If you pay income taxes, it's time to start thinking about filing your taxes for the 2020 Tax Year. Starting now can make the tax filing process a quicker one; just do a little at a time. So much has changed this year, so filing taxes may look quite different for you come tax time.
Here are few things to keep in mind as you prepare:
Recording Your Expenses: In general, always keep a log of your unreimbursed business expenses related to your employer, any business mileage and your receipt information. Keeping this data in a spreadsheet will make filing your taxes so much easier when it’s time. You can even categorize those expenses in your spreadsheet, for example, if it’s related to marketing, label it as such. Just keep in mind, however you decide to categorize your business expenses, be consistent every year.
Home Office Deduction: Since a lot more people are working from home, there has been an increase in creating or upgrading home offices. If you’re interested in investing in the stock market, you can see how this has also positively affected many companies in particular… ~ wink wink ~ If you own a small business, you can take advantage of the home office deduction. Is this space primarily and exclusively used for business? If yes, then keep a record of all of the things you purchased for the office this year along with the square footage of the office. Here is the IRS link for more details: https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction
Stimulus Checks: This year has proved to be quite a difficult one for so many people. It has really affected us all. As a way to encourage spending and boost the economy, the federal government Almost 90% of people received a stimulus package this year. Did you know that the stimulus money is not considered taxable income? That’s a tax savings!
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There are so many tax savings vehicles for you to use, but it may take a bit of research to make sure you know which benefit you in particular. It may not be an exciting subject, but it can cost you or save you so much. Chat with an accountant, look through tax prep software and arm yourself with as much knowledge as you can.
Happy Preparing!