1. Make sure you get the maximum allowable tax deduction for business use of your car
There are two methods to calculate your auto expenses and you can choose the one that gives you the best results:
actual costs
optional mileage amount (for 2009 it’s .55 per mile)
You can choose differently each year without needing permission from the IRS. As your car gets older and needs more repairs, the actual expense method frequently gives higher deductions.
If your business use is less than 100%, you’ll still need to keep mileage records so you can split your costs between personal and business purposes.
2. Make sure you track all your business PayPal transactions correctly
If you sell on-line, you probably have a ton of entries in your PayPal account. You need to record them all properly so you don’t pay too much in taxes. The types of items include
Sales revenue
Listing fees from eBay and other venues
Credit card processing fees
Shipping expenses
Money transfers
Some of these transactions represent income, some expense, some neither. If you don’t understand the difference, it’s easy to miss some deductions and it’s also possible to overstate your income.
3. Make sure you take all the deductions you’re entitled to for health insurance premiums and medical expenses
If you file Schedule C and show a net profit for your business, you can deduct a portion of the amount you paid for medical insurance. This is NOT a deduction from your business income and is NOT reported on Schedule C. It’s a deduction for adjusted gross income and is reported on Line 29 of Form 1040.
If you own more than 2% of an S corp, you can deduct the cost of medical insurance premiums you paid for yourself, your spouse, and dependents as long as the amounts were included in your W-2 wages from the corporation.
Any amounts that you deduct as self-employed health insurance premiums can’t be included in your itemized deductions on Schedule A.
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