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Tax InformationNeed an Offshore Sales Office in a Tax Free Environment?Small Businesses Filing Amended Federal Tax Returns to Recover MoneySmall Businesses Filing Amended Federal Tax Returns to Recover Money By Darren Oliver April 15th may be gone but, but certainly not forgotten ? especially if you, like millions of small businesses, unknowingly overpaid your federal taxes and can recover money by filing an amended return. According to the IRS tax code, you have three years from the filing date for the tax year in question to file an amended return. For example, if returns for the 2003 tax year were filed on March 1, 2004, the taxpayer has until March 1, 2007 to file an amended return. This same rule also applies if the taxpayer feels they have made errors resulting in a balance. Most business owners either prepare their business taxes themselves or have a tax preparer or accountant do them. With either method, the tax liability can be calculated as higher than it actually is because of missed deductions, unrecognized changes in tax laws or just plain being given bad advice. There are a number of applicable deductions which many tax preparers often miss from home office deductions to self-employed health insurance to personal assets converted to business use. Although some deductions may seem minor, over an entire year, they can add up to thousands of dollars. Another area, which causes many businesses to overpay, is being given incorrect advice by their tax preparer or even the IRS directly. In a poll performed by Money Magazine, the average tax preparer produces an average of 480 returns between February 1 and April 15, making it difficult for each return to get the time and attention it deserves. This same poll also found there was an average discrepancy of 300% between what the tax preparers said was due and what was actually due. Furthermore, in the IRS?s 2001 assessment of their own call centers, they found that 50% of the time, their representatives gave incorrect or insufficient advice. Whether a business owner does their taxes themselves and had to call the IRS for clarification on an issue or a CPA did, odds are the answer was not correct. The United States tax law is one of the most complex in the world. Not to mention, tax laws change every year and have changed tremendously in the last couple of years. Even the best tax preparer, CPA or even IRS representative can, like all humans do, easily make a mistake. In 2002 alone, 3.3 million taxpayers filed an amended return. Samuel Rowley, owner of Muffler Masters in Colorado, was able to recover $14,500 through the filing of an amended return when it was found that he overpaid FICA and payroll taxes. Another small business owner, Karen McClafflin, owner of home-based Secret Canyon Realty, was able to recover $11,000 when her tax preparer failed to include home office and automobile deductions in her past returns. Why is it that when faced with a life-threatening surgery a second opinion is immediately sought after but, when trusting thousands or millions of dollars to an individual or entity, it?s done without question? Businesses must get a second opinion, whether it is done before or after the return is filed, to ensure they are not overpaying or simply to ensure their returns are accurate in all aspects. If not, they could be leaving thousands of dollars on the table. How Home-Based Businesses Can Avoid Giving Uncle Sam More than His ShareHow Home-Based Businesses Can Avoid Giving Uncle Sam More than His Share By Darren Oliver With the rush to file your taxes by April 15th, you probably did not consider the possibility that you overpaid. According to the General Accounting Office, in 1998 alone, there was $311 million paid unnecessarily to the IRS. Do not count on the IRS to tell you if you have overpaid because they are not required to but you can file an amended return for up to three years. Chances are, you either prepare your business taxes yourself or have your tax preparer or CPA does them. There a number of issues surrounding either tax preparation method, which can result in your tax liability being calculated as higher than it actually is including missed deductions, numerous changes in tax laws or being given incorrect advice. As a home-based business professional, there are a number of deductions you are entitled to which many tax preparers often miss. For example, if you run a home office you are entitled to deduct expenses for the percentage of square footage the home office is occupying. Expenses include the combined total of mortgage interest, property taxes, utilities, repairs, etc. For example, if 250 square feet of a 1,000 square foot house is being used for a home office, you are entitled to deduct a quarter of your total expenses. Although some deductions may seem minor, over an entire year, they can add up to thousands of dollars that you are unnecessarily paying the IRS. That is money that you could be using to grow your business. Karen McClafflin, owner of home-based Secret Canyon Realty in Colorado Springs, CO, was able to recover $11,000 when her tax preparer failed to include home office and automobile deductions in her past returns. Another area, which causes many business owners to overpay, is being given incorrect advice by their CPA, tax preparer or even the IRS directly. In a poll performed by Money Magazine, the average tax preparer, prepares an average of 480 returns between February 1st and April 15th, that is a lot of returns in a relatively short amount of time which makes it difficult for your return to get the time and attention it deserves. This same poll also found there was an average discrepancy of 300% between what the tax preparers said was due and what was actually due. Moreover, in a poll of 50 professional tax preparers, consisting of 10 basic tax questions, none answered all 10 questions correctly and only 34 got at least half correct. This problem does not extend to just tax preparers or CPA?s. In the IRS?s 2001 assessment of their own 544 call centers, they found that 50% of the time, their representatives gave incorrect or insufficient advice. Whether you do your taxes yourself and had to call the IRS for clarification on an issue or your CPA did, odds are the answer was not accurate. The United States tax law is one of the most complex in the world. Not to mention, tax laws change every year and have changed tremendously in the last couple of years. Even the best tax preparer, CPA or even IRS representative can easily make a mistake or, forget to use an exemption which could reduce your tax liability. If you have not yet filed your taxes, it is a good idea to get a second opinion from an independent source. The extra money and time spent in doing this could save you thousands. Look for someone or a company who: � Has sufficient years preparing home-based business tax returns � Prepares less than the average number of returns between January and April so that your return gets sufficient time and attention. � Have had clients get a second opinion. In addition, talk to those clients to get there first hand insight. � Is willing to pay for a second review of your tax returns to ensure accuracy. � Is willing to take MSN?s online Tax IQ Test at http://moneycentral.msn.com/investor/calcs/n_taxq/main.asp. Although designed for consumers, this test contains basic tax information that even junior level tax preparers should know. Just as you trust a surgeon with your life, you trust this individual or company with your money and confidential information. Be highly selective and do not be afraid to put them through a rigorous qualification. If they are not willing to participate in your qualification then either they do not know their stuff or, your business is not that important to them. If you already filed your taxes or think you might have missed out on deductions, have been given bad advice or failed to take advantage of a tax law change which could reduce your liability for previous tax years, what can you do? The good news is that by law, the IRS is required, for up to three years, to review your returns and records as many times as needed to find errors. You have the same three years to get a second opinion and file an amended return. In fact, in 2002, 3.3 million taxpayers filed an amended return. Samuel Rowley, owner of Muffler Masters in Colorado Springs, was able to recover $14,500 through the filing of an amended return when it was found that he overpaid FICA and payroll taxes. You may worry that an amended return will trigger an audit however; the IRS itself admits this is not the case. In 2002 alone, 3.3 million taxpayers filed an amended return. The IRS is not the big, bad agency we used to know. In fact, statistics show that audits are down and continue to decline. Businesses throughout the U.S. overpay their taxes to the tune of billions each year and your money could be part of the billions that is overpaid. When it comes to your taxes, always get a second opinion to ensure you are not paying more than you should and, you can even hit pay dirt by looking back. Alas! In E-Commerce TaxlandIn trying to comply with tax laws for your e-business, you may find yourself falling down the rabbit-hole, going through the looking glass, and attending a Mad Tea-Party. Rearrange Your Affairs For Maximum Tax SavingsOne way to maximize your business profits is by reducing your taxes. Frequently, income and other taxes could be lowered significantly if only the taxpayer were willing to plan ahead. By taking some simple steps to rearrange your affairs, you could save a fortune! Organizing Your TaxesDoes this scene sound familiar? It?s April 7. You haven?t seen the top of your dining room table in two weeks because of the piles of paid bills, receipts, canceled checks, and unidentified cash register receipts covering it. Your head pounds and your stomach churns as the countdown to April 15 begins. Seven Key Tax Deductions for the Self EmployedAs a sole proprietor, it?s wise to familiarize yourself with the some key deductions that may reduce your tax bill for 2004. How To Set Up A Tax-Saving Bookkeeping SystemOne of the most important, but least understood or appreciated aspects of any business is its bookkeeping or accounting system. And, because very few people know much about the reasons for a bookkeeping system, most people are frightened by the thought of the work involved in setting up such a system, and the drudgery of daily maintenance. Knock-Knock-KnockKnock-Knock-Knock How to Reduce the Estate Tax Using the A-B Revocable Living TrustIn a past article I relayed the plight of the widow who stated: Keeping Your Own Money ? NOT Handing It Over To The TaxmanMost people trying to make a crust online (or offline for that matter) are so focused on doing just that, they ignore taking simple steps to ensure that they hang on to just as much of it as they can. Instead, they hand over large lumps of their hard-earned money in tax, usually in one of two mistaken beliefs. Either: Tax Reform, My WayWe need real tax reform and we need it now. Previous attempts have been made at tax reform, but they have only provided band-aid solutions that have still left us with too many quirks, complication, and read tape. There are several things Congress could do to simply the tax system and benefit the taxpayers and federal budget at the same time. Surprising Truths About Tax PreparersChoosing the right tax preparer for your business is a decision best not left until April. A former tax preparer and small business mastermind offers insights into the secret world of tax preparers. Navigating The Internet Sales Tax LawsQUESTION: I have been contacted by my local city government to say that my business is scheduled to be audited to determine if I owe any sales tax from items purchased on the Internet. Can they really make me pay this tax? I thought you could buy things online tax free? -- Katie R. Home Based Business Tax DeductionsRunning a home based business reaps many wonderful tax deductions that other businesses some times may not claim. Unfortunately to many small business owners end up paying the government taxes every year because they are unaware or several small business deductions that are available.
More Articles from Tax Information: Accountants and lawyers team up to fight Trump tax provision Financial Times The 2025 Tax Bill: Additional $4,000 Deduction for Seniors, Simplified Bipartisan Policy Center Twin federal proposals threaten provider taxes, key source of Medicaid funding for states Los Angeles Times Exclusive | Glitch delays millions of dollars in property-tax rebates for thousands of NYC co-op and condo owners New York Post Hydro‑Québec CEO’s new role in Ottawa, Canada braces for U.S. tax bill and Mattamy Homes gets into prefab housing: Must-read business and investing stories The Globe and Mail House approves omnibus tax bill with increased taxes on cannabis, data centers MN House of Representatives (.gov) Budget Reconciliation: Tracking the 2025 Trump Tax Cuts Tax Foundation Reassert tax sovereignty to unlock trillions for climate finance Tax Justice Network Bessent claims tariffs aren’t taxes The Hill Department of Taxation and Finance dos.ny.gov Supervisor Candidate Left Trail of Unpaid Debts, Taxes Voice of San Diego As property taxes rise, Texans turn to bees to find savings NBC 5 Dallas-Fort Worth For Trump’s ‘no taxes on tips,’ the devil is in the details The Conversation KC coffee shop sees property tax assessment soar more than 600%. ‘This is a shakedown!’ Kansas City Star Ohio GOP property tax bill would provide $3.5 billion in relief, but at the expense of schools News 5 Cleveland WEWS Holly looking at special tax hike to fix $494k deficit by June 20 The Detroit News Reclaiming tax sovereignty to transform global climate finance Tax Justice Network Confused about property taxes? How they work and how Ohio lawmakers want to lower them Cleveland.com A Webster property was sold for unpaid taxes in 2021. Now, the former owner wants his money back Concord Monitor Ohio economists: abolishing property taxes will hurt education, increase volatility ohiocapitaljournal.com Morning Report: Supervisor Candidate Left Trail of Unpaid Debts, Taxes Voice of San Diego Effects on Deficits and the Debt of Enacting H.R. 1 and of Making Certain Tax Policies in H.R. 1 Permanent Congressional Budget Office (.gov) As Pittsburgh nears a budget crisis, tax-exempt statuses have gone unchecked for years Pittsburgh Post-Gazette Capital gains tax: Another hit to homeowners Sierra Sun Governor says he’s working on property tax rebates Florida Phoenix Opinion | I Want My Taxes to Fund Climate Solutions, Not the Detention of My Neighbors Common Dreams Trump’s Tax Bill Reuters Hallstrom calls amendment to end inheritance tax as carry-over action for 2026 RIVER COUNTRY - NEWS CHANNEL NEBRASKA Oregon Cities Clash With Travel Industry Over Whether Tourism Taxes Should Pay for Wear and Tear on Your Favorite Destinations Willamette Week Trump’s Big Bill Would Be More Regressive Than Any Major Law in Decades The New York Times Finance GOP nears tax, health text Punchbowl News Wisconsin Republicans back $1.3 billion tax cut plan that lowers bills for 1.6 million residents Milwaukee Journal Sentinel GOP senators zero in on Medicaid policy in Trump’s tax bill that has little impact on enrollment statnews.com Altadena’s Powerball lottery winner got $628.5 million after taxes Los Angeles Daily News Hamill: Why estate tax knowledge still matters for tax professionals Albuquerque Journal Last night at Council: Asheville raises taxes, budget will fund staff pay increases Blue Ridge Public Radio Montana Renewables gets $67M in assets qualified as tax-exempt in state settlement Montana Free Press Chief of Department John Chell Used False Identity in Bid to Avoid Income Tax, NYPD Records Show THE CITY - NYC News Trump tantrum: After world's fourth-largest economy California, 10 other states can withhold federal taxes The Economic Times How Trump’s big bill will affect taxes, the deficit and health care, according to the budget office PBS What did commissioner candidates say about tax rate when they were running for office? Are they men (and women) of their word? alamancenews.com Maine's Income Tax Code Is Now Primed to Be Restructured - Here's What This Might Mean for You The Maine Wire Ohio schools say job losses for teachers could be "cataclysmic" with new property tax bill The Statehouse News Bureau You want to know how much Washington State now taxes you? Here is the answer. Washington Policy Center Sierra Pacific Industries to invest in Eugene sawmill thanks to tax break The Register-Guard How Would the 2025 House Tax Bill Change the SALT Deduction? Bipartisan Policy Center House tax-and-spending bill and other Trump administration changes could make millions of people lose their health insurance coverage The Conversation Florida lawmakers agree on tax cuts for back-to-school shopping, commercial leases, hurricane supplies Orlando Sentinel GOP tax bill would cost poor Americans $1,600 a year and boost highest earners by $12,000, CBO says AP News New Oregon Tourism Tax Debate: Should Visitors US Dollar Fund in the Essential Services and to Repair Tourism’s Damage? travelandtourworld.com Bentz defends Republican tax and spending bill, despite costs and cuts impacting his district Oregon Capital Chronicle Ohio Senate passes budget giving Browns $600 million, tax cut to wealthy, more public school money ohiocapitaljournal.com Remittance crackdown is a tax on the poor Financial Times |
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As a home-based business professional, there are a number of deductions you are entitled to which many tax preparers often miss. For example, if you run a home office you are entitled to deduct expenses for the percentage of square footage the home office is occupying. Expenses include the combined total of mortgage interest, property taxes, utilities, repairs, etc. For example, if 250 square feet of a 1,000 square foot house is being used for a home office, you are entitled to deduct a quarter of your total expenses. Although some deductions may seem minor, over an entire year, they can add up to thousands of dollars that you are unnecessarily paying the IRS. That is money that you could be using to grow your business. Karen McClafflin, owner of home-based Secret Canyon Realty in Colorado Springs, CO, was able to recover $11,000 when her tax preparer failed to include home office and automobile deductions in her past returns. 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