Are You Ready for Tax Season?

According to the Internal Revenue Service, nearly a third of Americans wait until the last minute to file their taxes. And once again  this year, with the April 15 deadline looming, millions of Americans still aren't ready to file their tax returns.

Business taxpayers are no different. The process for filing business taxes can always be counted on to add a little bit of a dark cloud to even the prettiest spring morning! And no matter how carefully you documented expenses and reported earnings, every business owner secretly frets over the liklihood of an IRS Audit!

The tax professionals at Neikirk, Mahoney & Smith, understand what you're going through and they stand ready to help you get through the process intact!

Need some help filing your business taxes? Give us a call today at 502-896-2999. Visit our website to learn more and we look forward to being of service!

Read This If You Have A Home-based Business

The Internal Revenue Service today reminded people with home-based businesses that this year for the first time they can choose a new simplified option for claiming the deduction for business use of a home.

In tax year 2011, the most recent year for which figures are available, some 3.3 million taxpayers claimed deductions for business use of a home (commonly referred to as the home office deduction) totaling nearly $10 billion.

The new optional deduction, capped at $1,500 per year based on $5 a square foot for up to 300 square feet, will reduce the paperwork and recordkeeping burden on small businesses by an estimated 1.6 million hours annually.

The new option is available starting with the 2013 return taxpayers are filing now.  Normally, home-based businesses are required to fill out a 43-line form (Form 8829) often with complex calculations of allocated expenses, depreciation and carryovers of unused deductions.  Instead, taxpayers claiming the optional deduction need only complete a short worksheet in the tax instructions and enter the result on their return. Self-employed individuals claim the home office deduction onSchedule C Line 30, farmers claim it on Schedule F  Line 32 and eligible employees claim it onSchedule A Line 21. 

Though homeowners using the new option cannot depreciate the portion of their home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions need not be allocated between personal and business use, as is required under the regular method.

Business expenses unrelated to the home, such as advertising, supplies and wages paid to employees, are still fully deductible.

Long-standing restrictions on the home office deduction, such as the requirement that a home office be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the new option.

For further details on the home office deduction and the new option, contact Neikirk, Mahoney & Smith PLLC, one of America's premier business accounting firms.