Are You Overpaying Taxes If You Use Tax Preparation Software?

For many business owners the answer to this quandary is tax preparation software. Fill out a fairly simple interview, click print and out comes a completed return that will pass muster with the IRS. The answer to all your problems or is it?

Can One Software Program Cover All Businesses?

Take a moment to consider the wide range of businesses that exist in the United States. Now cut that number down to those that can be categorized as “Internet businesses.” If you were asked to write a business plan to provide web design services to each of these services, how long would it be? It would be huge and completely useless because each business would have different needs. A Internet business selling flowers would have completely different needs from an online bank which would have different needs from a hosting company and so on. The only way you could create a practical plan for all Internet businesses would be to offer a collection of general services they could all use on their sites. Tax preparation software designers have the same problem.

There are over 15,000 pages in the tax code and over 100,000 pages of regulations interpreting those pages. Changes are made to the tax code ever year, and new regulations are issued constantly. If one were to create a list of questions for every tax deduction and credit detailed in those pages, the list of questions would be the size of a phone book! Yet, tax software programmers have somehow boiled it all down to a simple 30-minute interview process? Common sense should tell you that doesnt make sense.

As practical matter, tax software programs are designed to make sure that you claim a general set of deductions that are applicable to businesses across all industries. Most programs try to mask this fact by asking you to identify your business before proceeding. For a lark, you might try selecting another industry and then running through the interview process. You will find that the interview process is modified a bit, but you are still being asked the same basic tax deduction questions.

If you are only claiming general business tax deductions, you are paying more than you should in taxes. Ask yourself if you have seen any of the following questions in a tax software program interview:

Q. Do you store business inventory in your house?

Hint: You may be able to claim hundreds or thousands of dollars in deductions.

Q. Did you start a pension plan for your employees?

Hint: You may be able to claim a tax credit for the next three years totaling $1,500.

Q. Do you have a home-based business and a second office?

Hint: You may be able to deduct your commuting expenses each day. Yes, commuting expenses.

Q. Do you have business meetings at your home?

Hint: Did you charge your business for the space?

Q. Should you claim the standard mileage rate for your auto or the actual costs?

Hint: The standard mileage rate may not the best option.

Q. Did you modify your business location to comply with the Americans with Disabilities Act?

Hint: You may be able to claim a tax credit AND tax deduction for tax savings of $20,000 or more.

Q. Did you refinance your home?

Hint: The points you paid on your original mortgage are fully deductible now, not over the length of the loan.

This represents only the tip of the iceberg of available credits and deductions available to you. Just one of these deductions could save you thousands of dollars in taxes. Yet, you are never going to see these questions raised in a tax software program interview. The tax code and regulations are simply too large to be incorporated into a usable software program.

Your business is unique. You face and overcome issues and problems that are unique to your size, financial situation and particular business needs. Dont short change yourself by limiting your deductions by using tax software programs.

Richard A. Chapo is with BusinessTaxRecovery.com – obtaining tax refund recovery for overpaid small business taxes. Visit BusinessTaxRecovery.com to read more business tax articles or our new tax credits page.

Why is Forex Trading Better Than Stocks?

For hundreds of years stocks have been a popular investment. Companies issue stocks to raise capital for expansion and new projects. Each share of the stock represents a partial ownership in the company. When the company makes a profit, the value of the stocks rise. Stock owners can sell their shares for a profit, or hold on to the stock for even more gain in the future. Sometimes companies will issue dividends that is part of the profits that are distributed to share holders.

Stock Exchanges

Stocks are traded on stock exchanges. Most stocks are bought and sold through brokers who charge a commission or fee for this service. United States stock exchanges include the New York Stock Exchange (NYSE), the American Stock Exchange, and the National Association of Securities Dealers Automated Quotation System (NASDAQ). Most stocks are listed only on 1 exchange.

Long-Term Trading Vs. Day Trading

Stocks were traditionally seen as long-term investments. So-called “blue chip” stocks, those having proven value over many years, often formed the basis of an investment portfolio.

Short-term trading is a relatively new phenomenon in stock trading, made possible by the advent of the internet. Day traders attempt to take advantage of large daily fluctuations in the market by buying and selling many times in a single trading day. This is relatively risky, and any profits are reduced by the broker commissions charged on each transaction.

Forex

The Foreign Exchange Market (Forex) is quite different from the stock exchange. Forex is primarily a short-term market. Most traders enter and exit deals within a 24 hour period – sometimes within a few minutes. Many Forex trades can be made in 1 day without building up a large brokerage fee, because Forex trades are commission-free. Brokers earn money by setting a spread – the difference between asking and selling prices.

The Forex is the largest financial market in the world, with transactions worth $1.9 trillion every day. By comparison, all the American stock exchanges combined handle about $100 billion. The huge volume of Forex allows it to be one of the most liquid markets in the world. Liquidity is a business or economics term that refers to the ability to quickly buy or sell a particular item without causing a significant movement in the price. There is always a buyer and seller for any type of currency, because the world economy relies on the movement of goods from country to country. The stock market is less liquid because participants may choose to hold their investments indefinitely or move on to other markets.

Five Days A Week Non-Stop Trading

The Forex is not based in any one location. Trading markets are located worldwide and, due to time zone differences, trades can be made 24 hours a day, 5 days a week. Trading begins in Sydney, Australia on Monday morning (Sunday afternoon New York time) and continues non-stop until Friday afternoon New York time. Stock exchanges have more limited trading hours. While it is possible to trade on exchanges worldwide, each exchange is independent and operates for just 7 hours a day. It is not possible to buy or sell a certain stock that is listed only on one stock exchange when that exchange is closed.

Other Forex Advantages

It is more predictable than stocks; it follows well-established trends.
It allows high leverage; leverage is using given resources in such a way that the potential positive outcome is magnified. Typical Forex leverage figures are a 100:1 as opposed to 2:1 on the stock market.
It doesn’t require a large investment – mini accounts as small as $250 can get you started in the Forex.

As a point of conclusion, it must be mentioned that Forex trading is not without risk. Neither is the stock market. Either trading vehicle requires education, planning, discipline, and some disposable income.