Do NOT Tempt the Tax Man
January 2, 2008
Being self-employed as a work-at-home mom definitely has its perks. I can work early in the morning, or sleep in and work late at night. Also, since I am the boss, I can choose when to take time off or if I want to work overtime to get things done, so I can have a 3-4 day weekend. However, it can also have a downside, especially at tax time. I worry that I might tempt the tax man to come after me.
Although I took math classes in college, they are definitely not my favorite subject. After all, I have a BA in English. My expertise is in reading and writing, not numbers. Nevertheless, I am now responsible for my taxes, social security and all. What am I going to do!
Fortunately, I do not have many unusual deductions to worry about. My work consists of a laptop and high speed Internet. I do not employ anyone else, and my office space is a corner of my bedroom. But, I also remember my parents suffering during tax season. The table was spread with tons of paperwork, and my mom spent hours poring over the information. Of course, they wanted to be sure to take all the legal deductions. Thus, the crux of the problem!
What is legal? What is not? Can I take this deduction? Do I claim as single or head of household, because the children’s dad claims them as dependents, so I cannot? How do I know how to pay the least possible amount, without tempting the tax man?
Last year I discovered the true joys of filing electronically. I signed up with a free program. In about 1 hour, the questionnaire asked me a myriad of questions. I answered truthfully and to the very best of my ability. Plus, I did not claim anything for which I did not have a receipt. At the end of the hour, I had filled out the proper forms for my day job, and my part-time self-employment.
I am satisfied that my tax forms are correct, and I did not tempt the tax man to audit my math skills. No one wants to have Uncle Sam question the validity of a remittance or a refund. The penalties can be astronomical.
My best advice: Do NOT tempt the tax man. If in doubt, seek help, especially if you are new at self-employment. It is better to pay a fee for someone to check your paperwork than have interest and penalties assessed by the IRS. Then, after you are familiar with your tax concerns, you can do your own taxes next year.
How do you make sure not to tempt the tax man?
Thanks for the warning. 🙂
I hire a CPA to do my record keeping and taxes. He probably saves me over $10,000 a year, so it’s definitely worth it.
I am self-employed, but I own an LLC that employs me. I then file as an S-Corp to take advantage of certain rules for S-Corps.
I just wrote about my tax dilemma on my blog… today in fact. Tax time is never fun when you’re self-employed. 🙁