Having your taxes prepared can be a stressful experience for anyone, but it can be particularly uneasy for a spiritual worker who spends their time working with their right brain and naturally connecting to higher vibrations.
Understanding all of the reporting requirements, deductions and governmental compliance can be overwhelming! Here are NINE tax tips to simplifying your taxes!
1. ORGANIZE YOUR EXPENSES!
Please, do not hand your tax accountant a shoe box full of receipts! In fact, don’t give them any receipts! Your accountant does not need to see or have your receipts. Instead, keep an excel spreadsheet that lists your expense categories and simply provide the totals. Most tax preparers bill the same way that lawyers do, on the time incurred.
If they have to go through to categorize and total your receipts, you’re guaranteed it will increase the time spent on your return and more than likely, result in a higher tax bill for you!
As your business expands, you can always seek the help of a bookkeeper and an easy to use accounting software program, but the excel spreadsheet is a quick, organized and easy solution for the beginner.
2. CREATE A FILING SYSTEM!
Create your own personal filing system starting at the beginning of the year. Simply purchase a portable filing box or pendaflex style organizer and label each tab with an expense category. For instance, office expense, supplies, advertising, et al. As you accumulate the receipts, simply put them in the matching category.
At the end of the year, you now have all of your receipts ready to go! No searching for them! You then total the receipts in each category and then list them on the excel spreadsheet you created in step 1! Not only will you impress your accountant, but you will also feel a sense of ease not having to worry about finding and sorting a years’ worth of receipts all at once! After each category is totaled and your tax return is complete, take your receipts and put them in envelopes and label the expense on the front.
Store the envelopes in a box and place them in a safe as you’ll generally want to keep them for a minimum of 3 years for IRS purposes.
3. CASH COUNTS!
Include your cash income. Cash may be king but it is also reportable. Per IRS regulations, you are required to report your cash income received for services rendered. It’s best to be honest. Not only will it help your Karma, but in the event of an audit, the IRS reviews bank statements and they will look closely at any cash deposits to reconcile to your tax return.
4. WHAT FRINGE BENEFITS?
As much as you want to write off the massage, the gym and the clothes, it’s just not advisable. It’s quite difficult in an audit to have the IRS agree to those expenses, even if you claim medical purposes. So just consider them personal health and well-being and report was truly related to the business.
5. TAXPAYER’S OCCUPATION: Perhaps it took years for you to step out of the spiritual closet and embrace your gifts, but don’t list your profession as a psychic or medium. Although tempting to fully own your gift and power, it has a tendency to bring about more awareness since it’s an industry considered “high-risk”. Be honest about your profession, but perhaps there’s another word that describes what you do just as well. For instance, communications or consulting would also describe what you do with less of a direct target. Of course, you always have free will as we like to say in the industry!
6. WATCH OUT FOR THE REFUND!
Just because you get a refund does not mean you have the BEST accountant on the block! Anyone who brags that their accountant “got them the biggest refund” may be in for a surprise later if audited. It’s important to be reasonable in your deductions. Any excessive deductions can be an audit target.
7. UNDERSTAND YOUR RETURN!
Would you let a doctor perform surgery on you without understanding the ailment? Of course not! So many people just trust that their accountant did the return correctly. Be inquisitive with your return. Have the accountant explain the return a bit so you have a clear understanding of your tax return. Did they take additional expenses? OR report money you put in personally as income? Remember, if you invest in your company or add capital to cover the expenses that is not considered income.
Having a basic understanding of your return will only benefit you as in the case of an audit, the IRS holds the taxpayer strictly accountable.
8. HOME OFFICE!
Working from home can be a blessing. It can also be a tax deduction! However, you want to be certain that you qualify for the home office deduction. The IRS has very strict rules on what qualifies as a home office. For instance, it must be a space that is used exclusively for business. So having your office with a treadmill, not considered exclusive. You also must show it’s the principle place of business. You can also deduct if it’s a separate structure or space, like a garage, studio or even a barn. This does not have to be your principle location for business.
9. HIRE A PROFESSIONAL!
You may have the best intentions, but seeking out a professional and certified tax preparer is truly the best way to go! This is their field of expertise. You wouldn’t want a doctor giving you a reading right? So why are you trying to do your own taxes? Just put it out to the universe that you will do an extra session or two to cover the cost of a professional preparing your taxes. Not only will this ease your stress, but your tax advisor will be able to ensure you are filing in compliance and getting the most out of it!
Colby-Psychic Rebel is a professional psychic medium, teacher and author located in Los Angeles, CA. Colby is also the host of REBELations on Shay Parker’s Best of the Best on iOM radio. In addition, Colby is a CTEC certified tax preparer and worked 13 years in the accounting industry as tax manager for a CPA firm. www.psychicrebel.com