Today is that dreaded day–Tax Day–the day you scramble to the post office to mail your life to the grim reaper. If you’re like me, you spend far too much time sweating the tax code (most of which is not in a human language), then get all of the return cards and tracking stuff you can (gotta make sure it gets there), then wait nervously (like a junkie during a paranoid episode) for the grim reaper (the lovely IRS agents) to show up on your doorstep audit in hand.
This year, I’ve got an extra skip in my step. I’m actually somewhat mildly excited (read: not afraid) about filing my taxes. That’s because I’ve got 4 incentives to do so this year.
FOUR REASONS TO GET YOUR TAX RETURNS IN TODAY
- The economic stimulus check is obviously the most pressing reason to get your tax returns in by midnight tonight. If you miss the deadline, you won’t qualify for your stimulus check.
- This year, Uncle Sam is giving self-employed folks, freelancers, contractors and consultants like me a break on the social security tax on our earnings. Only the first $97,500 of combined wages, tips and net earnings is subject to the 12.4% social security part of the self-employment tax. Freelancers, contractors, consultants and other self-employed individuals may deduct one half of the self-employment tax as an adjustment to income on line 27 of form 1040.
- This change goes to the sweet spot for all self-employed folks—our ability to deduct expenses. The maximum expense deduction on depreciable property has increased from $108,000 to $125,000. And, if you are operating a socially responsible business—a business operating in a qualified enterprise zone or on renewal community property—you may deduct up to $160,000.
- Because many self-employed folks use their own automobiles to conduct their business—from artists schlepping paintings to galleries to caterers delivering food to wedding-goers—an increase in the standard mileage rate will be much appreciated. The standard mileage rate for operating your car, truck, van or panel truck increased to 48.5 cents a mile for all business miles for tax year 2007.
To learn more about these and other tax law changes, download a free copy of the IRS’s Tax Guide for Small Business Owners (For Individuals).
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