Tuesday, February 3, 2009

hey all you self employed, it's tax time!

I just finished up our 2008 taxes.... and man do we owe big time again this year, way more than last year even though this year Pat had federal taxes taken out of his paycheck (compared to last year's taxes when both of us were self employed and neither had any taxes taken out). The difference is last year I "worked" some of the numbers to get our payment down.... this year we're attempting to get a mortgage so I did everything on the up and up.

So I'm not here to bore you to death about me doing my taxes, I'm here to share a few tips (mostly for the self employed) that saved us almost $1000 this year in taxes. First and foremost, if you're self employed, DEDUCT YOUR MILEAGE!!!!! This saved us thousands of dollars last year. For every mile you drove, you get to reduce your income by about 5o cents. Didn't keep track of your mileage? Than take a few minutes to add up approximates now...... all you crafty mamas, how many times did you drive to the fabric/craft store? how many miles to that festival or craft fair you vended? And hint hint, remember, mileage isn't something you keep receipts for (no paper trail), it's all up to you to report the mileage, hint hint.

This year I got to claim the "self employed health insurance deduction"- I only started buying health insurance for myself in November to cover my pregnancy, but for those two months left of the year it knocked $400 off of our gross income. So if you're self employed and buy your own health insurance (as long as your spouse's employer doesn't offer to pay a portion of your health insurance through their group insurance- like pat's work, they offer me insurance but don't subsidize any of mine, i would have had to pay 100% so instead i bought my own insurance somewhere else for cheaper) claim your health insurance (line 29 on form 1040).

Got student loans??? Make sure you claim your student loan interest deduction if you qualify (line 33 on 1040)- it knocked $600 off our gross income.

OH and this one should be super obvious, but if you're self employed and pay self employment tax, don't forget to deduct half of it (line 27 on 1040).

And lastly, for those of us who got screwed out of (or part of) Bush's economic stimulus check like Pat and I did b/c we were self employed (instead of $1200 that married couples got, we got $600 b/c we were self employed- paid self employment tax but that didn't count, go figure!) make sure you look into the "recovery rebate credit" (line 70 on 1040). If any of you used to read my Myspace blog, you may recall my rant and rave about how we got screwed out of half of our incentive check b/c we were self employed- CAUTION: clicking on that link will lead you to my raving blog post, for mature audiences only for Language (what can I say, I was super pissed and my trucker mouth took over, hehe). Well guess what? I just got to credit the full amount we got screwed out of, as a rebate credit- this reduced our taxes owed by $600!

OH and for anyone still going to college- look into the "education credits" (line 50 on 1040)- when i was still in college these were the Lifetime Learning and Hope Scholarship credits and they used to get me every cent of my taxes back when I was in school (one year I got $3600 back just b/c I claimed these), and same with my little bro when I had him start claiming these- there are some stipulations but it's a pretty easy to understand credit if you read through them.

Anyways, those were just some of the goodies that saved us lots of moola in this year's taxes- obviously everyone's situation is different when it comes to taxes and what credits and deductions you can take (we don't own a house or have kids, that's a whole other money savings ball game in taxes.... next year!). My advice to those who do their own (and aren't trained at it) is take the time to read through the booklet- as you go line by line on your 1040 (or whatever form you use) make sure you know what they're asking, it only take a few minutes to look it up and it might just save you some (or alot) money!!!!

1 comment:

DancingMooney ♥ said...

Lots of great info here, thanks Miss!!