In case you forgot, we're only days away from the April 15 tax-filing deadline. If you waited this long to prepare your returns, odds are you expect to make a donation to the IRS. So here are some last-minute tips that may help ease your tax burden.
Supporting rumors of a kinder, gentler IRS-particularly to small businesses-the agency has set up a new feature, "Small Business Corner," on its Web site (http://www.irs.ustreas.gov). It's designed to help you locate and understand business-related tax information. There are five major sections: "Before Starting Your Business," "Operating Your Business," "Employment Taxes," "Reducing Burden On Small Business" and "Small Business News." Check it out.
Another nice touch is the new IRS e-file program "Payment Options for Business Taxpayers." In essence, you can file paperless returns more conveniently, and the process is faster and more accurate.
Need more write-offs? Instead of depreciating assets purchased in 1999, consider deducting the full cost now of tangible items such as computers, tools, machinery, equipment, furniture and fixtures. The cap for such deductions (all assets combined) has increased to $19,000 in 1999 ($20,000 in 2000). Both new and used assets qualify if purchased after you went into business, but buildings, real estate, inventory and supplies don't qualify.
Operating your business from home? This year, you're more likely to be able to claim a home-office deduction. Qualifying home offices now include those used to conduct administrative or management activities relating to your business-provided you don't do those things in any other fixed location and you use the area exclusively for business purposes. The IRS still has its eye on you.
But in case the agency isn't watching when you need its advice, you can get help 24/7 by calling (800) 829-4477. Need forms? Try the IRS Web site, where you can download and print more than 600 federal tax forms (including instructions) and more than 90 publications as well as access research tools, tax regulations and FAQs. To have materials faxed to you, simply dial (703) 368-9694. It may be too late to have forms and publications mailed to you (no charge), but if you want to try, call (800) 829-3676.
In preparing your 1999 returns, be aware that:
Fully half of what you pay in self-employment tax is deductible. The tax equals the combined Social Security and Medicare taxes paid by employees and employers. What does the 50 percent write-off mean? If you're in the 28 percent bracket, you save $140 for every $1,000 paid.
There's still time to shelter part of your income in a Keogh plan, Simplified Employee Pension (SEP) or a SIMPLE plan. Contributions to any of these accounts can be made as late as the filing deadline and still earn a 1999 write-off. One hitch: your Keogh and SIMPLE plans must already exist (as of December 31, 1999). But you may still open-and contribute to-an SEP. Just do it by April 15.
The deduction for health insurance premiums rises by one-third this year. Business owners and the self-employed can write off 60 percent of the cost of health insurance for themselves, spouses and dependents in 1999, up from 45 percent the previous year.
Paul DeCeglie (MrWritePDC@aol.com) is a former staff reporter for Journal of Commerce and American Banker.