The Best LEGAL Tax Shelter in the World-- Your Home-Based Business!
Do you sell on E-Bay or Amazon? Do you troll garage sales or Goodwill for items that you can re-sell? Do you collect beanie babies, comic books, or baseball cards and re-sell them? Are you an artist or a writer? Do you post your articles on-line? Even if you are not yet earning a profit, keep records! Keep your e-mails, and copies of your receipts, and introduce yourself to a new world of spectacular tax deductions that can legally reduce your taxable income and help you start your new, home-based business!
Here's how to get started!
1. Keep your receipts, even if you just throw them in a big shoebox! Write a little note on top of the receipt that shows what the item was for, and keep it until tax time! Even little things add up! Printer cartridges, paper, postage, thank-you notes, internet access, website costs-- anything you buy to help promote your business is deductible! Do you sell on E-Bay or use Paypal? Print out those receipts!
2. Keep track of your mileage-- a huge deduction that is often overlooked! Now, if you just have a regular job, you cannot deduct your commuter miles. However, if you have a home-based business, you can deduct all your miles related to your new business! Did you run to IKEA to buy a new desk for your home office? That mileage is deductible! Just keep track with a piece of notepaper or a cheap mileage log in your car. Even if you only travel 500 miles for your business, that is still equals a $250 dollar deduction!
3. Deduct your home office!! Do you have a spare room that you use as an office? You can deduct that, too! The formula is easy, and most tax software will do it for you. Here's how it works! Let's say that your house has a total square footage of 1000 feet. Your home office is 250 square feet. If you divide 1000 by 250, you end up with .25, or 25 percent. That means that 25% of all your home utilities, mortgage interest, rent, repairs, and improvements. The home office deduction is available for renters and homeowners. According to the IRS, your "home office" can be in a condo, house, apartment, or even a mobile home or a boat, as long as it is your actual residence.
4. You must be able to prove that you are trying to make a profit, so the IRS does not disallow your deductions as a "hobby loss". A "hobby loss" is where the IRS determines that you are basically just playing around, and not actually trying to have a legitimate business. This does a lot of Americans a disservice, because many small business owners do not show actual profits for many years, but they are still trying to run their businesses legitimately. The IRS likes taxpayers to show a profit within 5 years, but this is a loose guideline. I always use Amazon as an example-- Amazon didn't post their first profitable quarter until seven years after being in business! Also, many writers, artists, and other creative folks do not post any profits until many years later. If you have the records, you can PROVE that you were trying to make money! Just stick to your guns and keep your bookkeeping paperwork for at least six years.
5.Then, don't forget, if you are self-employed (have your own business), you can write off a lot of items that you can't write off if you are just working for your regular employer. For example, if you are a part-time writer, you can write off magazine subscriptions (related to your business), professional fees (such as web design and bookkeeping), business books, entertaining potential clients, travel, writing forums, conferences, etc. Almost everything related to your business can be a legitimate expense, as long as you can prove it helps you run your business, be more profitable, or helps promote what you do or sell.
So, follow your dreams! Become your own boss and start a part-time home-based business! You'll save a lot of money on your taxes, do something you really enjoy, and maybe make some profit along the way!
Related Tags: home business, business, tax, taxes, tax help, irs, businesses, e-bay
Christine P Silva, BA, CRTP, lives in California with her husband, two children, and three spoiled cats. She earned her undergraduate degree from San Jose State University, and her advanced accounting certificate and California tax registration from Cosumnes River College. She is the founder of the Sacramento Volunteer Tax Preparation Clinic, a free service offering tax assistance to low income and Spanish-speaking taxpayers.Your Article Search Directory : Find in Articles
Recent articles in this category:
- Guide To Finding The Right Irs Debt Help Solution For Your Situation
Finding the right IRS debt help for your situation is crucial. Where you turn for assistance will de
- The Basic Function Of Accounting
Accounting is a profession as old as the hills. It was a well known practice in the Roman, Ancient E
- The Fundamental Concepts Of Accounting
The Federal Election was held in Australia on 21st of August 2010. During the rather boring election
- Higher Earners Warned Over Tax Relief
Those that fall into the higher earners bracket have been warned that the government may impose furt
- Procter & Gamble Wins R&d Credit Case Against The Irs
On June 25, 2010, the U.S. District Court in Procter & Gamble Co. and Subsidiaries (P&G) v. United S
- 3 Ways To Settle Irs Tax Debt For Less
You can settle IRS tax debt for less if you know your options. There are several ways that you can s
- Five Steps To Finding The Best Tax Lead Company For Your Business
The lead buying business has become an efficient and proven form of outsourcing marketing efforts to
- Truly Effective International Tax Advice
A big concern for the public and corporate business units is to deal with the international tax at t
- How To Avoid Making The Common Tax And Bookkeeping Mistakes?
Even though who consider themselves in the financial loop may fall prey to some of the most common t
- How To Appeal Your Property Tax Bill
The responsible homeowner will want to do a thorough check of their property tax bill to ensure they
Most viewed articles in this category:
- New Tax Rules for the Poor
New tax rules for 2007 will bring about a good year for the poorest of tax-filers in Maryland. Tax-f
- IRS Alert: Tax Payers Need to be on the Look out for Fraud
Tax-Definition.org (http://www.tax-definition.org) is reporting on the second part of the tax
- Income Tax Questions Answered Because of Radio - The World Is a Client of "Better Business"
Having hosted a financial radio program over several years has exposed me to many questions. Some of
- Lost Last Year's Tax Return?
It happens every year. Just when you get motivated to get rolling on your taxes, you realize you can
- Figuring Out Your Tax Return Filing Status
When you are ready to plop down and start preparing that tax return, one of the first questions is y
- 2007 Brings Tax Relief for N.Y. Residents
As of January 1, 2007, New York residents have been benefiting from a decrease in hospital bills, an
- IRS Is Focusing on Schedule C Filers
In the last few tax years IRS has been paying more attention to taxpayers who file a schedule C. The
- Taxes: How To Dramatically Reduce Your Taxes With One Simple Step
How to Make It, Keep It, Protect It. Did you know the federal government may keep up to 65.9% of eve
- Estate Taxes
Federal estate tax applies to the transfer of property at death. The estate of a person who died is
- Deductions Missed In Taxes
The deductions which are often missed by tax payers are as follows: Old points on refinancing: The