It's tax time - what do you declare?

As they say, two things in life are sure and that's death and taxes, but unfortunately not in that order. Whether you are working for someone or if you are running a home business (or in my case both), one thing that all of us need to consider is taxes. You should be thinking about that through out the year and putting away money to pay for the taxes on your earnings but if you haven't you will have some reckoning to do before April 15th.

We have three home businesses, one of which is my wife's embroidery service, and I also have two Internet ventures going as well. Please keep in mind that anything you earn during the year is taxable income. If you are involved in Google AdSense or one of the many other Internet services, you will likely receive a 1099-MISC form for the income you earned. If you reside in the United States and made over $600 in one year through Google AdSense, Google has to send you a 1099-MISC form outlining exactly how much has been paid to you over the year. If your income was less than this, you may or may not receive the form but, you still have to report your income! This is just like the W2 you would receive from a place of employment except that these types of earnings are typically not taxed by the provider and you will be responsible for the taxes from those earnings.

In my case and level of earning with AdSense, I just plan on my last check of the year to need to be put towards the taxes on the years earnings. If you are self employed and can show a loss in your business, you can also get credit to offset much of your earnings and avoid a lot of the taxes. As a self-employed individual, you will now have expenses related to your business which you may declare. These include expenses such as domain registration and website hosting charges. Do you travel for your website to do research for articles, etc? You may also be able to record this as an expense, as well as others such as rented space in your home to run your business. Here are a few more:

Web Hosting and Maintenance charges
Advertising For Your Site (Adwords, Overture, Magazine, Newspaper)
Home-Office Deductions:
Portion of rent or mortgage
Portion of Internet access
Portion of telephone bill
Portion of cellular phone bill
Portion of other utilities
Equipment
Computer purchases & upgrades
Digital Cameras, Printers, Scanners, Fax Machines
Office Supplies
Software
And don't forget tax-preparation expenses!

Don't be afraid of the tax man but always be aware the "tax man cometh" and you don't want to be found in arrears on what you owe at tax time.

Technorati Tags: Taxes, Self Employed, Home Business