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Tax
Tips for Work at Home People
Being
a self-employed worker in or from your own home can be extremely
gratifying and lead to some solid financial rewards.
You save on business clothes (you may even work in your
bunny slippers), gas money, food expenses, stress and commuting
time, as well. If
you do start working in your home then there are a few things to
be aware of in order to keep your financial and tax records
straight. Below are
a few pieces of information that may enlighten and educate.
•
When you have all of your financial and tax info ready
and are about to start your taxes, then consider a computer
software program that will also keep a record for you from year
to year. This will
save time and headaches the following year.
•
If you are self-employed and think you'll owe more than
$1,000 then you need to make several estimated tax payments to
the IRS during the year.
•
Don't throw away receipts for "stuff" you
bought for your business. Keep
a record of everything and keep your personal and business
receipts separately. If
you plan on making lots of money then start a separate bank
account and open a business credit card just for the business.
•
A self-employed person owes the IRS (for social security
and Medicare) 15.3% on
their first $106,800 of net earnings (less in 2010 because of
the 2% Social Security tax cut).
This is called the self-employment tax (the extra 7.65%
you have to pay that your employer would normally pay if you had
an employer). Haf of
the 15.3% tax is deductible.
•
There are some tricky rules for deductions for the home
office. It varies,
so check into this carefully.
The area has to be solely for the office, not just a
regular part of the living room or kitchen.
•
Start a retirement plan, even if you're working at home.
You can look into a Simplified Employee Pension, a Keogh,
a Savings Incentive Match Plan, and many forms of 401k plans.
You can receive a substantial tax deduction for money put
into these types of accounts.
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