Its tax season time and I am sure if you’re like many 1099 Independent Contracting Investors, this is the least favorite time of the year. As a Certified Public Accountant (CPA), I had the opportunity to watch Investors make simple mistakes on their taxes resulting in them paying more than their fair share. With that, let’s start saving money:
1. Commission Fees
Have you used a middleman broker to help you with your deals? Paid an agency to handle transactions and charged you a fee? The costs directly associated with you engaging in your business can be considered tax deductible. Its important to keep track of these expenses as they can add up to huge tax deductions and reduce your tax liability.
2. Meals: Dinner, Lunches, Breakfasts or Coffee
Have you meet with potential investors and fellow entrepreneurs over drinks? Have you discussed investment strategies over breakfast or dinner? The amounts that you spend at these events can be considered deductible at 50%. For example, if you go to a bar to discuss your upcoming investment strategies for FY2015 and you spent 100 on drinks, you may be able to deduct 50% of that (e.g. $50 dollars)!
3. Conventions, fairs and mileage
Have you attended investor meetings and events for your portfolio or business? Did you drive or fly to these events? These can all be considered tax deductible events as they directly relate to your investing business and can be considered tax deductible. While the meals and entertainment are deductible at 50%, the travel costs are generally deductible at 100% so its important to keep track of these expenses.
Have you used your phone to conduct business? Perhaps call your fellow investors or looked at your portfolio while you’re away from your computer? You can accordingly deduct a certain percentage of your cell phone bill that directly related to your business. For example, if you use your phone three quarters the time you could deduct 75% of your monthly bill (e.g. if your bill is $100 a month, you could deduct $75 per month).
Ways to pay less taxes: The easiest and best ways to pay less taxes if you’re a Self-Employed Investor is to keep track of your business expenses. The more business expenses you have, the less you pay in taxes.
A free and easy to use app that keeps track of your business expenses and compliant with IRS Regulations is Tabby (www.trytabby.com). Happy savings this upcoming tax season!