Tax Assistance For Home-Based
by Yank Elliott, MBA &
Beware the Ides of
March! All Julius Caesar had to worry about was assassination. As a home based
business owner, you have to worry about the IRS and the dreaded April 15
deadline for filing your income tax return.
Assuming you have the
records of income and expenses, it may not be as bad as you think. There is a
lot of information, advice, and even help to get you through this ordeal. Much
of it is even available free. Read this article and you will save time by
having many sources available to you in one place rather than having to search
all over the Internet to find the help you need.
Having your own
business may require filing a Form 1040, Schedule C, and perhaps Schedule SE. A
good place to start your filing process is to see what you may need at
1040 Central. This page will point you to a lot of
information sources; here are the most important:
- Tax Relief in Disaster Situations - There are provision for
tax reduction for victims of several natural disasters occurring in 2005. Among
these are Hurricanes Katrina, Rita, and Wilma. There are also provisions
related to wildfires, floods, and tornadoes.
- Self-Employed Individuals or Independent Contractors - This
discussion will help you decide how to file your Income Tax Return. Generally
self-employed or independent contractors must file some kind of business
return. If you are neither of these you just need to file as an employee which
may change the required forms as well as the types of expenses allowed.
- Forms and Instructions - Here you can download every form
along with related instructions the IRS has. You need a computer and printer as
well as the Adobe PDF reader which is available on this site. This is very
convenient and saves the time and trouble of requesting the forms or visiting
some library or Post Office. Its really nice if you overlook one obscure
form and you file at the very last minute. Just pull the form from this
Website. This could be the only time the IRS is your friend!
- Business Expenses - This is an overview of allowable
deductions that may be available to you. Please note all the items require
records to substantiate any expense you claim. These expenses all relate to
some types of income your business may receive including products produced or
inventoried by you, rental income, payments for services performed, and
affiliate income. A complete list is in PDF
535 Business Expenses.
- Electronic Payment Options - This is a convenient way to
pay any kind of tax you may owe entirely over the Internet. Of course you can
still pay by check or money order using snail mail.
Thats nice, you
say, but how do I know how much I must pay? Well, you have to first file a tax
return and there are several ways to do this. Well discuss each of
- File the return yourself
- Paper forms by mail, get forms
- Free online
- Paid online
- Free volunteer filing
- Paid professional filing
Filing a return by any
means on your own may be a daunting task. Theres a lot of stuff to read
and understand and who are you going to ask questions? This can be overcome to
some extent using the paid services. Most have some checking services available
as well as question answers usually for a small extra fee. I file my own return
without the software because I have been a professional preparer in the past. I
think most people should at least use one of the paid online software programs
(or buy the program in a box). An advantage of buying in the box (or
downloading) is that you wont have to put your Social Security number
where anyone might be able to see it.
Heres a caution
about using any service, free or paid. If the provider promises anything that
sounds too good to be true beware. Tax filing is unpleasant even if you owe
little tax. A guaranteed refund or a promise of no tax is impossible; go
Here are two Websites
you should read before choosing anyone to prepare your return:
- Tax Preparer Fraud explains illegal practices sometimes
used to understate income or inflate expenses and other deductions. Not only do
these practices break the law they also put you, the client, at risk of illegal
activity and several kinds of fines.
- Definition-Abusive Return Preparer discusses some
additional illegal ways paid preparers may try to achieve low taxes for
In spite of all the
help available, there are some situations when you should always seek qualified
professional help with your tax return. The professionals required are a CPA,
tax attorney, Enrolled Agent (certified to represent clients to the IRS), or
well qualified commercial tax preparation firm. Some of these circumstances
- If you are buying a business
- When you purchase expensive assets for business
- If real estate is a substantial part of your
- If you have more than two employees (you may have
special reports, insurance requirements, etc.)
- When you owe back taxes, have a dispute with the
IRS, or have tax liens
For free filing
online, the IRS has formed a partnership with many software companies called
the Free File Alliance Companies. Generally these companies
allow free filing for Adjusted Gross Income of $50,000 or less (a few require
less than $29,000). To use one of these companies free be sure to go through
this IRS site; using the main Website of one of these companies may not allow
you to use the free offer. There are so many of these companies I would suggest
you use the Guide me to a service button at the top right of this
IRS page. This will narrow the field so you can examine a few companies to
decide which one has the best offer for you.
Paid online filing
services offer additional benefits and features for prices beginning at about
$10. Some of these offer live consultation usually with a small extra fee. This
is by no means an exhaustive list nor are there any recommendations made. Some
names like H & R Block will be well known to many. My suggestion is to
compare three or four of these for price and level of services provided. Pick
the one you feel will serve you best; most of them allow completion of your
return before you actually have to pay when your return is filed. This should
tell if you picked the right company. Here are some online for-pay filing
- FileYourTaxes.com - An important benefit of this program is
the ability to re-file returns due as far back as 1998.
- TurboTax - There are three online versions starting at
$9.95. A download version also is available from this site beginning at $19.95.
The online versions are free to try; pay only when you file.
- Payment plans - Provides help with payment plans and back
- H & R Block TaxCut - Three plans beginning at $9.95
with occasional special pricing. The $99.95 version includes your return signed
by a tax professional.
- ExpressTaxRefund.com - Basic package starts at $29.95 with
add-ons covering special forms you may require. If you think you may need some
unusual forms check out this site.
- Tax Prep & Accounting Services - Prices start at $9.95.
You can get quick online answers to questions for a small fee.
- CompleteTax - This is a product of Commerce Clearing House
(CCH) a well respected tax and legal information company. Prices begin at
$24.95; they also do state taxes. Personal service is available for a small
fee. The site has a Tax Projector for future taxes and other financial
- TaxEDGE - Price is $19.95. They advertise online help comes
with the program.
- Taxslayer.com - Online cost is $9.95; download is $19.90.
Both plans offer state return free. They offer online customer service.
- Taxbrain - Prices start at $19.95. They also file state
returns and provide live customer support along with an accuracy guarantee.
- Big Fat Refund - Basic price is $24.99. They will file many
other required forms for additional fees. They advertise unlimited help.
- Taxengine.com - Federal return or a state return is $19.95;
Federal and state return price is $29.95. Either price includes every form or
schedule required for a Federal return; this seems to be a better deal than
some other services which require extra fees for some forms.
- Tax Help - This is a list of sites some of which provide
help with tax debt relief, tax disputes, and other problems as well as
- Has a list of some city and state tax preparers.
Directory-Online Tax Preparation - This list contains some services not
covered elsewhere. Some of these links no longer work.
There are two
volunteer programs providing free tax services to people with income of $38,000
and less and for people age 60 and older. You can find these
Here are some
professional tax preparers with offices you can physically visit:
- H & R Block - Use your zip code to find an office near
you. Look in the banner at top right. You may qualify for an Instant Money
Refund Anticipation loan at one of these offices.
Hewitt Tax Service Office Locator - Use your zip code.
- Bookkeepinghelp.com - Here are many tax preparation offices
operated by various kinds of professionals. You may find one in your area.
Relax, and have some
fun with the IRS this tax season!
Elliott. All rights reserved worldwide.
Yank is a home-based entrepreneur and
freelance business writer living in Hurricane Alley, North Carolina, USA. His
Website is www.furriwhalesworld.com. Contact
Yank at email@example.com.