I just started a very small personal business. I’m reading online that when I file taxes I can file a standard deduction? And that as a married couple it has to be about $25,000. Problem is I have literally no idea what this means. Does it mean I have to spend $25,000 in business expenses in a year? Please help!!! And please, really dumb this down for me 🙂
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Is your business incorporated? Then it files its own taxes while you take a salary from the business (your salary is an expense) and file your own taxes. Or are you running the business as yourself, just stuff you make and sell?
Standard deduction is you filing personally. Everybody gets the option of a standard deduction. This is increased if you are married filing jointly because two people are getting deductions. It makes filing taxes easy. If you want to itemize your expenses and deduct them (keeping all receipts), that may end up being more than the standard deduction. If that’s the case then you itemize instead of doing standard.
It’s not just your business you can itemize, it’s a bunch of stuff. Any tax software can walk you through it.
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