Everyone is looking to save money in this tough economy, including celebrities, who are flocking to small business opportunities and network marketing ventures. Why? The fame? The fortune? Well yeah, PLUS the tax deductions. From movie stars to Olympic winners to even "The Donald", home business provides some nice financial benefits.
Death and taxes…kind of the same thing, right? Does the mere thought of tax time send you into a panic attack? It’s that time of year again! Ugh.
Tax time can mean a nightmare of headaches, wasted time and huge accountant bills. It is estimated that the average American works 4 months just to pay off federal and state taxes owed each year. How can we possibly get ahead? The rich seem to get richer and the poor seem to get poorer. Why is that? Well, one thing the rich do that the poor don't is know how to take advantage of every legal, ethical and moral tax deduction available to them.
Real estate is one way to accumulate tax deductions. Another terrific tool that allows you take deductions is having a home business of some kind. Whether it's selling Avon or designing craft items for local fairs, having a home office can save you BIG on tax day. Most small business owners are often concerned about tax deductions because they are not really sure of what items or expenses can legally be deducted and what constitutes a real business. The IRS expectations are that anyone claiming expenses from a business is truly operating, on a profit level, a business.
There are certain standards that the IRS uses to determine what is a legitimate business or not, and any self-employed person intending on taking itemized deductions will want to be within those standards. Once legitimacy is determined, then entrepreneurs will be pleased to know that most work from home individuals never take the full reductions possible. Adequate record keeping and good professional help should aid in working with taxes.
Many of the things you are currently paying for in your home business could be legitimate tax deductions:
• Your computer
• Your internet connection
• Your long distance and cell phone service
• A percentage of your rent or mortgage if you have a home office for your work
• The initial investment costs to start your business
• Office equipment and furniture
• Conferences, classes, continuing education
• Car, mileage, maintenance
* Restaurants and dining
* Entertainment expenses
* Airfare, travel expenses
Items that can NOT be deducted are:
* Gym memberships
* Gifts over $25
I suggest you talk with a tax professional before taking any tax deductions, of course. Having a home business could save you thousands of dollars this year alone!
Just remember to keep good records and consult with a tax professional. Good luck this week!
Sister Thrifty a/k/a Trina Boice