Tax returns are due in less than 2 days.  Are you procrastinating? Small business owners and self-employed individuals who wait until the last minute are prone to dumb mistakes: forgetting to sign a return, goofing up on the math, or filling in the wrong Social Security number.

All those errors will get your 1040 form kicked back and delay any refund you may be owed, says Gloria Birnkrant, a Beverly Hills (Calif.) certified public accountant whose clients include many small and midsize business owners and self-employed individuals.

Here are some strategies from Birnkrant and other experts to cope with the last-minute tax rush:

E-File your return. It’s quicker and more secure than mailing paper tax forms. If your business brought in little income in 2013, or you’re disabled or elderly, take advantage of free tax prep services through the VITA program.

Sweat the small details. That includes checking and double-checking Social Security numbers and your math or using a software program that crunches the numbers for you. Make sure you’ve attached all required documents, such as brokerage statements and your Schedule C.

Sign and date your return. Remember that you and your spouse must both sign a joint return, even if only one of you has income. Anyone you pay to prepare your return must also sign it.

Include your payment. Make your check for federal taxes out to United States Treasury—not to the IRS—and be sure your state payment is written to the proper agency as well. Enclose your check with your return or your payment voucher if you’re filing your return electronically—don’t staple it, though. On the check, write your and your spouse’s Social Security numbers, your daytime phone numbers, the tax year, and the type of form that you’re filing, such as 1040 or 1040EZ.

Write off your home office. Determine whether you can use the simplified home office deduction, which allows you to write off $5 per square foot of home office space, up to $1,500 for 300 square feet. So far, Birnkrant says most of her clients itemize deductions and claim more than $1,500 for the cost of home offices when they include other costs such as Internet service.

Pay estimated taxes. If you’re self-employed, don’t forget your first 2014 estimated tax payment is due April 15. “You’ll have to make some projections since 55 tax rules expired at the end of 2013, and it’s unknown how many of them will be reinstated,” says Barbara Weltman, contributing editor to J.K. Lasser’s Small Business Taxes 2014 (Wiley 2013). One way to avoid penalties is to take your 2013 tax liability and pay 100 percent of it (110 percent for high-income earners), split into four installments, she says.

Look for savings in past and future tax years. If your 2013 business income is low, opt to depreciate equipment purchases over time rather than all at once, for example. “Look at carryovers, like deductions and tax credits that you weren’t able to use in prior tax years but might be applied this year if your business is profitable enough,” Weltman suggests. “If you can amend prior-year returns, you might get better refunds for those years.”

Tally your Bitcoin taxes. The IRS this week issued guidelines on the treatment of virtual currency. “Virtual currencies like Bitcoin are treated as property, not currency,” says Ebong Eka, a Washington (D.C.) CPA and the author of START ME UP! The No-Business-Plan Business Plan (Career Press 2014). If you sold something and received virtual currency for it, you will have to pay tax on the fair market value of that currency. And you may also have to pay self-employment taxes on any Bitcoins you’ve mined if that activity constitutes your business, Eka says.

Fund your retirement. Yes, it’s 2014, but you can still contribute to an IRA for the 2013 tax year through April 15. For the tax year 2013, you may deduct a maximum contribution of $5,500 to a traditional IRA if you are less than 50 years old; those 50 or older may deduct up to $6,500, says Terry Durkin, director of the National Association of Enrolled Agents, a society of federally licensed tax practitioners. If you qualify, that IRA contribution could lower your tax liability or boost your refund. “I had a client this year who owed $900. He put $6,500 in his IRA and wound up getting a refund of $400,” Durkin says. Self-employed people who file for extensions have until Oct. 15, 2014, to fund a 2013 SEP-IRA.

Avoid penalties. Failing to file your tax returns on time or failing to pay taxes you owe will cost you. The corporate tax filing date was March 17, so if your company is organized as an S corporation, every shareholder will be charged $195 a month, for a maximum of 12 months, until your return is filed, says Louis Balbirer, director of tax services at Kaufman Rossin in Ft. Lauderdale, Fla.

About Author:
Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.

Original Article Via businessweek.com

Klein and businessweek.com are not associated with Enterprise Insurance Group.  Articles are posted for the education of our visitors.

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