Tax Deductions & Credits Personal Trainers Overlook

As a self employed personal trainer or fitness gym owner, operating the business on your own can become very overwhelming especially when you throw taxes in the mix. To simplify your job, below is a listing of tax deductions & credits that you should know.

Typical Tax Deductions

As the IRS states, all business tax deductions must be both “ordinary and necessary” or common & appropriate for your trade or business. In the case of a self-employed personal trainer or gym owner common business deductions include: music tapes, insurance, business-related meals, federal/state/local taxes, interest on any debt, rent expense, retirement plans, travel expenses for business purposes, office supplies, communication mediums (i.e. cell, fax, TVs, phone system), promotional/advertising expenses, and health insurance. While there are your typical tax deductions, you also want to be aware of the often overlooked deductions as detailed below.

1) Self Employment Tax (15.3% = 12.4% Social Security + 2.9% Medicare)

It is surprising how many self employed taxpayers miss this tax deduction which maybe be so obvious that it is overlooked. Please be aware that you can deduct 50% of your self employment tax.

2)Work at Home Tax Deductions

Believe it or not, if you work out of your home you can decipher between personal and business expenses for tax deduction purposes. For instance, an item such as a credit card machine would be an obvious direct business expense while rent expense would be treated as both a business & personal expense since it satisfies those two purposes. The way to calculate the business portion of the rent expense is to divide the amount of square feet used for business purposes by the total square footage of your home.

Personal versus Business Expense Scenario

If your entire home is 2,000 square feet and your business office is 500 square feet, you would be able to treat 500 divided by 2,000 or 25% of your of rent expense as a business expense. Please note that the business must be up and running to treat this expense as business expense. So if you launched your business in June, you could only claim the business expense from June onward.

Examples of expenses in which the business portion are deductible include: Real Estate Taxes, Qualified Mortgage, Insurance Premiums, Deductible Mortgage Interest, Rent, Casualty Loss, Utilities, Insurance, Depreciation, Security System, Repairs

3) Health Publications

Publications that the gym subscribes to or uses for educating clients can be treated as a tax deduction because it is common and appropriate in the trade.

4) Charitable Contributions

An example of this tax deduction would be donating old gym equipment to a qualified organization like a school. Tax deductions for donating to Haiti right now would also make sense.

5) Hiring Certain Employees Coming From Less Fortunate Groups

While trainers need to be fit, you can certainly hire certain employees for cleaning & admin work. There is the Work Opportunity Tax Credit which allows employers to deduct up to $2,400. Generally, the tax credit is 40% of the 1st $6,000 in 1st year wages or $2,400.

Tax Credits Are Higher For Certain Individuals

Disable Veterans Credit is up to – $4,800
Long-term Family Assistance Recipient – up to $9,000 if hired over 2 years

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Ten Tax Deductions You Don’t Want to Miss – From Refinancing Points to Long – Term Care Insurance

It’s that time of the year again. Time to gather your receipts and documents in preparation for tax filing season. This year, perhaps more than ever, taking advantage of every tax deductible expense is not just legal — it’s smart. Waiting until the last minute can cost you big time. So, get started early.

Some 46 million Americans itemize deductions on our 1040s — claiming nearly $1 trillion worth of deductions. Another 85 million taxpayers claimed more than half a trillion dollars’ worth of standard deductions. Some of those who took the easy way out probably shortchanged themselves.

However, millions of taxpayers overpay their taxes every year by overlooking just one of the money-savers listed below. Here are 10 of the most-overlooked tax deductions. Claim them if you deserve them, and cut your tax bill to the bone.

1. State sales taxes. While every taxpayer has a shot at this write-off, it makes sense primarily for those who live in states that do not impose an income tax.

2. Out-of-pocket charitable contributions. The big charitable donations or gifts you made during the year by check or payroll deductions are hard to overlook. But the little things add up, too, and you can write off out-of-pocket costs you incur while doing good works. If you drove your car for charity in 2008, remember to deduct the per mile limit.

3. Medical expenses. In addition to what you’ve spent on doctors, hospitals and medicine, other tax-deductible items include health insurance premiums, prescription eyeglasses and contact lenses, hearing aids, medical transportation, equipment for disabled people, and nursing home expenses.

4. Long-term care insurance premiums. Eight million Americans now own long-term care insurance policies and premiums may be tax deductible for individuals and self-employed. Many people still overlook this deduction for themselves or when assisting a parent with their own tax filings. And, note that States are increasingly allowing tax deductions or credits for the purchase of long-term care insurance.

5. Unreimbursed out-of-pocket job expenses. Tax-deductible expenses include vehicle expenses (other than commuting), travel expenses, uniforms, union dues and continuing education expenses.

6. Student loan interest paid by Mom and Dad. When parents pay back their child’s student loan, the IRS treats it as though the money was given to the child, who then paid the debt. So, a child who is not claimed as a dependent can qualify to deduct up to $2,500 of student loan interest paid by mom and dad.

7. Moving expense to take first job. Don’t forget that job-hunting expenses incurred while looking for your first job are not deductible; but moving expenses to get to that first job are. And you get this write-off even if you don’t itemize. If you moved more than 50 miles, you can deduct the cost of getting yourself and your household goods to the new locale.

8. Child-care credit. A credit is so much better than a deduction: It reduces your tax bill dollar for dollar. So missing one is even more painful than missing a deduction that simply reduces the amount of income that’s subject to tax.

9. Refinancing points. When you buy a house, you get to deduct points paid to get your mortgage. However, when you refinance a mortgage, you have to deduct the points over the life of the loan. That means you can deduct 1/30th of the points a year when it’s a 30 year mortgage. That’s $33 a year for each $1,000 of points you paid.

10. Jury pay paid to employer. Does your employer pays your full salary while you are doing your civic duty but ask that you turn over their jury fees to the company? The IRS demands that you report those fees as taxable income. You always have had the right to deduct the amount, so you weren’t taxed on money that simply passed through your hands. But now tax forms include a line dedicated to this deduction.

For information on the 2008 and new 2009 tax deductible limits and rules for long-term care insurance visit the Consumer Learning Center of the American Association for Long-Term Care Insurance and click on the box labeled Tax Deductible.

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7 Tax Deduction Strategies For Your Home Based Business

For any individual your largest expense are your taxes. One of the best ways to pay less tax is to have a home business. When you are only being paid by wages and salaries you virtually have no tax deductions. If you have a legitimate business you can take advantage of a wealth of tax deductions which can reduce your taxes by $5,000 to $15,000 or more per year.

Here are 7 strategies that you can take advantage of if you have a home business.

(I am not a tax accountant. Before using any of these strategies please seek the advice of a tax accountant.)

  1. HOME OFFICE DEDUCTIONS – For a while there was talk that taking home office deductions raised a red flag. As long as your business is legitimate and you designate an area for your home office you are okay. With that you can deduct expenses that you incur in the course of doing business. You can deduct office furniture like file cabinets, desks, office decorating and even office cleaning. You can also deduct rent, utilities, insurance, property taxes, supplies, phones, and repairs made to the office area of your home.
  2. EDUCATION – You and your employees of your home based business can deduct 100% of the cost of any education they receive up to $5,200.
  3. AUTOMOBILE – You can deduct your mileage when traveling for your home based business. Keep a log of your mileage and what you vehicle was being used for.
  4. TRAVEL AND VACATIONS – You can deduct the majority of any trip if you can link it to your business. The catch is you have to be doing business on the first and last day of your trip. Keep all receipts and document what you are doing for business.
  5. ENTERTAINMENT AND MEALS – You can deduct any 50% of meals that are being used for your business. Whether it is entertaining a prospect or making a sales presentation. If you have a business party at your home, you can deduct the entire cost of the party. Make sure the party is for a business purpose and document it well.
  6. MEDICAL REIMBURSEMENT PLAN – You can deduct 100% of medical expenses, even some of those that are normally not covered by some traditional medical plans. These include chiropractic care, vitamins, supplements, deductibles and co-payments.
  7. BUSINESS GIFTS – You can deduct business gifts up to $25 per person each year. If you are giving a gift to a business and do not designate who the gift is for, there is no limit.

You need to properly document your business expenses from your personal expenses. If you are using credit cards you either get a card in your business name or designate one card for business purposes only.

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How To Benefit From A Student Loan Interest Deduction?

Being a student with a loan can be a huge hassle, but with the student loan interest deduction you can make it less of one. With the student loan interest deduction you can use it for up to $2,500 of the interest you might have paid on your loan and it’s interest. One exception is with student loans that may be nullified, in that case you can completely exclude the total from your income.

When it comes to the interest reduction it has to be claimed on a loan that was to pay for qualified higher education programs only. On the other hand it can be one used for you, your spouse or your kids, meaning any dependents.

Claiming things such as fees, tuition, supplies, equipment, room and board and transportation can be done when claiming a loan interest reduction. It can be used for a college, university or even a vocational school. A couple other things to take into consideration when looking into the interest deduction is that the student must be at least a half-time student in a degree, certificate, or any other qualified program, as long as you are legally obligated to pay it back.

There are a few things you should realize though before claiming interest reduction that may effect whether or not you qualify. These include if another person can claim you as a dependent, you are married but file separately, for any reason you are not legally allowed to clear the loan or a relative took out the loan. All of these can mean you cannot qualify for the deduction.

Something else you may want to know before trying to qualify for the deduction is that there are some instances where costs may be incurred and have to be reduced. This occurs when there are non-taxable distributions from a Coverdell education savings account, or from a qualified tuition program, if there is interest from US Savings Bonds that are non-taxable, parts of scholarships and fellowships that are non-taxable, any kind of veterans education assistance and any non-taxable amounts (excluding gifts, bequests or inheritances). Make sure you check into any connection to any of these things before applying for a student loan interest deduction.

One last thing that should be considered is if you are paying on any loans after 2002, you have a different option in claiming payments for the reduction. This is because the “first 60 months” requirement on interest is no longer part of loan agreements after this date. This allows for deductions on voluntary interest payments, instead of only on required ones.

Having the option to save on student loans and the interest they incur, can greatly help a lot of families who want to give their children a better education and future. By taking advantage of the loan interest reduction they are allowing themselves the chance to do just that.

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