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First of all, whether you sell artwork at the hottest room in town or you design address labels for a wedding planner, it is all the same to the Internal Revenue Service.  That means that you start under one basic job description.  Try not to get too heated about it.  The Internal Revenue Service does not distinguish between fine art and graphic art.

If you keep a studio now, develop a home office as well.  Maintaining two offices is nothing strange to the Internal Revenue Service and in these days of work from home mothers and business entrepreneurs, a home office offers up no red flag for an audit.

One of the benefits of maintaining two offices is that you can deduct travel expenses.  While the Internal Revenue Service grants no deductions for driving to work, they do offer deductions for driving from one workplace to another.  So, the drive from home to your studio and the drive from your studio to your home just became a tax deduction.

Also, you have all the many benefits of tax deductions that can be attributed to your home business.  You can get a deduction on a portion of the mortgage, the utilities, the computer, copier, fax, scanner, office furniture and more on your home office, just like your studio.

So, if you already have a studio, definitely think about a home office as well.  If you currently work from home, the acquisition of a studio might not be as cost effective as the other way around.

Next, hire your spouse.  Hiring your husband or wife could also make some each day expenses tax-deductible.  Life insurance payments, health insurance payments, tuition for education related to work, and work travel and entertainment expenses are tax deductible.

You can hire your spouse to do jobs like cleaning the office,  addressing envelopes, answering the phone, tracking inventory, making deliveries, data entry, or just running errands.

The money you pay them becomes a tax deduction, even if it is deposited into a savings account.  In this manner, money they might get paid from someone else becomes a tax deduction for you.

Of course any salary you pay to any member of your family must be recorded on their own income tax return.  However, you can pay out up to ,756 annually and not take any tax deductions from their pay.

If you watch TV as part of your graphics arts business, your telegram or satellite charges become a business deduction.  So would motion picture rentals or even going to the theatre to see a move, if it can be in any way related to the artwork you do.

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It is true that the educational expenses are increasing day by day.  If you want to plan these expenses well in advance, IRS helps you with some tax benefits.  You can open an Education Savings Account (ESA) and pay to the designated beneficiary money to take care of his/her educational expenses.  This is a very good opportunity for making a supplying towards your responsibility in the future.  And it is very simple also.  You can just go to a bank, open an account, deposit money, designated beneficiary and the work is done! The following conditions must be remembered while opening or operating a Coverdell ESA account:

You can create or organize the statement in the United Says only for paying the eligible educational expenses to the designated beneficiary.  It can be opened in any bank.
The designated beneficiary should be under the age of 18 or he should be a ‘special needs beneficiary’ while opening the account.  The benefits intended under this statement are wide.  You can apply contributions from this statement not only for higher education expenses but also to elementary and secondary education expenses of the designated beneficiary.
Your Altered Adjusted Gross Income (MAGI) has to be below 0,000, (0,000 for married filing jointly) to become eligible to open and operate this account.  Any individual including the beneficiary can contribute to such statement provided the income condition is met.
There is no limit on how many Coverdell ESA accounts you can open, however, your total contributions in a year should not exceed 00.  If the contributions are prefabricated by more than one person, that is fine.  However this limit is for all contributions prefabricated for the same designated beneficiary. If you make contributions more than the limit set, the beneficiary must pay 6 per cent excise tax apiece year on excess contributions.
The contribution has to be in cash.  The money in this statement can't be combined with other property except in a common trust fund or common investment fund.
The contributions must stop when the beneficiary reaches the age of 18.
The money in this statement must be used within 30 days after the beneficiary reaches the age of 30 or the beneficiary dies.

Remember, the distributions prefabricated from this statement are all tax free, if they are equal to or less than the beneficiary’s eligible education expenses.  What are these expenses?

Tuition and fees
Books, supplies and equipment
Academy tutoring
The expenses required in connection with attending or enrolment at the school like uniforms, transportation, room and board.  The expenses on room and board must not exceed the actual amount charged to the student.
The buy of personal equipment or world wide web and related services to be used by the beneficiary and the beneficiary’s family during any of the years the beneficiary is in elementary or secondary school.

Any amount distributed from a Coverdell ESA is not taxable if it is transferred to another Coverdell statement benefitting the same beneficiary or another member of the family of beneficiary.  You need not report eligible rollovers on your tax return as they are tax free.  Regarding rollover – one per Coverdell ESA in one year is allowed. You can take distributions at any time so long as they are below the adjusted eligible education expenses for the designated beneficiary.  There is no need for the designated beneficiary to enroll for a minimum number of courses to take the tax free distribution.

You can change the designated beneficiary to a member of the beneficiary’s family.  And there are more tax consequences for this change if main beneficiary is under age 30.

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I was recently told about this by my dad who owns a business in Portland.  This brilliant program by  Gov. Theodore R. Kulongoski is to attach a gps device to your automobile to determine how many miles you drive daily.  This will be done to attach a mileage tax to drivers instead of the gas tax.  Oregon has been diligent in utilizing less and less gasoline and so the state has been losing millions of dollars.  The governor states that this will be a way to bring in tax and build infrastructure.

Of course there are the concerns about privacy having gps attached to your automobile for the government to see.  Also what about the rural areas, you have to give them a tax break for this right?  Business owners that have to drive apiece day hundreds of miles like my dad does for his business they will need a tax break.  Visitors to the state won’t be taxed, and now buying a Hybrid means you will be taxed the same amount as a Hummer driver.  Or if you drive a hybrid more than the Hummer you get to pay more tax than them.

Excerpt from the story:

“In a Portland trial program in 2006 and 2007, about 300 automobiles were equipped with GPS devices and apiece time drivers purchased gas, they were charged 1.2 cents a mile — about equivalent to the state’s 24-cents-a-gallon tax assuming a automobile that averages 20 miles per gallon.

“They drive up to the pump and there’s a mileage reader there, very much like a modern toll reader, which identifies the automobile as a mileage fee payer, and the total mileage driven in apiece regularize is transferred by a wireless broadcasting frequency that goes into a database, and the mileage fee rates are applied,” Whitty said.

In Kulongoski’s proposal, GPS devices would be installed only in new vehicles, and would monitor mileage only on Oregon roads. Drivers from outside the state would pay the standard gas tax, Whitty said.

The monitors could also grant the state to charge higher fees for rush-hour travel in congested areas, Oregon officials say. Seattle recently conducted such a trial with GPS and found that drivers were much less likely to enter congested areas when charged to do so.

California has also looked at mileage fees, but “we’re still talking. We’re not there yet,” stated Elizabeth Deakin, professor of city and regional planning at UC Berkeley.

She stated the increasing variation in vehicles’ fuel efficiency has impelled the national debate over how to pay for transportation expenses.”

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Each year, the average American citizen looks forward to Jan – April for one specific purpose: the tax refund. They view it as free money they get from the government. It has become huge business for tax preparation companies to give out loans against tax refunds. What exactly is a tax refund and is it a good thing?

Simply put, a tax refund is the United Says government returning money back to you that you paid through your paycheck. That’s right, it’s your money. They are just saying well we took too much so here have it back. You have in effect given the United Says government a 0% interest loan with your money.

What do you plan to do with your tax refund? There are two options for your tax refund; save it or spend it. The wise course of action would be to sock it into a high interest money market statement as an emergency fund. You can place it into your IRA assuming you haven’t already maxed out your annual contribution. You can purchase a certificate of deposit from your bank. There are many options on how to save your money. Banks out there are vying for your money right now. Shop around to find a decent interest rate. You also want to think about just how liquid you need this money to be. If it is going to function as your emergency fund, you won’t want to place it into a certificate of deposit and make it untouchable.

The other option is to spend it. The smartest way to spend this money would be to pay down existing debts. You can use this money to jump begin your debt snowball program. The money you save in interest and monthly payments is worth it. The other option would be to blow it at the mall. That huge screen television might seem like a good intent but stop and think about how much it’s really costing you.

What’s the smartest thing to do with your tax refund? Don’t have one. You can contact your human resources agent and ask them the procedure for adjusting your W-4 to accurately reflect the amount of taxes that should be taken out of your check. Then you can sock that money away into a savings statement and let it acquire interest. Then next year when everyone else is getting their money back, your investment will have prefabricated you even more money in interest.

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