September 22, 2017

Taxes – Do I Have To Pay Them?

When you do a job, you are handed a paycheck or given one that is directly deposited into your bank account. On that check stub, you see a number of deductions for the taxes that you have paid on this income. However, when you work from home as an independent contractor or on a freelance basis, you don’t always get that. You may be responsible for paying the taxes on your income for yourself. The question, do I have to pay taxes on what I earn can depend on a number of factors and is something that would have to be answered on an individual basis.

Do I Have to Pay Taxes on a Child Care Business That is Subsidized?

Many people who start child care businesses in their own home will have several children who are paid for through the state. There are a number of different programs that are meant to help people get an education or keep employment by providing them with child care while they are doing those things. Each state has different programs but it still counts as income to the child care provider. Both the parent and the child care provider will have to include the amount of child care that is paid and how many hours of care is provided on their tax forms at the end of the year.

Do I have to Pay Taxes if I Don’t Make a Lot of Money?

The amount of money that you have to make before it is considered taxable income is a tricky question to answer. Before you think that you can just forego the taxes, there are a lot of things you need to consider. If you don’t pay taxes when you are supposed to you can be subject to penalties and fines, and could also include jail time. And, consider this: if the IRS does find that you did not pay taxes for one year they may go ahead and audit you for other years as well.

If you do pay your taxes however, you may find that you are not making enough money to keep your bills paid or feed your family. At this point, you may need to consider whether working from home is a good idea or if you need to switch to a higher paying job until your business can bring in more money.

Do I have to Pay Taxes: Speaking to a Tax Expert

For the answers to all of your specific tax questions, it is important to talk to a qualified expert. It is important that you consider talking to a tax pro when you are getting ready to open a new business or change jobs as well as when your business expands or has an exceptionally good (or bad) year. Making sure that you understand your tax responsibilities, especially when you are self employed is important and will keep you from having trouble later down the road.

Can I Claim Any Money Back For Tax?

If you run an office from home then you can expect to have higher domestic bills. Why you may ask, well for one you will be using more electricity as you will be using your computer throughout the day and other appliances. You will also use more gas for central heating; you may even notice your water bills going up a small amount too.

If you are working from home but are employed by a company then you are entitled to claim a proportion of these expenses back against your tax bill at the end of the financial year. But HM Revenue and Customs in Britain would rather that you didn’t. Back in 2005 it capped the tax relief available for gas, electric, water and phone bills to just two pounds a week for employed workers. This is as in effect by working from home you are saving your company money. The more people a company has working from home, the less it needs to spend on bills of their own such as electricity, gas, rent for premises etc.

So why should the company keep those savings and expect the taxman to cover your costs? This is because it is down to your employer to reimburse you any costs by working from home, not the taxman. But alas more often than not the company will not as they see it that you are benefiting as you do not have to pay for travel costs.

If you are self-employed working from home then it is a different story, and a better one. You can claim some of your home bills such as gas, electric, phone and the rent against tax. But you do need to demonstrate that your home office is only used for business purposes. So if you are working in the corner of your kitchen then I don’t think it will go down very well with the taxman. The easiest way to work out what you are entitled to is by square footage, so for instance if your home office takes up fifteen percent of your home then as a rule of thumb you can claim fifteen percent back of your bill s against tax.

My advice is if you are running an office out of your home, then it is best to speak to an accountant to calculate it for you. They know the exact amounts you can claim back and how. They are the experts so ensure that you inform your accountant exactly what you use for business purposes in your home.