It’s tax time again. As freelancers, April 15th one of four big days we need to pay attention to from a business perspective. Why four? Because unlike our corporate counterparts, freelancers need to pay estimated taxes on a quarterly basis. If you’re only just now getting your freelance tax act together, this article will show you 5 last-minute freelance tax deductions you may not have considered yet.

Disclaimer: These are suggestions based on my three and a half years as a successful freelance writer and web consultant. Please consult a tax professional for your specific tax needs.

Tip #1: Books and Subscriptions

If you work as a writer, designer or other creative professional, all those books and subscriptions you bought to help keep your skills current are tax deductible. These should go on your Schedule C under Other Expenses and itemized in part V.

Tip #2 Mileage For Client Visits

If you work from home but occasionally need to visit clients at their place of business, you can deduct 55 cents per mile in 2009, plus any costs for parking and tolls. Make sure you keep a detailed journal of all business-related mileage plus a record of the overall annual mileage you put on your vehicle.

Tip #3 Shelter Your Profit With A SEP Retirement Plan

A SEP (Simplified Employee Pension) plan is very similar to a traditional IRA, and a great way for freelancers to shelter 20% of schedule C net income up to a maximum of $49,000 in 2009. If you haven’t opened an account yet, you have until April 15th to do so. Once in place, you or your representative will be responsible for directing investments and maximizing contributions.

Tip #4 Deductions For Internet Access and Other Communications

Many home-based workers use a dedicated cable or DSL internet connection for business purposes, while others use a household service that is bundled with household telephone and television services. Whichever you use, make sure to deduct the portion used for business. Don’t forget to include monthly data plans for smart phones or backup networks such as laptop network cards.

Tip #5 Home Office Deduction

If you work from home as a freelancer, you may be able to deduct expenses related to the business use of your home. These expenses can include mortgage interest, insurance, utilities, repairs and depreciation. The home office deduction isn’t just for homeowners – you can take advantage of it even if you rent.

To qualify, make sure you pass these two requirements: 1) You must regularly use part of your home exclusively for conducting business, and 2) you must be able to demonstrate that your home is used as your principal place of business. Most home office deductions are based on the percentage of your home used for business, so you’ll need to figure out the amount of space dedicated to your business. For example, if your home office takes up 250 square feet of a 2500 square foot home, you can deduct 10% of all qualified costs. But be careful with depreciation, as you’ll need to recapture it upon the sale of your home.

Pay Your Taxes, But Don’t Pay More Than You Have To

Deductions can mean the difference between profit or loss in your small business for a given tax year. The IRS knows you’re in business to make money, so if you show a loss over multiple years they will classify your business as a hobby rather than a going concern. Take your deductions honestly, but don’t pay more taxes than you have to.

It’s no secret that the U.S. economy is in bad shape. The housing bubble burst. The stock market crashed. People lost a lot of their retirement savings. The federal government has been bailing out big industries like banks and auto makers. State governments are feuding over state budgets. People are losing their jobs with some of the highest unemployment rates young professionals have seen in their lifetime.

Who’s to blame for the recession we’re in? It’s a hotly debated topic, and there really is no single right answer. The economic recession didn’t stem from a single group or a lone action. But to help you understand how the current economic situation came about, let’s look at three groups that had a hand in it:

The Federal Reserve – For years, the Fed kept interest rates low. Low interest rates help to grow the economy–they make borrowing (and therefore spending based on that borrowing) more attractive to consumers. Low interest rates also benefit banks making loans, because it’s easier for them to attract new customers as they advertise that low interest. The problem is that low interest leading to growth is good when the economy needs a boost; not so much when it’s already booming. That can lead to rapid inflation like we saw for years with the skyrocketing housing prices around the country.

Banks - You would probably be hard-pressed to find any American who didn’t hold banks at least partly to blame for the credit crunch-turned-recession. The fact that their tax dollars then went to bail out the banks with little oversight certainly didn’t help matters. And they would be right. Banks played a major role in the current crisis–a role stemming from greed.

To explain it as simply as possible, banks knowingly loaned money (through mortgages for over-inflated housing prices) to people who couldn’t afford it. They did it for the sole purpose of earning more money–they can charge much higher interest on sub-prime loans to people at the most risk of not paying them back.

Why did banks take that risk? Well frankly, they didn’t consider it to be that much of a risk at the time. They had at least two back-up plans:

1. They had insurance (through companies like AIG) to help cover their potential losses.
2. The housing market at the time showed no signs of slowing down. Therefore, if they foreclosed on a home, they had a good chance of selling it back on the market for an even higher price.

Everyone knows that markets fluctuate through inflation and recession, and that every bubble will eventually burst. The problem with banks is that they just didn’t care. They wanted to make as much money as possible in the short-term with little regard for the long-term.

Credit: Steve Woods

Consumers – Yes, even consumers just like you played a role in the current economic recession. Let’s be honest about it. If people lived within their means without a sense of entitlement to more, they wouldn’t have racked up debt they couldn’t afford.

In their defense, the average consumer is somewhat easily sucked in by promises of low interest and great deals (if the marketing messages and sales pitches didn’t work on many, people wouldn’t use them across most sales-oriented industries). Banks basically promised high-risk consumers something they never thought they’d have–a house of their own. People who otherwise would have stayed in their smaller homes or continued to rent strove for something better, but something they ultimately knew they couldn’t afford.

No single person, or even a single industry, led to the collapse of the housing market or our overall economic recession. While it may be easy to place blame on whoever the media or government is targeting on any given day, when you really think about the situation critically you see that there’s plenty of blame to go around. While you can’t say any one person caused the recession, you can be sure of one thing–the economy will rebound. It may not happen as quickly as we’d like, but it always does. Following every boom there comes a bust. And after every bust we rebuild.

As the need for a strong foundation for our financial affairs increases, private banking is looked at as a great option. Private banking is relationship banking with a professional advisor to take care of the banking, investment and other financial needs. This means the customer service rendered is more personal than it is with retail banking.

Nowadays, private banking has grown huge into a global industry and all the main banks have started their own separate private banking operations. Apart from banks, there exist other specialist institutions, some of which are well-known for their services. Some of these financial institutions and banks assign “private bankers” to their privileged clients, in order to facilitate their regular banking needs. They arrange meetings that fit the client’s schedule and things are taken care of with just a phone call from the client.

Earlier, private banking was meant to be a facility for high net worth individuals with liquidity in millions and designed to help them maintain and grow their wealth. It has become extremely competitive and there are many doors open for people, and even an individual with a five figure income can get an entry. This may not be a small sum but at least millions of dollars are not required like before. If the individual has $100,000 or more, then there is no limit to private banking agents that will pop the kettle.

The idea behind this innovative method of banking is that making money is much easier if there is some to spare initially. It can be grown through several investment opportunities, offshore portfolios, tax avoidance schemes etc. The consolidation of an individual’s or institutional finances coupled with the resources provided by the financial institutions makes it a powerful combination.

Leading financial institutions that provide private banking, offer services such as fiduciary and banking solutions, tax planning, asset and fund administration, investment management, wealth management etc. to affluent individuals, institutions and corporations. They help guide the clients in the right direction. Basically, clients will get a better class of service than the local banks.

As we all know, investment today is completely different from what it was before. It is now all about goal setting and making prudent and informed decisions. Most people need help with this and this is where private bankers can be of immense help and be the experienced and knowledgeable advisors people are always searching for. These people understand the ups and downs in the economy and the markets, and work with their clients to identify their needs for income, capital, liquidity and investment objectives.

However, not all can be trusted as there are many that charge higher but provide no value. When dealing with offshore private banks, there is the problem of not having any legal protection. It is important to take into consideration the reputation of the financial institution and not go with fly-by-night operators.

As global markets have grown more complex, to stay in tune with the fast-paced business scenario, many leading private banking institutions have come up with custom tailored and sophisticated investment plans for their clients. It could be anything that a client is looking for; right from securing a comfortable retirement, reduction of taxes, saving for children’s education, life insurance plans, pension plans or even capitalizing on existing investment opportunities.

Private banking brings that extra financial advantage to clients; the ability of bankers to listen to their clients’ aspirations, needs, concerns and financial dreams. When using a reputable financial institution, clients usually have a lasting relationship with their private bankers for years. Clients look towards them to provide solutions of high standard, which affords them the peace of mind they long for.

Credit: BigStockPhoto.com

Even in the business world, what goes up sometimes comes down, and if the company is big, the sound of the fall is louder and clearer. Chapter 11 bankruptcies in the United States have been many. Chapter 11 allows a company to reorganize by allowing the debtor to keep a part or all of their property, as well as allows the company to pay off creditors with future earnings.

Washington Mutual – September 26, 2008

The present financial crisis has hit the US harder than Hurricane Katrina, and WaMu bankruptcy only reiterates this. US reeled under the news of the biggest bank failure in its history, as federal regulators seized the largest American savings and loan institution, Washington Mutual (WaMu), which came to symbolize the excesses of the mortgage boom. Regulators brokered an emergency sale of the assets to JPMorgan Chase for $1.9 bn. As expected, global markets plunged. WaMu’s assets were $307 bn and it was also the sixth largest US bank, behind Bank of America. With this acquisition, JPMorgan will now have about $900 bn in deposits.

Lehman Brothers Holdings Inc. – September 15, 2008

A press release on September 15, 2008 by Lehman Brothers Holdings Inc. (LBHI), the 158-year-old U.S. investment bank, altered the American financial landscape. The company announced its intent to file for bankruptcy. This is the largest bankruptcy in the history of the United States with $638 billion in assets listed and the largest failure of an investment bank. The bank has been undermined by bad debts and shares tumbled 94% this year, before it was delisted on September 17, 2008. The deal for Barclays Plc to acquire the main business of Lehman has been approved. Barclays would also absorb $47.4 billion in securities and $45.5 billion in trading liabilities.

Refco Inc. – October 17, 2005

Refco Inc. filing was then one of the major bankruptcies in the United States. New York-based Refco was a diversified financial services organization that was primarily a commodities and futures broker, with operations in 14 countries. Founded in 1969, this firm was the largest broker on the Chicago Mercantile Exchange, with more than $4 billion in customer accounts. The firm’s collapse came about ten weeks after it sold shares for the first time to the public. The company was under investigation for hiding a $430 million debt and the Chief Executive Officer and Chairman; Phillip Bennett pleaded guilty of fraud and sentenced to 16 years.

Delta Airlines Inc. – September 14, 2005

This United States airline is based in Atlanta, Georgia and operates extensive international and domestic flights. The company has been facing financial difficulties for a long time and ever since 2004, tried to stave off bankruptcy by restructuring the company with job cuts and expansion plans. However, in September 2005, it filed for bankruptcy for the first time in its 76-year history. The company cited high jet fuel prices and high labor costs as the two main factors. Delta was in $20.5 billion debt at the time of filing. On April 30, 2007, the airlines emerged from bankruptcy protection as an independent carrier.

Conseco Inc. – December 18, 2002

This is an epic case of a stock-slide leading to bankruptcy and then an amazing recovery. Conseco Inc., an insurance, investment and lending company in Carmel, files for bankruptcy. But it did so after reaching a pact with major creditors to restructure its debt. With the bankruptcy Judge approving a plan cutting the company’s debt from $7 billion to $1.4 billion, the company emerged from being the third-largest bankruptcy in U.S. history and paved the path to financial recovery. Conseco Inc. was once a high-flying company that rose to Fortune 500 status through several insurance acquisitions. Too many buyouts sent the company into a severe tailspin.

UAL Corp. – December 9, 2002

UAL Corporation is an airline holding company based in Illinois. It was incorporated as a Delaware corporation. To keep up with the deregulated airline market place, the company tried diversifying its businesses in 1982, in order to improve its financial situation. In spite of its efforts, like other airlines, it struggled with rising fuel prices and shaky finance, and filed for bankruptcy. However, it emerged from bankruptcy in 2006.

WorldCom Inc. – July 21, 2002

WorldCom bankruptcy came about a month after the company revealed that it had wrongly accounted almost $4 billion in expenses. It was the largest US-based telecommunications company with more than 20 million customers and 80,000 employees. At that time, WorldCom was one of the world’s most valuable companies, valued over $100 billion, and the bankruptcy was considered the largest in United States history. WorldCom also came to be famous as one of the biggest instances of a corporate feeding its greed through accounting and financial manipulations.

Global Crossing Ltd. – January 28, 2002

The result of this bankruptcy was said to be the loss of 9000 jobs. Global Crossing is an American telecommunications company based in Bermuda, providing computer networking services throughout the world. In its filing, the company listed its total assets of $22.4 billion and debts amounting to $12.4 billion. It has since recovered from bankruptcy and succeeded in turning around its performance.

Enron Corp. – February 12, 2001

Enron Corp. bankruptcy was the biggest corporate bankruptcy in U.S. history, and left investors burned and employees with lost retirement savings. It was an energy company in the United States, formed in 1985, in Houston, Texas. It grew to be the nation’s seventh-largest company in terms of revenue by buying electricity from generators and selling it to customers. Wall Street also called it the technological innovator. The reason for its downfall is said to be the complex partnerships to keep about $500 million in debt off of the books in order to mask its financial problems, to continue to get credit and cash for running its trading business. Once the loss of $638 million was disclosed, the Securities and Exchange Commission opened an investigation. Enron then filed for protection from creditors.

Pacific Gas & Electric Co. – April 6, 2001

This company, with its headquarters in San Francisco, was founded in 1905 and supplies natural gas and electricity to most areas of Northern California. This company did well initially and had gas power, several hydroelectric and steam plants. Under the electricity market deregulation, the company sold off its natural gas power plants and retained the hydroelectric plants. But with the selling of the gas power plants, the generating capacity went down and it had to buy power from other energy generators. The company had to buy at fluctuating prices and sell at fixed prices, which led to losses and eventually bankruptcy. In 2004, the company emerged from bankruptcy and established itself extremely well and was named one of the most profitable companies for 2005 on the Fortune 500 list.

Bankruptcy cases are always filed in the United States Bankruptcy Court and are governed by federal law. State laws are also applied when it comes to property rights. There have been several other notable bankruptcies in American history, such as Texaco, Inc. and Financial Corp. of America. While some companies survived a bankruptcy and came out strong, others faded into oblivion.

Islamic banking follows Islamic laws and principles, primarily the tenet that interest must not be paid or collected and that profits and losses are shared. There are two other rules that come to play in Islamic banking. First, banks cannot be involved with businesses that take part in industries that are considered sinful, like gambling and alcohol. Neither can entrepreneurs take part in ventures that deal with sinful activities. Second, excessive risk cannot be taken in ventures.

On loans, borrowers only repay the amount that was originally borrowed. As a gratuity, the borrower can pay choose to pay the lender a small amount of extra money. Such a token should not be promised to the original lender, but paid on a voluntary basis to show appreciation for the loan. Neither should the lender expect such a gift in exchange for loaning money.

Islamic banks should not assess penalty fees for activities such as late payments.

There are some Islamic banks that have investment accounts. All profits made on these accounts – none of which are guaranteed – must be shared with the bank.

A common concept that Islamic banking uses to offset earning or paying interest, is leasing. For example, to allow an individual to purchase a piece of property, an Islamic bank might first purchase the property and then allow the borrower to instead lease that property rather than earn interest from loaning a mortgage. The bank can then resell the property to the borrower at a higher price and the borrower to earn equity through monthly rent/lease payments. Vehicle purchases occur in a similar manner. In both cases, there is no penalty assessed for late payments because these are considered usury, which is also forbidden by Islamic principles.

When the property is resold at a higher price, a “profit” is earned, though it is not thought of as profit. Both parties involved with the transaction must agree to any profit margin.

Individuals and businesses can provide capital to entrepreneurs to engage in a permissible business activity (those activities that are not sinful). Any profits made by the entrepreneur should be shared with the person providing capital. However, only the capital provider bears the cost of any losses that occur.

Under Islamic banking there are many ways of trading and selling that circumvent interest-sharing. In nearly all cases, this is done in a manner that provides benefit to all parties involved in the transaction.

Many Muslims world-wide are interested in banking solutions that abide by the laws of their faith. It’s no surprise that wherever there is a large population of Muslim individuals, Islamic banks are becoming mainstream, especially in the Middle East and many European countries.

Even if a Muslim lives in a society whose economy engages in interest-sharing, that person cannot take part in interest-sharing himself. In places where there are no Islamic banks, Muslims are nearly forced to use banks that offer only interest-paying accounts which directly conflict with Islamic principles. When this is the case, Muslims are required to give away any interest received. This must be done without the expectation of getting anything in return. However, even the mere handling of interest goes against Islamic faith.

“Interest Free Banking” is a fundamental concept derived from the Islamic form of banking. It operates with the primitive professional and ethical standards that exclude the “Muslims” from paying or receiving any kind of interest. This certainly does not mean that the revenue generating activities or money raving businesses are not encouraged. All of these business forms are greatly appreciated as far as they do not involve interest in any kind. There are a lot of financial tools introduced by the Islamic financial bodies to fulfill these business or profit making requirements. For a clear understanding, they deal with equity financing rather then reflecting on debt financing. In addition, as a replacement of fixed interest rates on the savings account, these interest free banks give a small percentage of return on deposits on an annual basis.

Now looking at the inception of interest free banking, it all started around the later part of the nineteenth century when the Muslim countries were doing well, both politically as well as economically. These banks started establishing their centers in the major cities of Islamic as well as non-Islamic countries to cater their comprehensive business needs. Conversely, the branches of such interest free banks turned out to be scarce and the regions apart from the major cities were totally ignored by such a banking system. But however, a lot of local businesses engaged with these financial entities rather than other commercial banks only due to religious reasons. The only reason behind this is, Islam completely forbids the concept of paying or receiving interest. With increasing time and business, it also became exigent to stay away from commercial banks. The commercial banks evolved with the most convenient user-friendly practices like faster money transfer and effortless current accounts but even then, lending money and starting deposit accounts were outlawed due to the forbidden interest banking. Coming to the present moment, it has been obvious that any financial transaction in the most cases involves a bank and for that reason avoiding the modern banking has become impossible. Thus we find a greater indulgence of banks in our local communities. Looking at this inevitability, interest free banking came into existence to serve all the business needs of Muslims and in turn taking utmost care of the rules of Islam. The interest free banking works on some simple rules in the Quran and those who do not follow these rules or deviates from following them correctly is termed as “non-Islamic”.

Interest free financial institutions have been into existence for quite sometime now. By and large, nearly all interest-free banks concur on the indispensable values of Islamic banking. Nonetheless, individually all the banks differ from the services and benefits. These differences occur due to the country rules, needs of the inhabitants and the customized bank’s experiences and objectives.

In spite of being successfully implemented, interest free banking module has some problems when it comes to the areas of financing. However, there are alternatives to such problems, like putting up loans with a service charge and introducing the participatory financial model. It can still be concluded that interest free banking does have a competitive advantage to co exist with the other business models in the financial industry. Such a concept is becoming widely popular with the Non-Islamic countries too. The basic principle that helps a person become debt free at the earliest can be called the most outstanding feature of these kinds of banks. The interest free banks work with the rule that the lender must have a share from the profits or the losses that occur to the borrower or the borrowing enterprise. Thus it is mandatory to share the profits as well as the losses. The lender and the borrower are more of partners and that plays a major role in characterizing the social order. In turn it helps remove the discrimination between the modern day “rich” and the “poor”. The traditional banking system on the other hand collects huge amounts of interest from the borrower regardless of the success or the failure issue. It places a huge amount of risk on any entity that is borrowing the money and is proved to be merciless with Islam.

With the rules that help humanity, Interest free banking is on its way to leave a long lasting impact on the financial institutions around the world.