Hello travel agents! You didn’t forget to file your taxes, did you?
The thought of having to prepare and file taxes each year may send you into a panic – your palms sweat, your heart beats fast, and you may feel as if you’ll pass out.
Take a breath and calm down.
The good news is that filing your taxes happens each year so you won’t be surprised when the New Year brings with it the anticipation of handling this task.
Whatever you do, don’t ignore your taxes. Why? Because you don’t want to receive a phone call or letter from the IRS. No one wants to be audited.
Keep reading to find out the top tax tips for independent and home-based travel agents. You may actually save money and receive a bigger tax break than you may have thought possible.
These are the Top Tax Tips for Travel Agents
Get and Stay Organized
If you’re tossing papers left and right or tearing through boxes to find information, you need to get organized. Create computer and physical file folders (it’s good to have backups). Keep business expenses in one place. Use software such as QuickBooks or Excel to keep a running total of expenses. With the click of the button, you can print out reports and use them to prepare and file your taxes.
Protect Data with Technology
Piggybacking on the first tax tip for travel agents, keep your data safe. Whether you use a cloud based software like TravelWorks or keep files on your computer, make sure they’re protected. You may want to invest in data backup service such as Carbonite (starts at $59.99 per year) or IDrive (offers a free version). They give you unlimited and one 1TB (terabyte), respectively. Of course, you may want to keep paper files for your most important documents. Why? Because sometimes technology fails – you need documents to prepare your taxes. Either way, make sure you protect your travel agency’s data.
Take the Maximum Deductions
Have you taken the maximum amount of deductions allowed? For example, tou can deduct your health insurance premiums. If you have a brick and mortar travel agency with a commercial vehicle, you may be able to deduct the insurance. Ask a certified public accountant about this. If you haven’t maxed out your IRA or 401(k) contribution, consider adding a little more before April 15 and taking the deduction quickly. Are you 59.5 years old or older? Deposit money into your IRA before April 15 and claim the deduction. Withdraw without a penalty at a later date. Don’t forget to deduct meals and entertainment, advertising and marketing, and educational expenses (conferences, conventions, seminars, etc.) for business. Keep your receipts!
Consider the Home Office Deduction
If you’re a home-based travel agent, you can write off a home office – a flat $1,500 deduction. This piggybacks on the tax tip of maximizing deductions. Keep in mind that you must use your home office exclusively for work. This means you can’t set up a arts and craft or sewing room, guest bedroom, gym, or other type of room.
Write Off Equipment and Supplies
Capital expenditures also known as equipment includes items that will not be replaced each year, such as office furniture, computers, and software programs. New equipment up to $500,000 can be written off in one year or depreciated over time. Write off office supplies, such as pens, paper, ink, toner, notepads, markers, etc. in the year they were purchased.
Hire a Certified Public Accountant (CPA)
The best tax tip for travel agents is to hire a CPA (certified public accountant). Why? Because he or she could save you money and get you a bigger tax break than you may have expected. Remember, a CPA is the expert who has to stay up to date with the latest in accounting and taxes. You may not understand IRS codes so it’s best to leave the filing of your taxes to someone who does.
Use Tax Tips for Travel Agents and Save More
The above tax tips for travel agents can do more than save you money – they can save you time, headaches and frustration when it comes to filing your taxes. If preparing your taxes makes you uncomfortable, contact a certified public accountant or tax professional. It’s better to pay someone who understands the tax laws than to file your taxes on your own and risk making mistakes.