Tax Tips for Changing Times
Looking for a Job? Tax Breaks Just for You.
If youíre looking for a job, the IRS is on your side. Uncle Sam prefers you to be employed. You can deduct many of you job-hunting costs including the costs of resumes, including printing and mailing costs, long distance calls and travel costs for your interviews.
This is the good news/bad news department. If youíre collecting unemployment benefits as compensation for lost wages, those benefits count as taxable income, and, yes, you will owe federal tax on them. Form W-4V is the one to use.
Getting Paid With Tips?
Be careful about Allocated Tips. On Form W-2, in Box 8, there will be an amount shown called Allocated Tips. This amount is generated from a government formula and is in addition to the tips you have already reported to your employer. If the amount of your Allocated Tips doesnít match your records, you must prove your case with written records
Furnishing Your Home Office?
If you purchased office furniture for your home office, you can deduct it as an expense only if you use it for business 100% of the time. So, take your nap in the non-deductible space and not at your desk. If you qualify and want to deduct the entire cost in year of purchase, utilize the section 179 expense deduction.
Like the Freedom of Being Self-Employed?
Self-employment income should be reported on Schedule C. Your expenses also go there. Note that your net profits are subject to self-employment tax as well as income tax (so much for the glamour of the entrepreneur). You may also be required to file quarterly estimated tax. When paying estimated tax, you can be up to $1,000 low in your estimates without incurring a penalty. However, whatever you owe will have to be paid in full when you file.
You canít deduct any expenses that youíre reimbursed for.