April 20, 2005
Live on CNN: NASE President Offered Last Minute Tax Tips
With the hours counting down to 2004's tax filing deadline, National Association for the Self-Employed president Robert Hughes offered last minute tax filing tips – including how to file for an extension – for the self-employed on CNN's "Daybreak" news show.
Anchor Carol Costello asked Hughes what made filing taxes so different for the self-employed, and what options they had on tax day and if they had yet to file.
Hughes told CNN's audience that sole proprietors file both individual tax forms, and tax forms for their business. The business tax form, Schedule C, is complicated and time-consuming. In fact, it takes about 18 hours longer to file Schedule C than it takes to just file the individual 1040 tax form.
These tips from Hughes helped even last minute filers waiting until the April 15th deadline:
Relax – you can get an extension: All tax filers can get an automatic extension by filing Form 4868 by April 15th. You can send the form through the mail, or call the IRS toll-free at 888-796-1074. You'll then have until August 15th to get all of your other tax forms to the IRS. But, an extension of time to file is not an extension to pay. If you do not send the IRS what you think you owe in taxes by April 15th, you'll be subject to late fees and interest
Check for hidden deductions: There are a number of deductions that small business owners and the self-employed do not think of when filing taxes. If you work out of your home, your office may qualify for a deduction. Same with business use of your car - do you drive to the post office or a client site? Those miles may add up to a deduction.
Check your math: Most of the mistakes on tax returns are simple addition and subtraction errors. Check your math. Then, check your math again
Start thinking about next year: While small businesses may be tempted to finish their return and not think about it again until next April, now is a great time to reflect on how to reduce your tax liability for next year. Consider deductions for a home office or employing your children; create a medical reimbursement plan, which would enable the business to reimburse the employee for all out of pocket medical expenses; reconsider the tax implications of incorporating your business; and research retirement plans designed specifically for the self-employed, including an IRA, SIMPLE, SEP and Keogh plan
There is help out there: Sole proprietors doing their own taxes can find help in a number of sources, including Schedule C from A to Z, a line by line guide for completing the tax form Schedule C, updated for this year's tax returns. Additionally the IRS Web site and toll-free help line, 1–800–829–1040, offer assistance to small businesses.
Members of the National Association for the Self-Employed have several additional resources available year-round to help ease the burden of tax filing. Questions emailed to TaxTalk are answered by CPAs within two business days at no charge to NASE members. TaxCentral provides a personalized tax calendar and calculator to help estimate the amount of self-employment tax due. Hughes' book, Schedule C from A to Z, can be purchased at a 40% discount for members by signing into their MyNASE account, and nonmembers can purchase the tax guide through Amazon.com.
View a video of Hughes' appearance here.
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House Votes to Permanently End Estate Tax…Again
Last week in a 272-162 vote, the House passed a bill that would extend the repeal of the estate tax indefinitely. H.R. 8, the Death Tax Repeal Permanency Act of 2005, was sponsored by Reps. Kenny Hulshof (R-MO) and Bud Cramer (D-AL) and had over 200 co-sponsors.
Currently, the Bush tax cut of 2001 will impact estate taxation until the year 2011. Presently, the first $1 million of estates per individual are exempt for estate tax purposes. In 2009, the exemption level is scheduled to increase to $3.5 million for individuals and by 2010 it will be fully repealed. However, in 2011, the estate tax is scheduled to be reinstated as the tax cuts of 2001 expire. H.R. 8 removes the sunset provision on the repeal so that it may continue indefinitely.
The House has passed similar legislation four times in the last four years. It has been stalled in the Senate where some moderates do not favor a full repeal. Some Republican House leaders said they are willing to work on a compromise with Senate conservatives and Democrats if necessary. Such compromises could include keeping the estate tax in place but raising the exemption amount to $10 million and/or reducing the tax rate to 15 percent. While some Republican leaders say compromise is possible, some staunch supporters of the repeal may not be so ready to make changes to the legislation. Additionally, Bush has not shown support for anything but the full repeal so far.
The battle over the fate of the estate tax has yet to really pick up in the Senate. Senator Jon Kyl (R-AZ), sponsor of the respective Senate estate tax repeal bill, and Senator Chuck Schumer (D-NY) have been sent to the table to negotiate a deal that will pass with the 60 votes needed to avoid a filibuster.
The NASE continues to follow the estate tax debate closely. Let your Members of Congress know how you feel about the estate tax through the online Legislative Action Center at http://advocacy.NASE.org.
NASE Participates in Roundtable on Access to Capital
The National Association for the Self-Employed participated in a House Small Business Committee roundtable last week, hosted by Ranking Member Nydia Velázquez (D-NY). Many Democratic committee members met to discuss the difficulties small businesses have with access to capital and how changes to the SBA 7(a) loan program might affect the small business lending.
Kristie Darien, executive director of the NASE’s legislative office, remarked to the roundtable participants that micro-businesses, specifically home-based businesses, have a very difficult time procuring capital from traditional lending resources such as banking institutions.
In discussions around the changes in the Small Business Administration’s 7(a) loan program, Darien stated that, “the increased fees associated with the program for both business owners and lenders will affect the ability of micro-business owners to apply for the SBA loans.”
Darien strongly urged the House Small Business Committee and participants to find solutions for micro-businesses’ lack of access to capital. She suggested that one solution would be to encourage lending by non-bank financial institutions such as commercial finance companies and private/public sector cooperative organizations. She also recommended expansion of SBA’s small business loans, equipment loans, microloans and venture capital equity investments.
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President Bush Designates Small Business Week 2005 as April 24th – 30th
President George W. Bush issued a proclamation last week to designate April 24th through April 30th as Small Business Week 2005. In his statement, Bush recognized the importance of small businesses to the U.S. economy and promised to champion small business causes.
“As small business owners and employees add to the vitality of our economy, they also inspire others to realize the full promise of our nation,” said Bush. “I join all Americans in celebrating the entrepreneurial spirit and hard work of our small business owners and employees.”
The Small Business Administration marks this week with the SBA Expo ’05. The conference and expo include a trade show, business-government matchmaking, business education sessions, and networking opportunities. The agenda also includes a luncheon to celebrate women in business, as well as additional awards ceremonies.
NASE President Bob Hughes will participate in a panel titled “How Tax and Regulatory Reform Impact Your Bottom Line” where he will discuss tax issues and provide tax tips.
As a valuable resource for micro-business owners, NASE members are encouraged to attend and visit the NASE booth at the trade show. To register for the SBA Expo ’05, or to find out more information, visit http://advocacy.nase.org/sbaexpo05.asp.
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Last Chance – Member Survey: Uninsured in America
Take the online member survey on health insurance and the uninsured. Let the NASE know your opinions by visiting the MyNASE Web site at http://my.nase.org/. Log in to your free MyNASE Web Account. If you have not set up an account, you can do so at http://my.nase.org/ with your member number. Let your voice be heard in the association by taking this survey during the month of April.
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