Freelance Finance Fix

Tax-Free Rental Income

Are you aware you can rent out your home for tax-free income? That’s right—for freelancers, solopreneurs, and small business owners who love to travel, renting your property might be an excellent way to earn tax-free income.    In this episode, Alex covers what the Augusta Rule is and how to take full advantage of renting your home for tax-free income, along with details about Section 280A. In this episode, you’ll also hear: * How the Master’s Golf Tournament changed short term rental rules  * Tips for taking advantage of the Augusta Rule * Potential benefits of Section 280A for small business owners Must-listen moments:  [00:00:37]  You need to know about the Augusta rule. This is the ability to potentially rent out your home for 14 days or less and not have to pay any income or tax on the rental income. [00:04:08] Go on Airbnb, look at local rentals, look at hotels, figure out what's a reasonable rate you could charge on your home per night. Create the supporting documentation you need, particularly if you are going to rent out your home in a seasonal time, or where there's excessive demand for that period of time. [00:05:55] If you are a small business owner, this rule can get even more lucrative for you. If you haven't talked to your tax professional team about some strategies of renting your home back to yourself in ways that align well with your business, i.e. doing things like board meetings, strategy sessions, offsite retreats at your home, this is something you need to talk to your team about.   For more details on financial topics curated just for freelancers, visit www.freelancefinancefix.com [http://www.freelancefinancefix.com/] You’re also invited to connect with me on LinkedIn at https://www.linkedin.com/in/alexmlynch/ [https://www.linkedin.com/in/alexmlynch/]

Tempted by High Interest CDs? Here's How to Protect Your Financial Future

Have you noticed more banks enticing you with higher rates? Higher rates generally mean higher savings but there’s no guarantee to how long this seemingly win/win situation will actually last. In this episode, Alex shares why banks are offering high rates and why you should review your long term financial goals before making any changes to your current investments.    In this episode, you’ll also hear: * Why banks are pushing longer term investment offers * Inflation as a benchmark for financial planning  * Long-term power of compounding and equity market’s growth Must-listen moments:  [00:02:56] They didn't suddenly decide you are their favorite customer and they want to reward you. They made a business decision and just like every other business, you need to evaluate them and make sure their products are competitive for you and your situation. [00:03:55] To create real wealth, we need to grow our wealth by more than the inflation rate. If our accounts are growing less than the inflation rate, we are losing what is called purchasing power. [00:08:51] If you haven't recently, it's time to review your banking relationship and where you have your money market funds to make sure that you're getting a competitive rate of interest as well.  For more detail on financial topics curated just for freelancers, visit www.freelancefinancefix.com [http://www.freelancefinancefix.com/] You’re also invited to connect with me on LinkedIn at https://www.linkedin.com/in/alexmlynch/ [https://www.linkedin.com/in/alexmlynch/]

Common Questions about Home Office Deductions

Our last episode, “Are You Maximizing Your Home Office Deductions?”, focused on home office deductions and details about Form 8829 Expenses for Business Use of Your Home. Be sure to review IRS Publication 587 and make sure you're using the most advantageous calculation when determining the business use percentage of your home.    In this episode, Alex answers the most common questions about home office deductions to ensure your claim is as legitimate as possible.   In this episode, you’ll also hear: * Which spaces in your home qualify for deductions   * Storage use and exclusive use by business  * Tips for supporting your home office deduction claim   Must-listen moments:  [00:03:57] Every home is different and your home's unique layout can give you some advantages or disadvantages when it comes to calculating the home office deduction and percentage of home used for business purposes. [00:06:24] A great reminder and best practice involving the home office deduction is to take photos of all of the areas you are claiming as a deduction…and if you do store goods anywhere else, take photos of those with clearly marked tape outlining the area for business use. [00:09:26] You can switch back and forth between the simplified method of calculating the deduction as well as it may make sense in some years and not in others…you are not locked into any method.   For more detail on financial topics curated just for freelancers, visit www.freelancefinancefix.com [http://www.freelancefinancefix.com/] You’re also invited to connect with me on LinkedIn at https://www.linkedin.com/in/alexmlynch/ [https://www.linkedin.com/in/alexmlynch/]

Are You Maximizing Your Home Office Deductions?

Although the April tax deadline has passed, now is a great time to review your return to ensure you’re maximizing your home office deductions.  In this episode, Alex dives into home office deductions, different ways to compute your home office use, and what to know about Form 8829 Expenses for Business Use of Your Home. In this episode, you’ll also hear: * What constitutes a business use area in the home  * Gross square footage and usable square footage calculations  * Getting the most out of your home office deduction Must-listen moments:  [00:01:46] Based on a certain calculation, you are able to allocate a share of some of your home expenses, like utilities, repairs, mortgage interest, homeowner's insurance, your property taxes, and several other expenses related to your home, against your business's income. [00:04:21] There are several other ways you can perform a business use calculation…potentially the most simple of them all is where you simply total up the number of bedrooms or rooms in your house and divide it by the number of rooms used exclusively for your business. [00:10:18]  If you have never dived further into this calculation, it can be a worthwhile use of your time, particularly if you plan to stay in your residence for a multi-year period…getting the highest deduction year after year can put extra money in your pocket.   For more detail on financial topics curated just for freelancers, visit www.freelancefinancefix.com [http://www.freelancefinancefix.com/] You’re also invited to connect with me on LinkedIn at https://www.linkedin.com/in/alexmlynch/ [https://www.linkedin.com/in/alexmlynch/]

Quarterly Tax Payments Simplified

Our previous episode, “A Freelancer’s Guide to Quarterly Tax Payments,” covered the basics of estimated tax payments and avoiding underpayment penalties.   In this episode, Alex discusses safe harbor provisions and determining your estimated tax payment. Be sure to check out Publication 505 by the IRS to learn more about estimated tax withholdings and safe harbor provisions. In this episode, you’ll also hear: * Benefits of safe harbor provisions for non-W2 income earners  * 90% accuracy for estimated payments and paying 110% of prior year taxes   * Pro-tips for making estimated payments as a freelancer or small business owner Must-listen moments:  [00:01:12] There are what are called safe harbor provisions within the tax code that, as long as they are satisfied, you won't owe a tax penalty for underpayment of your taxes. [00:04:21] Look at last year's tax return and how much tax in total you owed. Then multiply it by 27.5% and pay that amount as an estimated quarterly tax payment to the IRS every quarter. [00:06:08] If you're a freelancer, solopreneur, or small business owner experiencing massive growth in your business, I suggest hiring a bookkeeper or tax preparer to take care of these estimated tax payments for you. In hopes you explore the safe harbor provisions fully, find relief in these safe harbor explanations, and focus on increasing your revenue in alignment with your goals.  For more detail on financial topics curated just for freelancers, visit www.freelancefinancefix.com [http://www.freelancefinancefix.com/] You’re also invited to connect with me on LinkedIn at https://www.linkedin.com/in/alexmlynch/ [https://www.linkedin.com/in/alexmlynch/]