms by knowing their value and fearlessly going for it. Find out more, check out her blog at KnowingYourWorth.com and connect with her on Facebook and Twitter at The Fiscal Femme.
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