Boost Your Bottom Line with These Tax Return Tips

Keep as much of your business’s hard-earned profit as possible by not overpaying at tax time.

Prepare a thorough list of deductions and expenses. The list of commonly claimed deductions published by the IRS includes: the costs of raw materials to produce a product, storage, factory or office overhead, labor costs, retirement funding and federal unemployment tax (FUTA), rent, business loan interest, and more. Here are some other deductions to remember: travel expenses (including lodging, dry cleaning, phone service, and 50% of meal costs), credit card or banking fees, education expenses, licenses and regulatory fees, outplacement services, property repair costs, trade publication subscriptions, and marketing expenses. The IRS also published a list of expenses you cannot deduct.

Write off a portion of your home office expenses. If an area of your home serves exclusively as your principal place of business where you meet with patients, clients, or customers as routine part of your work day, you can write off the expense of this home office space. You might want to consider using the simplified option to calculate a home office deduction — $5 per square foot (300 square feet maximum).

Claim tax credit for wages paid for Family and Medical Leave. If your business offers paid family and medical leave, you can now claim a tax credit for wages paid for leave prior to January 1, 2020.

Remember to calculate your mileage. The standard mileage rate for operating a vehicle is 54.5 cents per mile. You should also be able to deduct the amount you reimburse employees for their vehicle mileage.

Deduct the cost of insurance premiums. Your business may purchase insurance for a wide variety of reasons: fire, theft, floods; hospitalization, medical, and life insurances; liability or malpractice; workers’ compensation and unemployment; and more. These types of premiums are generally all deductible.

File electronically. Filing your return electronically is quick and free. You can also opt for direct deposit of your refund. Eight out of ten taxpayers choose to receive their refunds via direct deposit.

Boost your individual bottom line with a federal tax-free, Roth IRA contribution. It’s not too late. We all get busy in December wrapping up year-end sales, new year contracts, and bookkeeping — not to mention the holidays! The IRS allows you to contribute to your personal Roth IRA until the end of tax season. So, any contributions you make prior to April 15, 2019 can still be counted toward your 2018 tax return. The maximum Roth IRA contribution allowed for 2018 is $5,500. Here’s how the savings add up. If you’re in the 30% tax bracket and contribute $5,500, you can reduce your tax liability and boost your bottom line by $1,650. If you’re at least 50 years old, your maximum contribution is increased to $6,500 ($5,500 plus an additional $1,000 “catch-up” contribution). By contributing now, you’ll be able to save even more when you’re 70-1/2 and are withdrawing Required Minimum Distributions (RMDs).

Look ahead. See how new tax laws for 2019 will affect your small business. The standard mileage rate is increasing to 58 cents per mile. Also, if you’re self-employed, you’ll need to pay self-employment tax on 2019 net earnings up to $132,900, up from $128,400 in 2018.

Share, Save and Connect with Clearview Federal Credit Union