Filing your federal tax return is probably either your favorite time of year or a tedious task that depletes your savings account. If you’re self-employed, you may have already figured out that you can deduct all sorts of things when April rolls around. Independent contractors who work in direct sales enjoy many different benefits at tax time, including deductions for business-related expenses and the ability to write off debts from self-employment. Make sure that you only deduct applicable expenses if you don’t want to find your tax return on the local auditor’s desk.
Don’t Get Greedy
Make sure you’re only claiming real deductions as you fill out your federal return. It’s okay to claim meal expenses and mileage for some professions, but review current IRS rules first. Auditors are said to have a strong interest in returns filled with deductions, so keep that in mind before you take off a few bucks for that lunch at Applebee’s.
Don’t Tell Them More Than They Need to Know
When you file a federal return, there’s no reason to mail in receipts or a copy of your self-employment earnings. If the IRS wants this info, they’ll ask for it. Don’t trigger an audit by offering extra documents or information.
Don’t File Too Early or Too Late
Self-employed folks should avoid filing on the first day of tax season or preparing a return long after April 15th has passed. Play it safe and file in February or March with the majority of the other taxpayers. Avoid doing anything to call attention to your return, like requesting extension after extension or amending it at the last possible minute.
Tax time is never fun, but it’s even more stressful if your expenses are audited. Play by the rules and keep an eye on your deductions to avoid receiving an unexpected letter from the IRS months after submitting your return.