Over the last 70 years, Congress has passed many laws giving Thousands of Dollars in Tax Deductions to average Americans who operate legitimate home-based businesses. However, to help reduce the chance that you will be audited, here are seven quick tips to use when filing your taxes.
* The IRS hates estimates. Even if a tax deduction actually does come out to an even $500, you might want to change it to $497. Even though $500 may BE precise, $497 LOOKS more precise.
* Your "Business Use of the Home" deduction should include ONLY the portion of your home used regularly and EXCLUSIVELY for your business. If you claim your bedroom, be prepared to prove that you don't sleep.
* Personal vehicle used 100% for business purposes. If it's true, claim it. But if you claim it because you have a sign on your car, that does NOT make it automatically 100% deductible.
* Paying your 8-year-old kid $100 a week wages as a business employee. A minor CAN earn up to $5,450 tax-free, but the wages you pay must be "reasonable and appropriate," given their age and type of duties they are performing.
* Claiming a home-office for a W-2 job. This can work, BUT it has to be for the convenience of the employer (your boss), not the employee (you). To survive an audit, have a written,signed statement from your employer (on letterhead) stating that you are REQUIRED to have a home-office.
* Autoship or ADP. If your company's product is nutritional, claiming that you must be a "product of the product" won't pass muster with an auditor. There are other ways to potentially deduct autoship, so don't use this "product of the product" one.
* No matter what, always keep at least a minimum amount of record keeping of what you are doing. Don't let it come back and bite you.
My motto is: It's how much you keep that counts.
Do take every opportunity to reduce your taxes. Don't give away any of your hard earned money.
Matt Ney is married with 3 teenage girls. He has started home-based businesses to provided himself as well as his girls with their own opportunity to generate monthly cash flow. Taking advantage of US tax laws, he has also reduced his income taxes allowing his family to save more for the future. More info on how easy it is to do all this, email me; bodeenmvp73@sbcglobal.net subject taxes
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