5 Last Minute Tax Filing Tips For The Maximum Refund - InformationWeek

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4/6/2009
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5 Last Minute Tax Filing Tips For The Maximum Refund

A little more than a week remains before the tax filing deadline, but it's not too late to maximize your refund or lay a foundation for a bigger return on your return next year.

A little more than a week remains before the tax filing deadline, but it's not too late to maximize your refund or lay a foundation for a bigger return on your return next year.The global organization for professional accountants, the Association of Chartered Certified Accountants (ACCA), offers resources for accountants providing services to business and individuals. Recently, the ACCA head of taxation, Chas Roy-Chowdhury, offered these 5 tips for businesses and individuals (including sole proprietors) to maximize returns:

  1. Don't confuse capital expenditures with business supplies or add them together. Equipment is a capital expenditure, and has to be depreciated rather than taken as a straight deduction. This means it is written off over a number of years. Special rules do allow most small businesses to write off up to $250,000 in capital expenditures for tangible personal property (such as computers and office furnishings) in the year of purchase. However, you still have to report these purchases as capital expenditures and elect to use this special method of expensing the costs.
  2. Understand what constitutes a legitimate business expense. There are also business expenses, which are deductible but could become non-deductible if not appropriately handled. For example, entertainment is deductible where it is undertaken and is both ordinary and necessary.
  3. Keep records of anything you deduct. This is especially the case where you work in a cash-based enterprise or such areas as trucking and construction. The IRS (Internal Revenue Service), if or when they audit your tax return, will want to see records to back up your deductions i.e. invoices.
  4. Don't assume all payroll costs are deductible. The costs need to pass the reasonableness test. While a number of factors can determine what is reasonable broadly it can be summarized as the amount you might pay someone who you employed on a temporary basis.
  5. Take the full deduction for all the business-related expenses. If your home is your office then you should ensure that those elements of your expenses which you can justify as business related, which might be a proportion of your utility bills, are also deducted.

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