Do you write off all your business expenses come tax time?

Expenses such as eBay fees, office supplies, home office expenses, and even gasoline can qualify as a deduction for your eBay business. Accurate bookkeeping will track all your business expenses and make your tax professional's life a lot easier come tax time. Cola Tax & Solutions provides bookkeeping service and tax preparation/consulting.  

If you have any questions, please feel free to ask as you have nothing to lose but $$$ to gain!

If you're like most business owners the answer is yes.

Let us at Cola Tax & Solutions handle your bookkeeping! Our rates are low and usually range from $50-300/month. Included are monthly financial reports.

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The answer is yes, all businesses need bookkeeping. If you make more than $400 of income in one year from eBay sales you are required to claim it as income. No one likes paying taxes on income, but we all have to do it. However, there are deductions that you can take as an eBay seller to reduce your taxable income. The smart eBay sellers use bookkeeping to track all business related expenses and detail every transaction, so at tax time there is no hassle. Good bookkeeping also helps you provide proof of expenses or sales when being audited by the IRS.

Okay, we all need bookkeeping, but how do you expect a busy eBay seller to keep up with all the expenses. It's simple hire a contract company to do it for you. Cola Tax & Solutions provides affordable bookkeeping services to eBay sellers, so that the owner can have more time making sales! Cola Tax & Solutions also provides eBay sellers with understandable monthly profit & loss statements to help you better understand your business. Rates start at $50/month!

I have personally seen tax software be wrong. Some tax software is off $1-6 dollars. How this happens you might be asking yourself, well it's simple really and I will explain it. The IRS gives you two ways to compute your tax. Either use the tax table or figure it using a basic formula. The table has many levels of taxable income listed. Every $50 dollars more of taxable income the table's level increases to the next level Example 1000-1050 is one level. The tax table figures one tax for the whole level. What the tax table does is take the tax of the middle of the level, 1025, and then computes the tax, $103, and applies it for the whole level of 1000-1050. If your taxable income was 1005 you would be paying the same tax as someone that had 1045. Where as if you compute your tax using the tax formula 1005 would be $101 and 1045 would be 105. That makes a $4 difference.

You have the choice to use either method. If your taxable income was 1049 it is clearly better to use the table and pay tax of 103, instead of 105 if you used the formula, which saves you $2.

The problem arises when tax software uses only the table to compute tax. If your taxable income is 1005 they simply use the tax table and you will pay a tax of $103. If you computed it using the formula your tax would only be $101, results in you losing $2. The same $1-3 your neighbor, relative, and half of America lost. It really adds up fast.

You might be asking were the other $1-3 might come from? Well it's simple; those individuals that are eligible for Additional Child Tax Credit get robbed another $1-3. Since the IRS bases the Child Tax Credit on your tax. It is easy to understand why the Additional Child Tax Credit would be wrong. For example you have one child and by the table’s standard your taxable income of 5450 computes 548 in tax. Your child tax credit will then be only 548. That makes your Additional Child Tax Credit 452. Now if you use the formula your tax on 5450 would be 545. That makes your Additional Child Tax Credit 455. Which I want to add for those who do not know the Additional Child Tax Credit is refundable which means money in your pocket. It basically gives you what is left from the Child Tax Credit (1000/child) IF you qualify.

To sum it up tax software that only uses the tax table will cheat about 49% of filers $1-3 and of those filers the ones that qualify for the Additional Child Tax Credit are shorted another $1-3. You might be thinking it's not a lot and it's not everyone. But why let the government keep all of that money?

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Many people ask "How can I reduce my tax liability?". It is simple. Just like anything else planning is essential to success. A well planned year could save you hundreds or even thousands of dollars when it comes time for income taxes. The single best thing you could do for yourself is buy a house. I can't stress the importance of owning a home. The interest on the mortgage is tax deductible, you build equity in the home, your housing expense is fixed for 30 years, the list could go on and on about how owning out weighs renting. Right now could not be a better time to go out and buy. With FHA and other government housing, it would be foolish for anyone not to TRY to qualify for a mortgage. Mortgage interest and now MI premiums are tax deductible which often are the first things that make a person itemize.

If you know you are going to itemize your deductions you better be saving all your receipts! Sales tax can quickly overcome state and local tax payments. If you own your own business or simply sell crafts saving receipts on materials bought could help reduce your taxable income.

The next deduction that comes to mind is contributing to an IRA. The IRS is allowing you to deduct payments into an IRA. This is a no brainer. The number one thing people lack the most is retirement funds. Whether your 30 or 20 there is no better time to start and IRA fund. Time flies by as we already know! You never want to face retirement on social security alone.

Hopefully this has been helpful. I wish you all good luck in life and hope you are successful. May this article save you thousands on your income tax next year or even this year.

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In order to receive the economic tax relief package, that was proposed by President Bush, you must file a income tax return with the IRS. Just file your tax return and the IRS will take care of the rest and send you the check. So if you made more than $3,000 dollars in 2007 and weren't planning to file a tax return its time to rethink that and go ahead and file. Don't the let the government keep YOUR money!

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Individuals have until April 15^th 2008 to make contributions to an IRA account and be able to deduct it from their 2007 tax return. The IRA contributions deduction has a limit of $4,000, for the 2007 tax year, for filers under the age of 50 (given your earned income was over $4,000). The limit increases to $5,000 for individuals over the age of 50. These contributions will reduce your taxable income and there for reduce your tax bill. In some cases they might actually make you fall into a lower tax bracket and save you even more.

If you haven’t started contributing to an IRA consider doing so. The short term tax relief is only one small benefit. The real benefit comes when you retire. It is a known fact that most American’s do not have enough funds in their retirement accounts. Please do not fall victim to that statistic and invest today.

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