What is the “basis of all human morality”?
By Herb Drill
A man does what he must - in spite of personal consequences, in spite of obstacles and dangers and pressures - and that is the basis of all human morality
-- President John F. Kennedy
The late singer-songwriter Jim Croce had some sage advice: You don't tug on Superman's cape, spit into the wind or try to pull a fast one on the IRS.
OK, maybe that last one wasn't one of Jim's lyrics, wrote Kay Bell for Bankrate.com, but the sentiment - know the consequences before you act - still applies.
Unfortunately, she maintains, that's not always easy to do when it comes to Uncle Sam's tax collectors. “The tax law is complex and difficult for even experts to negotiate. Just when you think you've followed all the rules and researched all the angles, a tax regulation blindsides you,” she notes. “There are many arcane and infuriating tax laws that cause filers problems.”
One such issue might revolve around whether you’re self-employed or an employee and if you use a portion of your home exclusively and regularly for business purposes. You may be able to take a home office deduction.
You can deduct certain expenses if your home office is the principal place where your trade, or business is conducted, or where you meet and deal with clients or patients for your business. If you use a separate structure not attached to your home for an exclusive and regular part of your business, you can deduct expenses related to it.
Your home office will qualify as your principal place of business if you use it exclusively and regularly for administrative or management activities tied to your trade or business. There must be no other fixed place where you conduct substantial administrative or management activities. If you use both your home and other locations regularly in your business, you must determine which location is your principle place of business. If the relative importance factor doesn't determine your principle place of business, you can consider the time spent at each location.
If you’re an employee, you have additional requirements to meet. You can’t take this deduction unless the business use of your home is for the convenience of your employer. You can’t take deductions for space you’re renting to your employer.
Generally, the amount you can deduct depends on the percentage of your home used for business. Your deduction will be limited if your gross income from your business is less than your total business expenses. Such expenses may include the business portion of real estate taxes, mortgage interest, rent, utilities, insurance, depreciation, painting, and repairs. You may not deduct expenses for lawn care or those related to rooms not used for business
There are special rules for qualified day-care providers and for persons storing business inventory or product samples. For more information, see IRS Publication 587 - Business Use of Your Home.
If you’re self-employed, use Form 8829 - Expenses for Business Use of Your Home to figure your home office deduction and report them on line 30 of Schedule C - Form 1040. Employees can use the worksheet in Publication 587 to figure their allowable expenses and claim them as a miscellaneous itemized deduction on Schedule A, Form 1040.
To be on the safe side, you may want to review IRS Publication 4035, Home-Based Business Tax Avoidance Schemes, which describes schemes that claim to offer tax relief but which actually result in illegal tax avoidance. IRS publications and forms are available on www.irs.gov, or call 1-800- 829-3676.
In addition, Bankrate.com offers these “top 14 tax mistakes”:
· Making math errors
· Omitting Social Security numbers
· Not signing and dating your return
· Not using the preprinted label and envelope from the tax package
· Forgetting about interest and dividends
· Forgetting to donate unwanted items to charity
· Not including all your forms
· Not properly tracking your investment "basis"
· Using the EZ form when a longer form could cut your taxes
· Not getting all your payment material correct
· Forgetting to bunch your deductions
· Not taking all the credits for which you're eligible
· Missing the deadline to request an extension
· Not putting enough postage on the envelope.