#Art of deduction reddit how to
#Art of deduction reddit professional

When it comes to claiming a business expense as a tax deduction, it is important that you keep all receipts. The deduction is based on precedent and on the reasonable belief that it is accurate.The expense is ordinary (common or accepted as an expense of running a massage therapy practice) and necessary (appropriate or helpful for developing and maintaining your practice).You incurred the expense in connection with your practice.In general, an expense is tax deductible if it meets three conditions established by the Internal Revenue Service: If there are charitable donations to qualified nonprofit organizations or business expenses you might have been holding off on during the year, year-end is a good time to make them because they might be eligible as tax deductions. TheВ end of the year is a good time to assess whether you can reduce your tax liability by 'spending down' the profits of your business. Keep track of all income, including tips-do not assume that you don'tВ need toВ report tips. In addition to self-employment tax at the federal level, some states also apply a surcharge to self-employed individuals. The intention is that this amount should fund your Social Security account for your later retirement benefits.

If self-employed, you pay the entire amount. When you're an employee, your employer takes out half what you owe for Social Security from your paycheck, and your employer pays the other half. Please note that having a contract is not enough to ensure that you are considered an independent contractor.ДЇind more information at IRS.gov FICA vs. The facility that pays youВ does not withhold taxes for you if you are an independent contractor, so taxes are your responsibility. If you do not pay quarterly taxes on time and in the amount required, you will owe a penalty when you file your annual return. You must also file and pay quarterly estimated taxes in April, June, September and January.ДЄs a general rule, Internal Revenue Service (IRS) regulations require that you pay at least 90 percent of the amount due for that quarter or 100 percent of the amount you paid for that quarter in the previous year. If you earn more than $400 a year, you are required to pay federal, state, Medicare and self-employment tax.

#Art of deduction reddit professional

If you itemize your deductions, you might be eligible to deduct business expenses you incurred that your employer did not reimburse you for, such as professional association dues, massage lotions and accessories, massage-related magazine subscriptions and continuing education, to name a few. Your employer gives you a W-2 form that shows how much income you have been paid for the year and how much money was withheld for state, federal, Medicare and FICA (Social Security). If you are employed, your employer withholds taxes for you, and you do not have to file quarterly estimated tax.

A massage therapist's best friend can be a professional tax advisor.

#Art of deduction reddit how to

As a business professional, it is your responsibility to understand how to calculate how much you owe in taxes, what expenses are allowable as deductions and when your taxes are due. Massage therapists can get into trouble if they do not understand the rules about paying taxes.