How many times have you done your taxes, and a week or a month later realized you forgot a deduction? The tax law is very complicated, so it’s easy to miss a deduction or two. In my experience, these are the top 5 missed deductions.

1. Non-Cash Donations

Did you clean out your closets this year? Chances are you donated those items to Goodwill or a similar non-profit organization. The value of donated items (clothing, furniture, etc.) is deductible. You will need to get a written receipt and assign a value to these items, but the tax savings are worth the effort.

2. Points on Refinancing

With interest rates so low the past few years, there have been a record-number of houses refinanced. If you refinanced, you may have paid points to get a lower interest rate. These points are deductible over the life of the new loan. In addition, if you incurred points on an old refinancing, any unamortized points are deductible in the year of the new refinancing.

3. Educator Expenses

If you’re a qualified educator (teacher, aide, instructor or principal), you can deduct up to $250 for materials you bought for the classroom. Qualified expenses include books, supplies, and computer equipment. This law is set to expire in 2006, so take advantage of it now if you qualify.

4. Investment and Tax Expenses

Expenses for tax planning and investment advice are deductible as a miscellaneous deduction, subject to the 2% Adjusted Gross Income (AGI) limitation. Expenses that qualify include tax preparation fees, safe deposit box fees, fees paid to investment advisors, legal and accounting fees related to tax planning, broker and IRA fees paid directly, investment publications, and more. Many people assume that they won’t have enough miscellaneous expenses to exceed the 2% AGI floor, but all of these expenses combined can be substantial, especially if you have unreimbursed employee expenses to add to these expenses.

5. College Savings or 529 Plan Contributions

Depending on which state you live in, contributions to 529 college savings plans may be deductible on your state income tax return. Because this deduction is only available on the state return (no deduction available on your federal return for 529 contributions), many people fail to include this deduction on their state tax return.

Kristine A. McKinley, CFP, CPA, and founder of Beacon Financial Advisors, teaches individuals and families how to invest and plan for retirement, college, and other financial goals. Kristine offers financial and tax planning on an hourly, fee-only basis.

To learn more about taxes, such as making estimated tax payments and home office tax tips, please visit onlinebiztaxtips.com

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Q: I am trying to decide if opening and contributing to a Roth IRA would be a better option than contributing over and above what my company matches in my 401K.

A: Ideally, it’s best to max out both your 401K and Roth IRA accounts; the more you can save for retirement the better. However, for many people this is not possible, so the question then becomes which account should I invest in first?

Generally, it’s best to invest in your 401K plan first, up to the amount your employer will match, then to invest in a Roth IRA. If you have additional funds to invest after making the maximum contribution to your Roth IRA, you should max out your 401K, and then invest in taxable accounts. There are always exceptions, however, so here are some points to consider when deciding the best order to invest your retirement funds:

Matching Contribution – many employers will provide a matching contribution when you elect to participate in the company 401K or other employer sponsored retirement plan. This is free money, and should be taken advantage of even if your 401K plan isn’t the best due to poor investment choices, high expenses, etc. There is no matching contribution for a Roth IRA, so you should invest in your 401K up to the matching contribution first, before you invest in a Roth IRA.

Investment Choices – Most 401K plans have a limited number of investments to choose from. Roth IRAs can be opened just about anywhere: mutual fund companies, brokerage firms, banks, etc., which means your investment choices are unlimited. If your 401K plan has limited or poor investment selections to choose from, the Roth IRA may be the better choice (after you contribute enough to get the matching contribution in your 401K plan).

Taxes – although your 401K contributions are tax-deferred, which allows more of your money to go to work for you, money invested in a Roth IRA grows tax free. As long as you follow the rules, you may never pay taxes on the earnings in a Roth IRA. If you expect to be in a higher tax bracket when you retire, this could result in substantial tax savings.

Because withdrawals from a 401K account are taxed at your ordinary income tax rate, withdrawals could potentially push you into a higher tax bracket. If you have a combination of 401K and Roth IRA accounts, you have greater flexibility in choosing which account to withdraw from, which could allow for tax planning opportunities to help minimize your taxes during your retirement years.

One more note regarding taxes: 401K, traditional IRAs, and other employer sponsored retirement plans are subject to the Required Minimum Distribution rules; Roth IRAs are not. Again, having Roth IRAs in combination with your 401K accounts can provide tax planning opportunities not available to people who only have 401K accounts.

Withdrawals – your contributions to a Roth IRA are available to you penalty and tax-free at any time. Your earnings in a Roth IRA may also be withdrawn at any time. There is a 10% penalty, but this penalty may be waived under certain circumstances (disabled, first time homebuyer, qualified higher education expenses and more). Withdrawals from a 401K plan are much more restricted, as employers may or may not allow early withdrawals or loans.

Automatic investments – contributions to your 401K account are automatic since they come directly from your paycheck. This makes investing in your 401K easy and convenient, and after you’ve started contributing, most likely you’ll no longer miss the money being invested. Investing in a Roth IRA takes more effort. Although many Roth IRA custodians will allow you to setup an automatic investment plan from your checking or savings account, it takes more discipline to invest in a Roth IRA than it does to invest in a 401K plan. If you think you don’t have the discipline to invest in a Roth IRA account, then investing in a 401K plan (even a poor 401K plan) is better than not investing at all.

Conclusion: Everyone’s situation is different, and there is no one specific order for retirement investing that is perfect for everyone. However, investing in your 401K up to the matching percentage, and then opening a Roth IRA is a good strategy for most people, as a combination of 401K and Roth IRAs could provide you with the best of both worlds. Both types of accounts have many benefits which can allow for flexibility and planning opportunities when it comes to withdrawals and taxes, both before and after you retire.

Kristine A. McKinley, CFP, CPA, and founder of Beacon Financial Advisors, teaches individuals and families how to invest and plan for retirement, college, and other financial goals. Kristine offers financial and tax planning on an hourly, fee-only basis.

To sign up for free financial planning tips, worksheets, checklists and more, visit http://www.beacon-advisor.com.

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You’ve probably heard about the Nebraska meatpackers who won the largest lottery jackpot in the United States last week. One winner replied “I’ve been retired for about four days now” when asked what he would do with his winnings. His response did not surprise me; I’m sure my reaction would be similar!

What does surprise me is that many Americans believe that they cannot retire comfortably unless they win the lottery. A survey by the Consumer Federation of America shows that 27% of Americans believe that their best chance to gain $500,000 in their lifetime is to win a sweepstakes or lottery.

Fortunately, building a comfortable retirement nest egg is easier than you think. Here are five steps to help you build a comfortable retirement:

1. Start early! If you started saving $100 a month beginning at age 18, you would have over $500,000 by age 65. The power of compounding is great, and the earlier you start saving, the greater the benefit. The easiest way to get started is to enroll in your company sponsored retirement plan. If your company doesn’t offer a retirement plan, signup for automatic withdrawals to a Roth IRA or mutual fund.

2. Have a plan. The best way to ensure that you will have a comfortable retirement is to plan how much you will need to retire. Sit down with your family and decide what you’ll do when you retire, where you’ll live and what your spending needs will be. You can’t reach your destination if you don’t know where you’re going.

3. Participate in company sponsored retirement plans. Many companies offer matching contributions to your 401K or other retirement plan contributions. This is free money – take it!

4. Invest in a diversified portfolio of stocks and bonds, that fits your goals and risk tolerance. Studies show that your investment return is determined primarily by the allocation of your assets, not the individual investment selections you make.

5. Keep your costs down. Invest in no-load, low cost mutual funds (or other investments). Lowering the expenses in your portfolio by just 1% can equate to 20% more money in your portfolio after 20 years.

Although winning a large lottery certainly can’t hurt, following the steps above should send you well on your way to a comfortable retirement.

Need more help? Contact a fee-only financial planner to help you project your retirement needs and make a plan to retire in comfort.

Kristine A. McKinley, CFP, CPA, and founder of Beacon Financial Advisors, teaches individuals and families how to invest and plan for retirement, college, and other financial goals. Kristine offers financial and tax planning on an hourly, fee-only basis.
To receive free financial planning tips, worksheets, checklists and more, visit http://www.beacon-advisor.com

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Saving for retirement is even more important for solo-entrepreneurs because you don’t have a company sponsored pension plan or matching 401K contributions to rely on. There are many retirement plans available to self employed individuals and small businesses. Which one is right for you?

Here is just a sample of the retirement plans available to solo-preneurs and small businesses:

Roth IRA – although this is not just for solo-preneurs, this is the first place you should look to save if you are just starting to save for retirement (or resuming to save after starting a business). Roth IRAs are low-cost, very flexible, and allow you to grow money tax-free as long as you follow the distribution rules. Contributions can be made up to $4,000, and can be withdrawn at any time without tax or penalty (earnings withdrawn may be subject to penalty and tax if withdrawn before age 59 ½ and certain other conditions are not met).

SEP IRA – if you’re maxing out your Roth IRA, and are ready to save more, a SEP IRA allows you to save up to 25% of your compensation (20% of your self-employment income) for a maximum of $44,000 per year. Contributions are tax-deductible, and SEP IRAs have low maintenance fees. Contributions can be made for employees also, but employees cannot contribute to their own SEP IRA. This is a good choice if you just have a handful of employees and are looking for a low-cost way to save for your own and your employees’ retirement.

Simple IRA – a Simple plan offers many of the benefits of a 401K, but with less IRS reporting requirements. You can contribute up to $10,000 to a Simple IRA, with an employer match of up to 3%. Contributions are tax-deductible, and Simple IRAs also enjoy low annual fees. Employees are allowed to contribute to Simple plans, and a company match is mandatory. If you have a lower salary (or self-employment income) in your small business, a Simple IRA allows you to put more away towards your retirement than other plans.

Solo 401K – for small businesses with no employees, the solo-401K allows you to put the maximum amount away, with less cost and less reporting requirements than a traditional 401K. Similar to a SEP IRA, contributions max out at $44,000. However, unlike a SEP IRA, participants in a Solo-401K can contribute up to 100% of the first $15,000 of compensation or self-employment income, and an additional amount up to 25% of your compensation. This is important because it allows you to save substantially more than a SEP IRA, if your compensation is less than $220,000 per year. A solo-401K is not appropriate for small business with employees or expecting to add employees.

There’s no one best plan for all small businesses. The best plan for you will depend on many factors, such as whether you have employees or not, how much you want to contribute each year, how much time you want to spend administering the plan, etc. To get more information about small business retirement plans, contact a no-load mutual fund company, a discount brokerage company or a fee-only financial planner.

Kristine A. McKinley, CFP, CPA, and founder of Beacon Financial Advisors, teaches individuals and families how to invest and plan for retirement, college, and other financial goals. Kristine offers financial and tax planning on an hourly, fee-only basis.

To sign up for free financial planning tips, worksheets, checklists and more, visit http://www.beacon-advisor.com

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http://EzineArticles.com/?Retirement-Plans-for-Solo-Entrepreneurs&id=156370

Most parents want to pay for their children’s college education, or at the very least help pay for college. While it would be great for your children to be able to start like after college without student loans to pay off, the cost to parents may be too high.

The average annual cost of a 4-year public college is $12,127 (source: The College Board’s Annual Survey of Colleges, 2005-2006), with 4-year private schools averaging $29,026 a year. College costs have been outpacing inflation by rising over 5% per year.

On the other hand, saving for retirement has become even more important as companies have started freezing or eliminating pension plans, and the future of Social Security continues to be uncertain.

Paying for both college and retirement will be challenging for most parents. Here are some suggestions to help you to achieve both goals:

• Have a plan. You should determine how much you will need for retirement and how much you anticipate your children will need for college.

• Start saving as soon as possible. Time is your greatest ally, whatever your savings goal. Figure out how much you are able to save each month, and setup an automatic plan as soon as possible.

• Prioritize – if you can’t afford to save for both goals, retirement should take priority over saving for college. Your children can always borrow for college or earn scholarships; you can not borrow money for retirement.

• Save for both. Ideally, you’d like to be able to save for both goals at the same time. If you’re able to, allocate money to both goals. You may wish to visit with a financial planner to determine how much should be allocated to each goal.

• Research – there are several different types of college savings accounts available. Find out which type of account will benefit you the most before you invest.

• Use retirement accounts to save for retirement and college. Retirement accounts can be tapped into to help pay college bills (IRA withdrawals can be taken penalty free for college expenses; Roth IRA contributions can be taken penalty and tax-free). However, you should only do this if it will not sacrifice your retirement savings.

The bottom line to getting the most out of your savings – prioritize your savings goals, have a plan in place, and start early.

Kristine A. McKinley, CFP, CPA, and founder of Beacon Financial Advisors, teaches individuals and families how to invest and plan for retirement, college, and other financial goals. Kristine offers financial and tax planning on an hourly, fee-only basis.

To sign up for free financial planning tips, worksheets, checklists and more, visit http://www.beacon-advisor.com

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You’ve heard it a million times – cash flow can make or break a business. The same can be said of your personal finances. Without adequate cash flow, you may not be able to pay your bills, do the things that bring you the most joy and satisfaction, or reach important financial goals you’ve set.

So… what is cash flow planning? Cash flow planning is tracking and projecting your cash inflows from wages, self employment income, investments and other income, and comparing to your cash outflows (bills, loan payments, taxes, etc.). The difference between the two is your net cash flow.

Why is cash flow planning so important? Cash flow planning may mean the difference between achieving financial goals or not, whether they are saving for a down payment on a new house, putting your children through college, or retiring early. Careful cash flow planning can help you make smarter decisions with your money, and can also help you identify problems down the road and fix them before they occur.

The first step in planning your cash flow is knowing where you spend your money! What’s the best way to track your spending? Use pen & paper, spreadsheets or a software program. The best method for you is the method that you will actually use on a regular basis.

Project your spending for at least 12 months so that you include annual and other infrequent expenses. Update your cash flow plan at least monthly. If you are experiencing a cash flow crisis, track and project your cash flow on a weekly basis instead of monthly.

Create best and worst case scenarios and create appropriate responses to both scenarios. For example, if your best case scenario is an increase in income by 50%, how will you use the extra cash? Will you put the additional income in your retirement plan or spend it on other financial goals? If your worst case scenario is a drop in income by 50%, how will you continue to cover your monthly expenses? By planning for the best and worst case scenarios, you’ll be ready for any situation. When estimating income, use conservative estimates if your income fluctuates from month to month.

Prioritize your financial goals and determine how much you’ll need to reach those goals. Whether you’re saving for a new car or for your retirement, you’ll be much more likely to achieve your goals if you know where you are going.

Create “rainy day” and “emergency” funds. Rainy day funds are for infrequent or unusual expenses (car insurance, annual vacation, home improvements). Emergency funds are for short periods of unemployment, unexpected medical expenses and other large expenses you weren’t counting on. Having money set aside for emergencies or other unexpected expenses will help make sure your financial dreams aren’t derailed.

Watch your spending. Focus on your goals and the value that each purchase brings to you. Avoid lavish spending if it means reaching your goals sooner.

Finally, update your cash flow regularly. Monitor your spending and re-evaluate your goals periodically. Remember, whether you are a business or an individual, cash flow planning can make the difference between success and failure.

Kristine A. McKinley, CFP, CPA, and founder of Beacon Financial Advisors, teaches individuals and families how to invest and plan for retirement, college, and other financial goals. Kristine offers financial and tax planning on an hourly, fee-only basis.

To sign up for free financial planning tips, worksheets, checklists and more, visit http://www.beacon-advisor.com

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Ah the holidays… a time for parties, over eating, and over spending. Americans routinely overspend during the holidays, often resulting in increasing credit card debt to go along with that increasing waistline from too much pumpkin pie.

The holidays are stressful enough. Don’t add to that stress by overspending your holiday budget. Here are ten tips to help you save time, money and stress this shopping season:

1. Make a list. Decide how much you can afford to spend this year and write it down. Decide who you want to buy for, and how much you want to spend on each person. Take this list with you when you go shopping to ensure that you don’t buy on impulse or exceed your spending limit. Also, don’t forget to include wrapping paper, decorations and shipping costs. These can add up fast!

2. Pay cash for your holiday gifts. It’s much harder to spend cash than credit, so this tip alone could save you hundreds of dollars this holiday season. Also, avoid credit card offers or store charge card offers that offer you a discount if you sign up. These cards usually have high interest rates, and could end up costing much more in the long run than the discount you receive when you sign up for the card.

3. Do your shopping online this year. Buying online could result in discounts not available in stores. Just remember to include the shipping cost when buying online. Even if you don’t actually buy online, the time you can save by doing comparison shopping before you go to the malls could be invaluable.

4. Have a Secret Santa gift exchange, where you put names in a hat and each person draws one name to purchase for. If you have a large family, this could mean tremendous savings! You should set a dollar limit so each person knows how much to spend. That way no one overspends and relatives with smaller budgets won’t feel bad about not spending a fortune on a gift.

5. Another alternative for those with large families is to do a group gift. Have several relatives go in on one big gift instead of each person buying a separate gift. You will probably all save money and you can buy the recipient one big, cool gift that they really want.

6. Start early! Shopping early allows you to comparison shop and to catch pre-holiday sales, which could mean huge savings. This also curbs impulse shopping, which can be very expensive. Another benefit to shopping early is lower shipping costs if you need to mail a gift. Waiting til the last minute can be expensive because you’re more likely to pay full price for the gift, and you may have to pay extra to ship it if you want to guarantee it arrives in time.

7. Make your holiday gifts. If you have creative talents, such as cooking, crafts, etc., making your own gifts can be very special. If you’re not very creative, consider giving your time. Offers to baby-sit or to do something special for someone can be very personal and appreciated gifts. How many parents do you know who wouldn’t love to have free babysitting?

8. Purchase wrapping paper, holiday cards and other decorations right after the holidays. Seasonal items are usually offered at deep discounts after the holiday, and they never go out of style. Stock up on clearance-priced items for next year, this year!

9. If you’ll be traveling this holiday season, book your travel plans early. Airline flights, train tickets and bus tickets usually go up significantly during the holidays, so booking your travel plans early can save you money and stress.

10. Start a Christmas fund in January for next year’s shopping. Many credit unions and banks offer special accounts just for this purpose. A CD is another great way to save for next year’s holiday expenses. It never hurts to sock away a little money every month between now and the next holiday season. You’ll earn a little interest and you’ll have cash to spend on your holiday gifts and other expenses when the holidays roll around.

Kristine A. McKinley, CPA, Certified Financial Planner®, and founder of Beacon Financial Advisors, teaches individuals and families how to invest and plan for retirement, college, and other financial goals. Kristine offers financial and tax planning on an hourly, fee-only basis.

Learn how improving your credit score can save you hundreds to thousands of dollars each year by signing up for our free ecourse Boost Your Credit Score in Five Easy Steps.
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By Kristine McKinley

One of the questions I hear most often from eBay sellers is how to value inventory for purposes of preparing their tax return, especially if it was purchased at a garage sale, or if you used the item before you sold it on eBay.

For new items that you purchase for inventory, make sure you keep all of your receipts. In addition, you might want to keep a spreadsheet with a description of the item purchased, date, and the purchase price, including shipping costs.

For items that you purchase from a garage sale or thrift store, you may not get an itemized receipt from the seller. So, I would encourage you to write up a receipt (carry a small notepad with you while garage sale shopping or thrift store shopping), while you are still at the garage sale or thrift store. Record a description of the items purchased, date, amount paid, and the location. Ask the seller to sign the receipt you wrote up.

The hardest inventory to value is inventory that you used for personal use before you sold it on eBay, such as clothes you bought for your children that they have outgrown. Before you sell these items on eBay, you should research similar items to see what they have sold for on eBay or similar auctions. For tax purposes, the value of your inventory is the average selling price on the similar items you researched. Print out your research, and be sure to enter the average selling price on your inventory spreadsheet, in case the IRS comes knocking.

If you clean out your garage and list the items on eBay for sale, you cannot claim a loss on their sale. The amount used as your cost basis in inventory converted from nonbusiness use can be no greater than its fair market value at their time of conversion. You also must be able to prove the property’s cost or you may be denied any basis (you’ll have to report the entire proceeds as gain).

The most important thing to remember is to keep good documents. If the IRS audits you and you can’t provide documents showing how much you paid for an item, they may claim that your cost basis is $0, which means you will pay tax on 100% of the sale price instead of just paying tax on the profit.

To your financial success,

Kristine A. McKinley, CPA, Certified Financial Planner®, and founder of Beacon Financial Advisors, teaches individuals and families how to invest and plan for retirement, college, and other financial goals. Kristine offers financial and tax planning on an hourly, fee-only basis.

For more information on eBay taxes, sign up for our free special report ‘Tax Tips for eBay Sellers’ or visit our blog.

=> Special Report ‘Tax Tips for eBay Sellers’ – http://beaconfinancialtips.typepad.com/ebaytaxtips/2007/02/free_special_re.html

=> Blog – http://beaconfinancialtips.typepad.com/ebaytaxtips/

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By Kristine McKinley

If you sell on eBay, or if you have an online business, listen up. There are several tax issues in the news right now that could have a huge impact on the way you do business.

The first issue, and the one that is getting the most attention, is Congress’s push to get the IRS to force brokers (companies such as eBay and Amazon) to report personal data on their customers.

In this proposal, brokers (such as Amazon and eBay) would be required to report names, addresses, and gross proceeds of each customer that completes more than 100 separate transactions and generates more than $5,000 in gross proceeds each year.

Most likely, companies will report this information for all of their customers because they won’t know who will meet the criteria above until the end of the year.

This proposal could cause problems for smaller companies. Not only will collecting this information be costly, but smaller companies may not have the technology to keep this data safe from hackers. The Center for Democracy and Technology is concerned about the safety of the personal data collected, and rightly so, given how much fraud and identity theft takes place today.

The proposal could have a negative affect on ecommerce, as some customers may shy away from doing business on the internet if they are required to provide Social Security numbers.

If passed, the proposal will be effective beginning January 1, 2008. There is no indication that there will be any retroactive treatment for the new law.

Secondly, state and local taxing authorities are pushing for the ability to impose sales tax on sales made online. Currently, eBay sellers and online business owners are not required to collect sales taxes on items that are sold and shipped to customers in another state.

If the state the eBay seller or business is located in has a state or local sales tax, then you are supposed to collect sales tax on items sold and delivered to the same state, but many people are not complying with these rules.

Every state (and many localities) has their own sales tax rate and rules, so the Streamlined Sales Tax Project was introduced to help simplify the collection and reporting of sales tax. Without some simplification, the cost to small businesses to comply with sales taxes would be tremendous.

Finally, the Internet Tax Freedom Act, which was created to promote the growth of the internet, is set to expire in late 2007. This act prohibits companies from taxing internet services, and if this act expires, small businesses would be hurt the most.

States and local taxing authorities are eagerly awaiting the chance to collect taxes on internet services, but many companies, such as AT&T, Comcast, NetChoice and others, are lobbying for a permanent moratorium on this tax.

All of these issues could have a huge impact on eBay and other online businesses, so if you make your living online, you should keep your eyes and ears open for news regarding these tax issues.

Note: This article was written May 27, 2007. Tax laws change frequently, so please check with your tax professional if you have any questions about the tax issues discussed above.

Kristine A. McKinley, CPA, Certified Financial Planner®, and founder of Beacon Financial Advisors, teaches individuals and families how to invest and plan for retirement, college, and other financial goals. Kristine offers financial and tax planning on an hourly, fee-only basis.

For more information on eBay taxes, sign up for our free special report ‘Tax Tips for eBay Sellers’ or visit our website.

=> Special Report ‘Tax Tips for eBay Sellers’ http://beaconfinancialtips.typepad.com/ebaytaxtips/2007/02/free_special_re.html

=> Website – http://www.squidoo.com/ebaytaxtips/

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http://EzineArticles.com/?Tax-Issues-for-eBay-Sellers-and-Online-Businesses&id=582116

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By Kristine McKinley

The second quarter estimated tax payment is due in less than two weeks (June 15). Do you know if you need to make estimated tax payments?

The federal income tax system is a pay-as-you-go tax system. That means you pay taxes as you earn income throughout the year. If you are an employee of a company, you pay taxes through withholding from your paycheck. If you are self employed, you pay taxes by making estimated tax payments.

The general rule is that you must make estimated tax payments if you expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and tax credits, AND if you expect your withholding and tax credits to be less than the smaller of:

* 90% of the tax liability on your current year tax return, or

* 100% of the tax liability on your prior year’s tax return

Example: If your tax liability for 2006 was $1,500, but you expect to owe $2,000 this year because your business did better than the previous year, then the minimum you would need to pay in to avoid underpayment penalties is the lesser of $1,800 (90% of your current year tax liability) or $1,500 (100% of last year’s tax liability).

The easiest way to estimate your quarterly estimated tax payments is to estimate your tax liability for the entire year and divide that amount by four. However, if you don’t receive your income evenly throughout the year, you may use the annualized income installment method. A worksheet and instructions are available in IRS Publication 505, Tax Withholding and Estimated Tax.

The due dates for estimated tax payments are:

For the period: Jan 1 – March 31

Due date: April 15

For the period: April 1 – May 31

Due date: June 15

For the period: June 1 – August 31

Due date: September 15

For the period: September 1 – December 31

Due date: January 15 the next year

If the 15th falls on a holiday or weekend day, the due date will be the next business day.

You can pay your estimated taxes by using payment vouchers (Form 1040-ES), or by using the Electronic Federal Tax Payment System (https://www.eftps.com/eftps/). In addition, if you have an overpayment from a previous year, you can apply the overpayment to your next year’s estimated tax.

Resources:

IRS website – http://www.irs.gov/index.html

IRS Publication 505, Tax Withholding and Estimated Tax -
http://www.irs.gov/publications/p505/index.html

Form 1040-ES – http://www.irs.gov/pub/irs-pdf/f1040es.pdf

Kristine A. McKinley, CPA, Certified Financial Planner®, and founder of Beacon Financial Advisors, teaches individuals and families how to invest and plan for retirement, college, and other financial goals. Kristine offers financial and tax planning on an hourly, fee-only basis.

For more information on eBay taxes, sign up for our free special report ‘Tax Tips for eBay Sellers’ or visit our website.

=> Special Report ‘Tax Tips for eBay Sellers’
http://beaconfinancialtips.typepad.com/ebaytaxtips/2007/02/free_special_re.html

=> Website – http://www.squidoo.com/ebaytaxtips/

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