Tax day is here but you are finding that you can’t file your return on time. That is a no brainer; you can file for a 6 month extension with form 4868. You can do it online, through the mail or over the phone. The extension’s good until October 15th. But remember that an extension is only for filing, not for paying any taxes you owe. So, if you are going to owe your Uncle Sam, then you’d better make an estimated payment. Set up an installment plan if you can’t pay the full amount due.
Accordingly, start gathering your receipts, invoices, canceled checks, online payments and automatic deductions. Don’t forget business records and any other papers that prove deductions.
Tax representatives Selig & Associates note that IRS Section 162 states that there shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including:
(1) A reasonable allowance for salaries or other compensation for personal services actually rendered;
(2) Traveling expenses (including amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances) while away from home in the pursuit of a trade or business; and
(3) Rentals or other payments required to be made as a condition to the continued use or possession, for purposes of the trade or business, of property to which the taxpayer has not taken or is not taking title or in which he has no equity.
Keep in mind that regardless if you operate your business out of your home or an office, you can deduct charitable gifts or donations, memberships to professional and trade organizations, and subscriptions to professional and trade publications
Also, here are seven often overlooked tax deductions (see IRS Guide):
Mileage. The standard method in 2015 it is 57.5 cents per business mile plus tolls and parking. The actual method is to add up all automobile expenses – including gas, repairs, oil change, car insurance, car washes, etc. – and then multiply it by your business percentage (business miles/total miles for the year). Your commute from home to work is not deductible. But traveling to and from a client’s location is deductible.
Home Office Usage. If you use a home office consider using the simplified deduction method, which is $5 per square feet of area used exclusively for business (300 square feet is the maximum allowed). The standard method requires you to keep track of utilities, maintenance, mortgage interest or rent and deduct the business percentage (total square footage of home divided by square footage of office) on your Schedule C.
Startup costs. You can deduct costs you incurred before setting shop, such as expenses to explore business opportunities, may entitle you to a deduction in your first year of business. Although you have to be operating a business in order to deduct business expenses, you can deduct up to $5,000 of the startup costs you incurred before you began operations in your first year of business.
Phone and data bills. If you’re self-employed and you use your cell phone for business, you can claim the business use of your phone as a tax deduction. If 30% of your time on the phone is spent on business, you could legitimately deduct 30% of your phone bill. What’s more, your computer, Internet service, software and even some tech gadgetry are possible tax deductions if you must use them to run your business. Say, you use you iPad a lot when traveling for business purposes.
Bank fees. Charges for checking accounts, ATM withdrawals and other bank services are fully deductible.
Interest payments. If you financed the purchase of business equipment on your credit card, the interest is a deductible business expense.
Self-employment taxes. If you’re self-employed, one-half of the Social Security and Medicare taxes you pay on your net income is a personal (not business) deduction that you can take on Form 1040.