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Wednesday, December 8, 2010

How to Save on your Taxes with a Home Based Business By Janet Callaway

Did you know that your Uncle Sam will actually pay you to start a home based business? That's right, Congress has approved over 100 tax benefits that are available ONLY to home based business owners. These deductions, found in the Federal Tax Code, are 100% legal and 100% audit proof.

Before we look at a few of these deductions and how much money they can put in your pocket, let's look at how much is actually left out of your paycheck. While you know it is not as much as you would like, do you realize how much of your income goes to taxes? When you add up federal, state, country, gas, property, social security, unemployment, etc. the total comes to about 45%. By the time you pay your monthly housing, healthcare, food and transportation costs, you are left without about 20% to pay all others expenses and to enjoy life.

Not a pretty picture. Fortunately, you can change that picture with a home based business. Aside from the money you will make with a home based business, here are 5 significant tax breaks that can put $300-$500/month in your pocket.

1. Home Office Deduction (Renters too; includes % for utilities, maintenance, ins.)

2. Business Use of Personal Vehicle ($1 for every 2 miles plus more)

3. Hire your children (even as young as 6; big tax savings)

4. Healthcare Costs (100% of out-of-pocket costs)

5. Business Travel & Entertainment

The good news is that there are only two qualifiers to be able to take advantages of the above deductions as well as over 100 others. Here's what they are:

1. Operate your business on a regular and consistent basis (the tax courts have defined this as 3-4 hours a week)

2. Have an intent to make a profit.

To learn more about the tax savings available to home based business owners, click on Resources on the right hand side of the page and watch the 5 minute video by Dr. Ron Mueller, Home Business Tax Law Expert. And, of course, contact me so I can give you further details.

Does saving $5,000 a year or more on your taxes appeal to you?

Photo by brianjmatis


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