You have three years from the date of filing a return for the tax year in question to submit an amendment to your return. In order to analyze how this is relevant to businesses, we look at some of the overlooked deductions that may need to be corrected with a tax amendment. For example, if a tax return for the 2003 fiscal year was submitted on 1 March 2009, the tax payer has until 1st March 2012 to file the amended returns. The same rule applies if the taxpayer is deemed to have made errors resulting in a balance.
Most companies may prepare their business taxes themselves or have a tax preparer or accountant do them. With any method the tax liability can be calculated as being higher than it actually is because of missed deductions, unrecognized changes in tax laws or just from the giving of bad advice.
There are a number of applicable deductions, which are often overlooked by many tax preparers; home office tax deduction, self-employed health insurance to personal assets converted to business users. Although some results may seem small, throughout the year they can add up to thousands of dollars. Below are the top ten most frequently overlooked tax deductions for business.
Vehicle Expenses – often the cost of personal vehicles for business use, but people will not be able to keep the mileage and other expenses related to the car.
Business Expenses – Most business owners will use their own money or property for the cost of doing business, and cannot hold it.
Home Office Deductions – If a taxpayer performs home office work, they are entitled to deduct the costs of basic recording home office occupies. Costs include the total mortgage, property taxes, utilities, repairs, etc.
Personal property converted for business purposes – in many cases when a person starts work, it will use personal assets to get the business going. The market value of these assets can turn in to a business deduction from the day of treatment.
Meals and Entertainment Costs, similar to the total deduction of trading costs, many times business owners will use their own money to pay for meals and entertainment expenses.
Communications costs – at any time, personal mobile phone or Internet access is intended for use in business, which is an additional deduction that is often overlooked.
The interest on corporate loans to shareholders – If money is loaned to shareholders of a corporation they are required to pay interest on it. Owners will have to apply the interest as income on your W-2 but access to the corporate return can be used to reduce payroll tax refund as a result of social security and health care.
Company Entertainment – Company holiday parties, barbecues and other forms of entertainment, often paid for out of pocket and not charged and not refundable.
Self-employed health insurance – as of the tax year 2002, those who are self-employed are entitled to deduct 70% of their health insurance.
Fuel Tax Credit – the fuel that is used for the operations of off-road vehicles or equipment shall be entitled to a tax credit for fuel. For example, if a company is buying a gallon tank of fuel to power the mower or other equipment, they are entitled to credit.
Another area causing many businesses to pay more is being given the wrong advice by their tax preparer or the IRS directly. In a survey conducted by Money Magazine, the average tax preparer files an average of 480 applications between February 1st and 15th April making it difficult for each return to get the time and attention it truly deserves.
In addition, in 2001, according to the IRS and their call centers, they found that 50% of the time, their representatives gave incorrect or insufficient advice. Whether a business owner had questions on their taxes and had to call the IRS for an explanation on the matter, or the CPA, most likely, the answer was not correct.
The tax laws in the United States happen to be some of the most complex in the world. Not to mention, tax laws change every year and have seen enormous changes over the past few years. Even the best tax preparer, CPA or even IRS representative can, like all people, be easily misunderstood.
In 2002 alone, 3.3 million taxpayers filed an amended application. There have been cases where a taxpayer was able to receive via an amended return, $ 14,500, when it was discovered that they overpaid FICA and payroll taxes. Another small business owner has managed to recover $ 11,000 when her tax preparer didn’t include home office and automobile deductions in her past returns.
In order to get more information about tax tips for businesses, feel free to visit our tax tips for business site and get your questions answered today. Having your taxes reviewed is a simple task that may put more money in your pocket and help your business grow for the long term.