Top Tax Tips for WAHMs
Almost every year, we say that we’re going to get a leg up on our taxes by being more organized, doing more research on things like deductions and filing way before the April 15 deadline. And yet, also every year, an overwhelming majority of us find ourselves scrambling around to get our taxes done.
If you are a Work-At-Home-Mom and you can relate to this scenario (that oftentimes has the full potential of turning into an all-out dilemma), we have a few tax tips that can make filing less stressful and more beneficial when it comes to your returns:
Keep good records. When you work for a big company or corporation, there is an entire accounting department that handles financial records. However, when you are self-employed, it is up to you to keep all of your information organized and up-to-date. You don’t want to wait until the last minute to find all of the receipts that can get you some substantial tax deductions, so make sure that you keep consistent records.
Get some accounting software. Whether you choose to hire someone to do your taxes for you or you decide to them yourself, it’s still a good idea to have some of your own accounting software. It makes it easier to do your taxes or share your information with the person who will be handling them for you. Some of the best accounting software that’s currently on the market includes Sage 50 Complete Accounting, QuickBooks Pro and Bookkeeper.
Remember to deduct your office space (among other things). One of the greatest tax benefits that come with working from home is that you can actually deduct the space of your home office on your taxes. Not only that, but you can also put on your tax deduction list, the expenses that directly correlate with the work that you do including a percentage of your utilities, internet, the business phone line that you have and office supplies. Don’t forget that you can also deduct the mileage that you used to go to meetings and a percentage of your travel expenses as well.
Make sure to set up a retirement plan. If you’ve ever gone to a website like taxrebate.org.uk then you know that its purpose is to help you figure out how much of a refund that you are eligible for. Well, did you know that if you set up your own retirement plan that you have just one more way to protect some of your income? That’s right. A SEP-IRA is a program that allows you to set up a retirement plan that you can put as much as 20 percent of your self-employment income into. There is also something called the Keogh Plan that makes it possible for you to put away a certain amount of tax-deferred income for the purpose of retirement as well.
Get some of your FICA money back. Did you know that if you’re self-employed, that means that you pay both the employer and employee portions of Social Security tax? The upside to this is that you can actually (and legally) deduct half of your self-employment tax as you work to figure out your adjusted gross income. Remember that while there are a lot of perks to working at home and being self-employed, it also means that you are solely responsible for your taxes, so make sure to be as proactive and thorough as possible. When April 15 rolls around, you’ll be so glad that you did!