How does a person get back more taxes? With a home business!
A home business opens them up to recapturing literally thousands of dollars per year. Simply put, The U.S. Tax Code is written FOR business owners because economies are grown by entrepreneurs. Further, as long as the business is intended for a profit, the tax code allows three years of losses before it expects the profits to be realized.
Furthermore, generating wealth is based on one concept; CASH FLOW. The more cash flow that comes in NOW is better than getting it later. Therefore, if a person has a job, and their exemptions are set at 0 or 1, they are getting the least amount possible each check and paying their taxes ahead of time. This is not smart from a cash flow standpoint because what they are doing is letting the Government use their money knowing that “They will get a big tax return check back”. Essentially, it becomes their “savings account”, and the return is rather small.
Network Marketing can truly build wealth for you and your family over a period of time, (in our business, it's four years); And, one advantage which is immediate, is the availability of tax deductions.
Point is, it’s not too late to join a legitimate home business and use these home business tax deductions for the 2011 tax year. Don’t miss the boat and get more taxes back this year! Get started before December 31!
If you would like to read more about building wealth through cash flow strategies, please visit more areas on this blog site.
Below are potential tax deductions that, we as business owners, can enjoy;
examples of DEDUCTIONS:
All specified suggestions Not to be taken as any form of advice. For that,
speak to your tax accountant.
Products Purchased
Car Miles
Car Depreciation TALK TO YOUR ACCOUNTANT AS THIS CAN BE COMPLICATED.
Mortgage Interest or Rent
See the following: Business rent deduction-Schedule C-IRS Publication 587.
And, Since mortgage interest can be taken on Schedule A as an itemized deduction, you may consider moving it to Schedule C and taking the Standard Deduction.
Calculate square footage of office/total finished square footage of home or apartment=BUP (Business Use Percentage).
Other Home Deductions
■Gas, electric, water, and sewer (BUP x expenses).
Talk to your accountant for more specifics,etc.) & see IRS Publication 587.
■Cleaning crews to dust, vacuum and empty the trash (BUP x expenses).
■Computers, copiers, fax machines, and telephones.
Business Deductions
■Advertising (100% deductible).
■Paper, pens, and postage (100% deductible).
■Bank fees on business accounts (or personal checking if no business account) (100% deductible).
■Desks, sofas, coffee tables, and other furniture.
100% deductible if used exclusively for business.For partially used business assets, you can deduct a percentage of the asset.
■Credit card annual fees and business cards (100% deductible).
■Painting, wallpaper, carpeting, and other repairs/remodeling (BUP x expenses).
■Legal and professional services (100% deductible pertaining to business).
■Bad debts from sales or services (100% deductible).
■Phone bills(outside of “base amount” 100% deductible), cell phones (100% deductible if business), pagers (100% deductible if business), and Personal Digital Assistants (PDAs) (100% deductible if business).
■Magazines and books for business education (100% deductible).
■Newspapers, magazines, books, and on-line media (100% deductible).
■Services performed by independent contractors (BUP x expenses) or (100% deductible, i.e. accountant).
■Supplies and materials (100% deductible).
■Plane fares, hotel costs, meals and rental cars.
The tax law says that anytime your work “requires you to sleep or rest away from your principle place of business”, you may deduct reasonable travel and related expenses (such as meals, hotel, rental car, tips, etc.). IRC Section 162 (a)(2) and Revenue Rulings 54-497, 75-432, 63-145, 75-169, 76-453.
You can deduct 100% of your transportation costs, 100% lodging, 100% of incidental expenses, and 50% of your meals if ½ of your days qualify as Business Days, and fewer than ½ your days are for non-business purposes (“51/49% Transportation Rule”) and the primary purpose of your trip is Business.
You CAN deduct your spouse’s expense if he/she is for a bona fide business purpose, he/she is an employee or owner of the business, and the travel and related expenses would be deductible for him/her even if he/she were making the trip alone.
TALK TO YOUR ACCOUNTANT to see what determines a “Business Day”.
■Taxes and licenses.
■Special work clothing or uniforms.
■Lunches, dinners, ball games, and theater tickets.
For the most part, only 50% of meals and entertainment expenses are deductible. IRC 274(n).
“The Four Requirement Test”;
At the time you decided to spend the money, you expected that there would be a future business benefit.
During the entertainment, you actually talked about things that could produce that business benefit.
Your principal reason for entertaining this person was to actively conduct business.
You incurred the expense so that you could talk directly with the person who could produce a future business benefit.
TALK TO YOUR ACCOUNTANT for the exact rules on meals.
■Security Alarms and hidden cameras (BUP x expenses).
■Health, life, dental, vision, disability, and unemployment insurance.
When your spouse is an employee of your home business, he/she could be eligible for “Employee Benefits” from his/her employer (you), and the cost of employee benefits are deductible to you as business expenses IRC Section 162 (a).
This can include all insurance plan annual deductibles, co pays for doctor visits and prescription drugs, plus non-covered expenses like orthodontics, eyeglasses, contact lenses, dental work, chiropractic, nutritional supplements, etc., Reg Sec 71-588; Plr. 9409006.
TALK TO YOUR ACCOUNTANT ABOUT THIS DEDUCTION, IT CAN BE COMPLICATED.
■Company cars (and even boats).
■Contributions to Employee Retirement Plans.
■Holiday cards, gifts, and postage (100% deductible).
■Internet access fees, web hosting fees, Cable, DSL, or Broadband, computer extended warranty costs, database backup services, merchant discount fees, ink and toner cartridges, software used for business, spyware and antivirus subscription services, firewalls, routers, peripherals, surge protection equipment, conference call services (100% deductible).
■Any expense that qualifies as “ordinary and necessary” to operate their business.
SAVE RECEIPTS
■Make sure to keep all receipts.
OTHER NOTES
“Section 179 Election” allows you depreciate immediately the entire amount of the business assets as long as business use is at least 51%.
■INDIRECT EXPENSES are only deductible to the amount of net income, but can be carried forward in future years for deduction.
■DIRECT EXPENSES are allowed to exceed the amount of net income generated by your home business, and usually can be applied against ALL other income sources.
■For more information, go to www.homebusinesstaxsavings.com.
■Hire and TAX accountant to produce your return. You can deduct the amount of the charge from the accountant, you will have a person knowledgeable of all rules or can look them up.
b> All specified suggestions are Not to be taken as any form of advice. For that,
speak to your tax accountant.
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