You can make these and other ordinary personal expenses tax deductible.
How would you like to be paid $11 for every 25 miles you drive?
How would you like to write off half the cost of restaurant meals with friends?
How about ruling out a beach vacation with the family?
You have to convert these personal expenses into business expenses. The easiest way to do this is to start a part-time home business.
Your business will have expenses. Rent or mortgage payments, salaries, car, travel expenses, etc. It is no different from other companies in this regard.
The IRS has special rules for writing off business expenses. They can be deducted from business income first, before income taxes are paid. The business only pays taxes on the income that remains after all expenses are paid.
These rules also apply to your part-time business. Most businesses start out small; The Dell computer started in a bedroom, the Apple computer in a garage, Snapple Beverages in a Brooklyn apartment, etc.
You have to give your previous personal expenses a business purpose, so that they become business expenses.
Instead of giving your kids assignments, you give them a paycheck!
I have employed my guys to distribute flyers throughout our housing complex, soliciting people who might want to sell their homes.
As long as their compensation is reasonable and they are paid through a company check, you can now deduct their wages as business expenses. Whether you require them to put the money into your college savings or your wedding is nobody’s business but yours.
If you’re driving to the mall, stop by the local diner to stash some of your business cards in the business card holders above the cigarette vending machine in the lobby. That’s a legitimate marketing expense and makes you eligible for that 44-cent-per-mile driving allowance.
While at the restaurant, you run into a couple of friends who are also interested in your business or products. As long as you properly document the meeting, 50% of the cost can be written off as a business expense.
In all likelihood, your business will show a loss as revenue in the first few years will probably not be enough to support all of the write-offs.
The law allows this loss to be deducted from past, future, or current income from other sources—for example, regular income from your job!
The loss reduces your wages or self-employment income, which reduces your taxes for the year.
This strategy can result in savings of $2-$3-$6,000 per year or more for the average family!
Your CPA probably hasn’t told you about this strategy, either because he/she isn’t into them or because you didn’t ask. It’s also hard to sit down and counsel him when she shows up at her office at 5:30 pm on April 14 with a shoebox full of coffee-stained receipts to get her taxes done.
Home-based business deductions are a specialty and not all CPAs are aware of them.
However, you will need the guidance and support of an accountant or CPA who is knowledgeable in this area to ensure that you take all of the hundreds of possible deductions that you are allowed as a home-based small business.
Also, you will need to be shown how to document these expenses correctly, otherwise you may end up in trouble with the IRS.
In short, you must have a home-based business and you must have the guidance and support of a qualified professional to help you properly document your expenses.
Once implemented, you will be able to reduce your taxes by thousands of dollars each year by converting previously non-deductible personal expenses into tax-deductible business expenses.
Oh yeah, that beach vacation? Why do you think they plan seminars and conferences at the resorts? Generally speaking, as long as you spend more days for business than for pleasure, the trip is deductible! Enjoy!