It can be a time for dread and dismay, so here are some tips to help alleviate the pain.
What is the deadline for filing?
April 15th is the deadline that everyone remembers as “Tax Day,” but since it falls on a Saturday this year, you have until April 18th to file.
What if I’m not ready and can’t file on time?
Need more time? The IRS allows a 6-month extension for individual taxpayers. However, if you owe any tax, you will need to send payment in with your extension. This means you will need to estimate what you think you will owe for 2016. See https://www.irs.gov/filing/extension-of-time-to-file-your-tax-return to file for an extension.
What forms do I need to file and where do I get them?
Since you are a small business owner, and most likely a Sole Proprietor, you will need to file the Schedule C (Profit or Loss from Business) and the Schedule SE (Self-Employment Tax). The results from these forms will then be entered onto your personal tax Form 1040. These forms can be obtained on the IRS website at https://www.irs.gov/forms-pubs.
What is considered taxable income?
- Business Income: Any sales from products or services you made in 2016 are taxable income. Make sure you DON’T include sales tax for income from sales of products or taxable services.
- Other Income: This would include any income you made from working for someone else, either as an employee or as a contractor. You should receive a W-2 (employee income) or a 1099 (contractor income).
What expenses can I deduct?
Any expense related to the running of your business is deductible. The cost of goods or supplies, insurance, licenses, utilities, office supplies, bank service fees, and mileage!! Keep track of the miles you drive for your business. They are an often overlooked deduction.
Can I take the home office deduction?
The IRS clearly states that in order to take the home office deduction, your home must be the “principal place of business.” You must also have a space within your home that is used “exclusively and regularly” as your principal place of business. See IRS Publication 587 for more details https://www.irs.gov/pub/irs-pdf/p587.pdf.
Is there free tax help available?
United Way of King County, Seattle Public Library, and Goodwill all offer free tax assistance for individuals, not businesses. But, if you can complete your Schedule C and Schedule SE, you can take these and get help with your individual tax forms.