One of the biggest lifetime expenses that any American will have is taxes. The more you make, the more taxes you pay – right?
The answer is no. It doesn’t matter how much money you make. It matters how you make your money.
Business owners and real estate investors will always pay less tax then a regular W-2 wage earner will. That’s because things such as home office, auto, cell phone, ISP, travel and the like suddenly become deductible if you can prove a business purpose.
You don’t need to spend money to save taxes. If you find those hidden business deductions that are actually items you already pay after tax money for, and then convert them to legitimate business deductions, you’ll keep more money in your pocket right away.
There are a few rules to taking advantage of these deductions:
- You have to have a business. That means you are legitimately working at a money-making venture. If you’re still in the learning mode, the sooner you take action, the sooner you can start taking advantage of the tax breaks. Start your business today by taking action today. And remember that just because I said “money-making”, your venture doesn’t need to make a profit right out of the gate.
- The expense has to have a business purpose. That means that it is for something that is “ordinary and necessary to the production of income in your business.”
- You have to pay for the expense. If you’re a cash basis taxpayer (most small business owners are) you need to show that you’ve paid for the expense in the calendar year either by a cancelled check, receipt (if you pay cash) or credit card payment slip.
- You need to properly report the expense. An experienced tax preparer can help you file your tax return in a way that reduces audit red flags.
Your own business means you control how much money you make and even more important, how much in taxes you pay. That all means more money in your pocket at the end of the day with freedom you control.
Need help with your tax return? Give Richard a call at 888-592-4769.