Want To Pay Less Taxes?
With the start of a new year we all realize that April 15th is right around the corner. And, of course, we would like to not owe more to the IRS than planned. Are you aware that home-based business owners qualify for more tax breaks than do taxpayers in any other category? Any part-time business can provide tax savings as long as you operate the business from your home and can save between $300 and $500 a month doing it.
How to qualify? Simply choose a legitimate business and expect to make a profit from the endeavor. (You are not required to make an income from the business but you must intend to receive a profit from it). In addition, you must work at your part-time business regularly and consistently at least 3-4 hours per week.
When I became involved with my own home business over 26 years ago, I had no idea of the tax savings. But I soon learned and took advantage of the savings. If you have ever considered having a “Plan B” in your life, let me briefly tell you about the deductions that you can have when filing your tax returns:
- Your own home office ~ you can deduct $5 per sq. ft. for up to 300 sq. ft. for a maximum of $1500 per year
- Self-Employment Tax ~ you can deduct half of your total taxable income for both self-employment tax and income taxes.
- Utilities, internet and phone cost ~ Utilities are partially deducted as part of your home office expense, your phone (not base cost but business calls) and internet are deductible).
- Supplies ~ Toner, paper, envelopes, etc. + equipment such as computers, printers, etc.
- Equipment ~ can be depreciated over several years or one year
- Repairs & maintenance ~ such as service contracts for business equipment, etc.)
- Retirement plans ~ You can establish individual retirement accounts (IRA) such as SEP or SIMPLE IRAS
- Self-employment Health Insurance Premium ~ can be deductible when making a profit
- Other Insurance ~ portion of your homeowner’s insurance if you have a home office. Also if you have a personal car for business you may deduct a portion of auto insurance (if you are not just deducting the standard mileage)
- Taxes and Fees ~ Property tax on home where you have a home office is partially deductible. Fees for licenses and permits as well.
- Interest ~ Financing costs and credit card interest (when card is used only for business)
- Advertising, Promotion, Dues, Subscriptions ~ all deductible
- Business Travel – not personal and covers transportation, car, lodging, meals and incidental costs. Standard mileage is .58 per mile
- Meals ~ 50% deductible when dining with client locally or meals while traveling on business.
- Transport and Auto Expenses ~ Commuting costs not deductible but if the home office is your principal place of work, traveling to other sites where you do business is. Either take standard mileage deduction or calculate actual expenses and depreciation and multiply that by your business use percentage. Parking, tolls, and fees also can be added to this.
- Professional Services ~ legal fees and tax preparation (separate from personal)
- Business bad debts ~ Any unpaid debt owed to you can be deducted (income must be reported as it is earned, not as it is paid – accrual method of accounting.
As you can see, there are many ways to benefit from having your own “Plan B” ~ Looking back, I never imagined the benefits and now, with Ray being retired, that extra income really helps.
If this interests you at all, this is my invitation to check out my opportunity site here. It is filled with videos of people just like yourself that have taken the leap and shared their stories. I would love to hear what you think.