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Last Minute Tax Advice for the Self-Employed (Fox Business)

Every tax paying American knows April 15 is the deadline to file your federal income tax return, but do you know about this year’s tax code changes that can have a big effect on your 2014 tax return and your wallet? 

As the American public, including millions of self-employed business owners, race to meet the April deadline, there are some important changes to the tax code to keep in mind that could help ensure your return is filed accurately – and with the greatest possible financial benefit.

Health Care Penalty: The biggest change is the new health-care penalty, if you chose to not to obtain qualified health-care coverage. As part of the Affordable Care Act (ACA), everyone is required to sign up for health-care coverage, or face a penalty that increases each year for non-compliance.

Home Office Deduction: In its second year, small business owners who work from their home can now claim a streamlined, standardized home-office deduction rather than completing a complicated IRS form.

Mileage Rate: If you use your automobile for business, you also can deduct a standard mileage rate on your return at 56 cents per mile for 2014 (and expected even higher at 57.5 cents for 2015).

Retirement Contributions: Limits for retirement contributions have also increased for most Americans. SEPs, IRAs and 401k plans, all allow you to contribute to your own future and take a tax deduction on your 2014 tax return.

Health Reimbursement Arrangements (HRAs): As an unintended consequence of ACA implementation, small businesses lost the ability to provide their employees small amounts of financial support for health-care related expenses through HRAs.

When it comes to tax equity, comprehensive tax reform is needed to ensure that all small businesses – from those with 499 employees to the sole entrepreneur – are treated equally and fairly. Not only should adjustments be made to the corporate tax rate, but also the individual rate – the rate at which the majority of the self-employed and small business owners’ taxes are calculated.

As Congress considers tax reform, there are three easy ways they can support the Main Street, small-business community: amending the definition of “employee” to include the owner of a sole proprietorship to take advantage of additional benefits; simplifying the definition of an independent contractor to clarify a worker’s status; and streamlining the deduction process, much like the home-office rule, by creating a schedule C-Z to expand as many deductions as possible for business expenses. These small, common sense changes will help the small business community in a big way.

Our nation’s smallest businesses, from the self-employed to micro-businesses with nine employees or less, are part of the largest small business demographic -- and it is growing each and every day. According to the latest U.S. Census figures, small businesses account for 78% of the entire business community, representing over 27 million entities nationwide. In fact, the self-employed are growing at a top rate of 2.8% over the last ten years – more than any other small business group.

This year’s tax deadline is only weeks away. If you haven’t gathered your documents, now is the time to get prepared. Remember, you are not alone, there are a host of resources -- from your local small business development center to the IRS and the Small Business Administration -- available to help you. Educating yourself about the changes and adjustments to the tax code could save you money, and filing electronically can help you avoid errors. 

And remember, if you still can’t get your taxes done on time, you can ask for more time from the IRS via an extension.

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