How can my husband get his taxes cut down?
We live in Colorado, he owns his own flooring installation business, we are still paying back taxes from last year and now its tax season again. He still owes a lot of money from 2010. What can he deduct? He had already accumalated a lot of tools he needs and uses before he ever started his own business. I know he can claim the house, insurances, either gas mileage or like vehicle repairs, his work clothes. I really need to help him, I am a stay at home mom and am feeling broker by the minute. Please anyone with genuine advice please help me out. I greatly appreciate your expertise. Thank you and God Bless
- mrreliable3599Lv 78 years agoFavorite Answer
Get professional assistance. A self-employed individual pays taxes at a huge tax rate, making every dollar allowed as a business expense extremely valuable. If you're trying to do this yourself, you're likely to miss out on deductions for start-up costs (what are those?), section 179 deduction (what is that?), domestic production activities deduction (what is that?), and possible deductions for certain types of wages paid.
He can't claim the house unless there is an exclusive use area. The business use of home deduction usually isn't much. It is an audit flag so don't pretend it's exclusive use if it's not, and don't go trying to claim 50% of your house is used for business. His primary place of employment is not the house, it's customer's homes.
He can't claim mileage to a work site and back home. He may be able to claim mileage in between different work areas during the day.
He can't claim work clothes unless they're uniforms. Any clothing that is adaptable to everyday wear is not allowed.
You already owe a lot of money from 2010. Is there another large balance due coming for 2011? Here's the double whammy. The first quarter estimated payment for 2012 is due the same day as the balance due for the 2011 return.
If you haven't been sending in estimated payments, you could be in a perilous situation. Balance owed from 2010, pile on another big balance owed from 2011, and you're already into owing money on taxable income for 2012.
It might sting to have to pay a tax professional to help guide you out of this mess, but not nearly as much as it will sting with underpayment interest and penalties. A tax pro can help you work out a workable payment plan with the IRS, and also estimated tax payments going forward, so you can move forward and not be buried by cascading IRS debt.
- JudyLv 78 years ago
Work clothes if they're uniforms, not if they're just jeans and regular shirts. Mileage, between multiple job sites the same day. Advertising. Office suppplies. Expenses of a showroom if he has one. Money he pays to other people who help him with the flooring. Without knowing a lot more about his business and how it's run, it's hard to make suggestions.
Not sure what you mean by claiming the house. Your home? Unless he runs his business out of your home, this wouldn't be a business expense, although you might be able to claim mortgage interest and real estate taxes if you itemize.
- troLv 78 years ago
some of the things you mention are not deductible-not your house, work clothes, the tools were not purchased during the time he operated the business, unless he bought the tools in preparation for starting the business, pre opening expenses that can be amortized
you need to go to www.irs.gov and find publication 334, or you can order it at 1 800 829 3676
look over the list of publications that suggest business operations and see if you can help with knowledge
- Anonymous8 years ago
He needs to think about incorporating (inc/llc). That way he can pay himself a w-2 check instead of 1099. That way his personal taxes will be separated from his business taxes and only one of them will have to pay taxes.
He can take off the following:
Insurance, office supplies, electricity, tools, people assisting him, mileage, permit/fees, phone, advertising, meals and rental property. If you more assitance go to the website and call them. They can help, ask for Ms. T.Source(s): www.AceManagementGroup.com