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My Individual Business Owner's Tax Reducing Tips came into being when my wife is due to file her Income Tax Return (ITR) in the place where the Land of Lincoln is Situated ...after scanning my tax books and in fact visited my CPA-Lawyer classmate to ask significant tax exemptions.
Among other reasons is that I should know in advance, before the rainy days come in at least I am prepared to deal with. It means when fate allows me in to dine and be near to the Statue of Liberty, least I know the legal escape of taxation even if I am not an accountant.
Saving money is always a good thing. But when it comes to your taxes, it can seem like you're stuck paying the amount you are told to pay. However, this is simply not the case.
While the tax code is rigid and there are a lot of rules to follow, the truth is that many people don't take the time to learn how the rules work and how they can work to their advantage. Simply because they relay so much on their CPA-Lawyer to do the job.
In the situation of boxing champion Manny Pacman Pacquio, it seems that he entrusted to his accountants and lawyer all the preparation...yes of course as the adage goes to state “hire your weaknesses and enhance your strength”....
BUT it does not mean you should not know even a little such as why individual tax payer pays to much compared to a corporate one?
Please bear in your mind that there are two types of taxpayers:
1. Employee also known as Individual Tax payer
2. Corporate tax payer
To all you know the Employees/ Individual Tax Payer have very few deductions available to them. Mortgage interest, standard deductions for dependents, gifts to church or charity, and contributions to a retirement plan, are usually the only deductions available. [Kindly check in your country's tax code and/or Google it!]
For the most part, employees are taxed immediately on what they earn: their "take home" pay is after taxes.
Surprisingly, not single proprietorship or business owner, but a corporation earn money, spend what they want or need to run their entrepreneurial endeavor, including their salary, and Pay Taxes On Whatever Is Left.
Did you know that in every tax codes, the tax deductions available for Corporations include:
1. mortgage interest,
2. rent,
3. utilities,
4. computers,
5. janitorial services,
6. office supplies,
7. furniture used in business,
8. phones, publications,
9. travel expenses,
10. meals & entertainment,
11. medical insurances,
12. gifts to charities/clients,
13. contributions to employee retirement plans,
14. landscaping, or
15. any other expense that qualifies as "ordinary and necessary" to operate the business.
Note well, “Other Expenses that Qualifies as “Ordinary and Necessary” to Operate the business, the same is so broad that imbued with discretionary connotation, hence, will give amount of leeway to corporate moguls to take sidestep taxation.
And now if you're doing a business endeavor yet not a corporate one so your deductions are limited.
BUT I have a challenge in my end so it's up to you to take this.
So here's the challenge: Home and Personal Expenses are NOT tax-deductible, BUT Business and Business Expenses ARE tax deductible. Having a Home-Based Business Pays Off!
If to navigate the maze domain of taxation it says there that to qualify for tax-deductions, the Business Owner not a corporate one must actively conduct his business.
The same must be established to the Tax Agency's satisfaction vis-a-vis the focal intention to derive profit.
Among other reasons is that I should know in advance, before the rainy days come in at least I am prepared to deal with. It means when fate allows me in to dine and be near to the Statue of Liberty, least I know the legal escape of taxation even if I am not an accountant.
Saving money is always a good thing. But when it comes to your taxes, it can seem like you're stuck paying the amount you are told to pay. However, this is simply not the case.
While the tax code is rigid and there are a lot of rules to follow, the truth is that many people don't take the time to learn how the rules work and how they can work to their advantage. Simply because they relay so much on their CPA-Lawyer to do the job.
In the situation of boxing champion Manny Pacman Pacquio, it seems that he entrusted to his accountants and lawyer all the preparation...yes of course as the adage goes to state “hire your weaknesses and enhance your strength”....
BUT it does not mean you should not know even a little such as why individual tax payer pays to much compared to a corporate one?
Please bear in your mind that there are two types of taxpayers:
1. Employee also known as Individual Tax payer
2. Corporate tax payer
To all you know the Employees/ Individual Tax Payer have very few deductions available to them. Mortgage interest, standard deductions for dependents, gifts to church or charity, and contributions to a retirement plan, are usually the only deductions available. [Kindly check in your country's tax code and/or Google it!]
For the most part, employees are taxed immediately on what they earn: their "take home" pay is after taxes.
Surprisingly, not single proprietorship or business owner, but a corporation earn money, spend what they want or need to run their entrepreneurial endeavor, including their salary, and Pay Taxes On Whatever Is Left.
Did you know that in every tax codes, the tax deductions available for Corporations include:
1. mortgage interest,
2. rent,
3. utilities,
4. computers,
5. janitorial services,
6. office supplies,
7. furniture used in business,
8. phones, publications,
9. travel expenses,
10. meals & entertainment,
11. medical insurances,
12. gifts to charities/clients,
13. contributions to employee retirement plans,
14. landscaping, or
15. any other expense that qualifies as "ordinary and necessary" to operate the business.
Note well, “Other Expenses that Qualifies as “Ordinary and Necessary” to Operate the business, the same is so broad that imbued with discretionary connotation, hence, will give amount of leeway to corporate moguls to take sidestep taxation.
And now if you're doing a business endeavor yet not a corporate one so your deductions are limited.
BUT I have a challenge in my end so it's up to you to take this.
So here's the challenge: Home and Personal Expenses are NOT tax-deductible, BUT Business and Business Expenses ARE tax deductible. Having a Home-Based Business Pays Off!
If to navigate the maze domain of taxation it says there that to qualify for tax-deductions, the Business Owner not a corporate one must actively conduct his business.
The same must be established to the Tax Agency's satisfaction vis-a-vis the focal intention to derive profit.
Hereunder are the approaches for one to establish intention to derive profit:
1. The Individual Business Owner must in any way possible establishes him/herself to the satisfaction of the Tax Officer vis-a-vis Tax Agency his/her seriousness in active prosecution of the business by holding regular meetings and/or training session with others in business, example to this you MLM monthly business building conference with your networks of up and downline. Please have it document and keep the bills.
2. The Individual Business Owner establishes by way of best evidence obtainable that he/she is really serious in doing the business endeavor via presenting long distance call logs, receipts for postage, ordering of business promotional literature and products, business cards, products, etc. You need to file, thus, serve as part of documents submitted before you tax agency.
3. The Individual Business Owner establishes "actively running" the business by holding meetings, making presentations, doing mailings, and having customers and prospects.
4. The Individual Business Owner's history of income or loss with respect to the business activity must be "relevant" to "the intent to produce profit." Your Tax Agency certainly would assume that a business with 3 or 4 years (in a row) loss that is not decreasing would be abandoned by the Individual Business Owner if the intent were to make a profit.
NoteWell: If the business is NOT abandoned, then your Tax Agency could assume that the business is for "tax-reduction" and not "profit producing" purposes. If a business does not show a reasonable profit at least some of the time, then change businesses, or get hassled by your Tax Agency over the deductions.
5. The Individual Business Owner deducting "personal pleasure or recreation" expenses - golf, vacations, theater tickets, dining experiences, etc. must meet the "reasonable" and "relevant factors" in the eyes of your Tax Agency.
6. The Individual Business Owner needs a Business Plan with vision and mission statements, target prospects and customer profiles, competitive environment and marketing advantages, as well as sales strategies. The Individual Business Owner may wish to seek advice of an attorney to develop this document.
7. The Business Owner needs to have a customer and/or prospect list, and "work it." Keep copies of mailers, faxes, emails, phone call notes, telemarketing scripts, advertising, etc. And of course your expenses over your social media operations should also be deductible as necessary expenses.
Worth of note is the fact that the aforementioned approaches that should be executed by the Individual Business Owner needs to use professional tax preparers who specialize in home tax law.
Since I am inspired to pound the keys of my laptop supplied by the best innovator of Information Age, I have to continue to share all about tax tips.
Know it full well that there are rules which can help to lower your annual gross income so that you're not only lessening your taxes, to tell you this topic part of the leading few I hold it to remember from the discussion of my former tax law professor now a trial court judge.
But did you know that once you can get deductions over your annual income, you in effect can save a pretty sum for your savings if not for that vacation you've always wanted to take.
In all respect, know that there are two different kinds of deductions that are listed in all tax law: Deductions and Tax Credits. I assume this scenario is similar to the tax law of your country.
Deductions are those costs that are subtracted from your gross income on the front side of a tax form before anything else is taken off. These help to lower your tax bracket first along with the standardized deductions that everyone has on their forms.
Tax credits are those deductions that come directly off of the amount you are to be taxed. Obviously, these are much more significant and will help to dramatically lower your owed taxes.
Here we are now in accomplishing the basic form on Individual Tax Return (ITR) available at your Tax Agency, which the usual from that most individuals use, you need to locate the words deductions either at the front or at the back of the form, thereat you can see the following:
A. Exemptions~that is those people who are dependent on you. You get a tax break for them. This is generally going to be one or two if you don't have any children (single or married correspond with one and two).
B. Medical deductions If you have a lot of medical expenses, you will want to keep receipts and make sure to enter in the totals here. What can and can not be included in this total varies per year, so you will want to check with your Tax Agency what the current rules are. These costs can not be something that was reimbursed by your health insurance company or by another else.
C. Home mortgage interest and points If you own a home, you can reduce your income by adding in the interest that you paid on your mortgage. This is taken off along with any points associated with your mortgage value.
D. Charitable contributions The trick with charity is that you really do have to give a lot in order to make a difference on your taxes. You also need to be sure that you are giving to registered charities in order to have it 'count' with the IRS. Make sure that you get the receipts from all of your donations and place the total here.
E. Casualty and theft losses If you were a victim of theft, you might be able to recuperate some of the losses here. This can be a difficult deduction to justify, so be sure you have the help of a professional tax preparer before you fill in this section yourself.
F. Job expenses Outside of a small business, if you work for someone else and you can deduct costs for supplies associated with your job here. This can also include education costs associated with getting more training for your job or for a future job in which you could make more money.
On Tax Credit:
While tax credits can't help you to increase your refund, they can eliminate the tax you owe. Various tax credits that you can take off of individual taxes include:
a). Earned income tax credit~This is a credit that you can qualify for if you have dependents and your income level falls below a certain level.
b). Child care tax credit~Like the earned income credit, this is taken if your income falls below a certain level.
c). Hope tax credit/Lifelong Learning Credit~This is a tax credit that helps people who are returning to school pay for their costs.
d). Elderly tax credit~If you are 65 or older, you can qualify for this credit.
Furthermore, I would like to tell you in all honesty that I get to know these all little by little in view of my quest to settle down in the land where the Statue of Liberty is located, and other than that to prepare my very self as my favorite statement:
“When the pupil is ready, the teacher will appear”~~Plato.
By getting to know the tax law of where the Land of Lincoln is situated, and where my place of second abode, is not only helpful, but strategic and imbued with reason and practicality.
Moreover, You can also help reduce your overall taxes by, Paying interest on your student loans. If you began to pay off your student interest before you were out of school, you were doing yourself a tax favor.
In addition, if you are making payments that not only attack the principle, but also the interest, the interest payments are all deductible. The government will send you a ticket at the end of the year of the total amount.
I know that there are tax law provisions as to how to maximize deductibility yet failed to cover the same, and asking your end to input-share over here at the box provided below.
Bears stressing to emphasize that some will rely to their tax preparer for the preparation of their Individual Tax Return, but in my end it is best to know the nuts and bolts of doing it vis-a-vis to reduce your taxes.
Significantly, it is best to share that no need to get back to your tradition school system to know these all, but via self-education will give you a fortune.
So again if you have approaches to reduce taxes via the means not repugnant with the established legal precepts, I am happy to have it here, and please place the same at the box below.
ExecuteDifferently!
Jay Maghuyop Tan
P.S. Just a matter of Repudiation, viz: Aforementioned information is for Informational and educational purposes only. Bear to note, the same should not be treated as representations as to accuracy, completeness, correctness, or validity, further the same will not be liable for any errors or losses arising from its display herein.
P.S.II The ideas presented herein expressed solely my opinions and the same should not be construed as financial advice. And to make it real, please consult your investment adviser or study more further before making any investment decisions.
1. The Individual Business Owner must in any way possible establishes him/herself to the satisfaction of the Tax Officer vis-a-vis Tax Agency his/her seriousness in active prosecution of the business by holding regular meetings and/or training session with others in business, example to this you MLM monthly business building conference with your networks of up and downline. Please have it document and keep the bills.
2. The Individual Business Owner establishes by way of best evidence obtainable that he/she is really serious in doing the business endeavor via presenting long distance call logs, receipts for postage, ordering of business promotional literature and products, business cards, products, etc. You need to file, thus, serve as part of documents submitted before you tax agency.
3. The Individual Business Owner establishes "actively running" the business by holding meetings, making presentations, doing mailings, and having customers and prospects.
4. The Individual Business Owner's history of income or loss with respect to the business activity must be "relevant" to "the intent to produce profit." Your Tax Agency certainly would assume that a business with 3 or 4 years (in a row) loss that is not decreasing would be abandoned by the Individual Business Owner if the intent were to make a profit.
NoteWell: If the business is NOT abandoned, then your Tax Agency could assume that the business is for "tax-reduction" and not "profit producing" purposes. If a business does not show a reasonable profit at least some of the time, then change businesses, or get hassled by your Tax Agency over the deductions.
5. The Individual Business Owner deducting "personal pleasure or recreation" expenses - golf, vacations, theater tickets, dining experiences, etc. must meet the "reasonable" and "relevant factors" in the eyes of your Tax Agency.
6. The Individual Business Owner needs a Business Plan with vision and mission statements, target prospects and customer profiles, competitive environment and marketing advantages, as well as sales strategies. The Individual Business Owner may wish to seek advice of an attorney to develop this document.
7. The Business Owner needs to have a customer and/or prospect list, and "work it." Keep copies of mailers, faxes, emails, phone call notes, telemarketing scripts, advertising, etc. And of course your expenses over your social media operations should also be deductible as necessary expenses.
Worth of note is the fact that the aforementioned approaches that should be executed by the Individual Business Owner needs to use professional tax preparers who specialize in home tax law.
Since I am inspired to pound the keys of my laptop supplied by the best innovator of Information Age, I have to continue to share all about tax tips.
Know it full well that there are rules which can help to lower your annual gross income so that you're not only lessening your taxes, to tell you this topic part of the leading few I hold it to remember from the discussion of my former tax law professor now a trial court judge.
But did you know that once you can get deductions over your annual income, you in effect can save a pretty sum for your savings if not for that vacation you've always wanted to take.
In all respect, know that there are two different kinds of deductions that are listed in all tax law: Deductions and Tax Credits. I assume this scenario is similar to the tax law of your country.
Deductions are those costs that are subtracted from your gross income on the front side of a tax form before anything else is taken off. These help to lower your tax bracket first along with the standardized deductions that everyone has on their forms.
Tax credits are those deductions that come directly off of the amount you are to be taxed. Obviously, these are much more significant and will help to dramatically lower your owed taxes.
Here we are now in accomplishing the basic form on Individual Tax Return (ITR) available at your Tax Agency, which the usual from that most individuals use, you need to locate the words deductions either at the front or at the back of the form, thereat you can see the following:
A. Exemptions~that is those people who are dependent on you. You get a tax break for them. This is generally going to be one or two if you don't have any children (single or married correspond with one and two).
B. Medical deductions If you have a lot of medical expenses, you will want to keep receipts and make sure to enter in the totals here. What can and can not be included in this total varies per year, so you will want to check with your Tax Agency what the current rules are. These costs can not be something that was reimbursed by your health insurance company or by another else.
C. Home mortgage interest and points If you own a home, you can reduce your income by adding in the interest that you paid on your mortgage. This is taken off along with any points associated with your mortgage value.
D. Charitable contributions The trick with charity is that you really do have to give a lot in order to make a difference on your taxes. You also need to be sure that you are giving to registered charities in order to have it 'count' with the IRS. Make sure that you get the receipts from all of your donations and place the total here.
E. Casualty and theft losses If you were a victim of theft, you might be able to recuperate some of the losses here. This can be a difficult deduction to justify, so be sure you have the help of a professional tax preparer before you fill in this section yourself.
F. Job expenses Outside of a small business, if you work for someone else and you can deduct costs for supplies associated with your job here. This can also include education costs associated with getting more training for your job or for a future job in which you could make more money.
On Tax Credit:
While tax credits can't help you to increase your refund, they can eliminate the tax you owe. Various tax credits that you can take off of individual taxes include:
a). Earned income tax credit~This is a credit that you can qualify for if you have dependents and your income level falls below a certain level.
b). Child care tax credit~Like the earned income credit, this is taken if your income falls below a certain level.
c). Hope tax credit/Lifelong Learning Credit~This is a tax credit that helps people who are returning to school pay for their costs.
d). Elderly tax credit~If you are 65 or older, you can qualify for this credit.
Furthermore, I would like to tell you in all honesty that I get to know these all little by little in view of my quest to settle down in the land where the Statue of Liberty is located, and other than that to prepare my very self as my favorite statement:
“When the pupil is ready, the teacher will appear”~~Plato.
By getting to know the tax law of where the Land of Lincoln is situated, and where my place of second abode, is not only helpful, but strategic and imbued with reason and practicality.
Moreover, You can also help reduce your overall taxes by, Paying interest on your student loans. If you began to pay off your student interest before you were out of school, you were doing yourself a tax favor.
In addition, if you are making payments that not only attack the principle, but also the interest, the interest payments are all deductible. The government will send you a ticket at the end of the year of the total amount.
I know that there are tax law provisions as to how to maximize deductibility yet failed to cover the same, and asking your end to input-share over here at the box provided below.
Bears stressing to emphasize that some will rely to their tax preparer for the preparation of their Individual Tax Return, but in my end it is best to know the nuts and bolts of doing it vis-a-vis to reduce your taxes.
Significantly, it is best to share that no need to get back to your tradition school system to know these all, but via self-education will give you a fortune.
So again if you have approaches to reduce taxes via the means not repugnant with the established legal precepts, I am happy to have it here, and please place the same at the box below.
ExecuteDifferently!
Jay Maghuyop Tan
P.S. Just a matter of Repudiation, viz: Aforementioned information is for Informational and educational purposes only. Bear to note, the same should not be treated as representations as to accuracy, completeness, correctness, or validity, further the same will not be liable for any errors or losses arising from its display herein.
P.S.II The ideas presented herein expressed solely my opinions and the same should not be construed as financial advice. And to make it real, please consult your investment adviser or study more further before making any investment decisions.
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