10 Tax Tips for Travel Agents

Everyone stresses out about taxes—and we all tend to avoid what makes us feel stressed. But now, before the year is out, is actually the best time to pull together the papers, get over the fears, and start down the path toward filing taxes for 2015. We spoke with Louis DeMars, of AVM DeMars CPAs, LLP, in Williston Park, NY, to come up with some tips for independent and home-based travel agents.

1. Sooner really is better.

Before the year is out, start gathering your paperwork. Of course you already have all your business expenses entered into a spreadsheet or software program, and all the receipts to back them up in a file, right? If you use an accountant, get in touch to make an appointment, find out what you will need, and send over your paperwork. It’s always a good idea to get everything filled out in advance, so you know whether you owe or are getting a refund. If it’s the former, you can wait until the last minute to file with the IRS; if it’s the latter, put it in the mail immediately and get your check. (Filing early also helps protect you from fraud – see #4 below.)

2. Be organized.

The more organized you are, the more deductions you can claim and the faster you can file. It’s not necessary to tape each receipt into a scrapbook and file them in chronological order, but storing all your business expenses in one file, and keeping a running tally of the totals for each category in QuickBooks or even Excel, takes just a few minutes and goes a long way toward making the process simple when April 15 rolls around.

3. Know your dates.

January 20, 2016, is the earliest date you can file your 2015 tax season. The last day of the tax season has been extended by three days this year to April 18.

4. Keep your data safe.

This is prime time for scammers, who love to access the Social Security numbers of unsuspecting folks, and beat you to the punch by filing for your refund. So be sure to always use a secure server when filing taxes or sending information to an accountant. Ask your accountant about the steps he or she takes to guard your personal information, and whether the information is backed up and stored safely.

5. If the phone rings, it’s not the IRS calling.

If you ever receive a call from the IRS telling you that you owe money for taxes or a threatening email asking for personal information, just ignore it. The IRS only contacts taxpayers through the address on their tax forms.

6. Don’t forget to deduct health insurance premiums.

One of the most frequent errors of small-business owners is not deducting their health insurance premiums. You may also be able to deduct commercial vehicle insurance and life insurance premiums; ask your accountant or look carefully at the IRS website.

7. Understand the difference between equipment and supplies.

Equipment (also called capital expenditures) typically includes things that do not need to be replenished every year, such as software programs, computers, and office furniture. You can write off the cost of new equipment (up to $500,000) in one year, or depreciate it over time. Supplies purchased throughout the year, such as pens, paper, and ink, are written off in the year they are purchased.

8. Know when to call for help.

Do you understand how much to pay quarterly taxes in order to avoid an estimated tax penalty? Have you considered deferring income or accelerating deductions to cut your tax bill? Do you understand how pension planning can lower your taxes? If not, take a course, contact the resources below, or call an accountant.

9. Consider taking the home office deduction.

Beginning last year, travel agents who work at home can use a simplified deduction to write off their home office. Where in the past you had to calculate the figures and store receipts to back up your claim, and claiming a home-office deduction was a red flag for the IRS, now you can just claim a flat $1200 deduction. Your home office must be used exclusively for work, however, so no, you cannot have a gym or a guest bedroom set up in there.

10. Maximize your deductions for the year.

Make sure you have done all you can this year to take advantage of the deductions to which you are legally entitled. If you are planning to contribute to charity or buy a new computer, or if you have not contributed the $18,000 maximum to your retirement fund ($24,000 if you are over 50), do it before December 31 so you can take the deduction right away rather than waiting until April 2017.

Thanks to Louis DeMars, of AVM DeMars CPAs, LLP, in Williston Park, NY 

Pic:Ken Teegardin