Author Topic: Eliminate your taxes  (Read 5445 times)

NearlyThere

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Eliminate your taxes
« on: July 01, 2015, 11:19:20 AM »
Following from this Radical Personal Finance podcast and a heap more I can't think to link just now (http://radicalpersonalfinance.com/15/), I'd be keen to see what business expenses you guys are legitimately using to reduce your taxes. Be as creative as you like.... although being a mustachian I really don't spend too much all round, so this is hard for me.

First contribution
- Business trips combined with personal trips to offset the personal costs against the unavoidable business costs

If only I could offset my home rates, insurance, electricity heating and food costs, then I'd really be laughing.

sunday

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Re: Eliminate your taxes
« Reply #1 on: July 01, 2015, 05:47:32 PM »
You could offset your mortgage interest and utilities with a home office deduction or reimbursement. Also, my S-corp buys me lunch when I'm working.

Insanity

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Re: Eliminate your taxes
« Reply #2 on: July 01, 2015, 10:20:53 PM »
Be careful about the lunch thing if you are local.  you need to be careful about the lunch thing from what I have been told.  I wanted to do that last year and was advised against it.  I also wanted to do that for my commute, but it is also local.

Home/Office deductions are red flags for audits now.

I honestly don't go as extreme as I could.  I would rather avoid the risk of having "that discussion". 

Axecleaver

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Re: Eliminate your taxes
« Reply #3 on: July 06, 2015, 12:11:14 PM »
I don't take the home office deduction, but I do consider the home office to be my primary place of business, so I take mileage to the work site. Section 179 deductions are great for cellphones, laptops, and other tech used by the business. Any professional services like lawyers, accountants and exotic dancers. Temp office help.

Meals during work hours, or after-work drinks, I take these but since I own the company, I'm limited to 50% of the cost. Most of my meal expenses are with clients, so I feel pretty safe deducting these.

The rest of the expenses are traditional business expenses - supplies, insurance, air travel. I don't play games with the expenses, I keep receipts for everything $25 or more, and make sure I can document every expense I claim. I stuff all these in envelopes marked by month and year, and save these for seven years. Well, they end up sticking around more than seven, but that's the idea. Just went through our basement storage and burned receipts from the 90's... I may have to tune my recordkeeping purge criteria a bit.

foobar

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Re: Eliminate your taxes
« Reply #4 on: July 08, 2015, 06:42:09 PM »

Meals during work hours, or after-work drinks, I take these but since I own the company, I'm limited to 50% of the cost. Most of my meal expenses are with clients, so I feel pretty safe deducting these.


Technically you can't deduct the meals when you are not with a client or traveling for business. There are some exceptions. For example a food critic (or someone that runs a foodie blog) can deduct the cost of eating out as a business expense.

Goldielocks

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Re: Eliminate your taxes
« Reply #5 on: July 08, 2015, 07:56:18 PM »
Training class directly related to skills needed, like time mgmt

elvizzle

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Re: Eliminate your taxes
« Reply #6 on: July 08, 2015, 10:16:47 PM »
When I had my business, here were some things I did to reduce my taxes:

Max out 401k. The 2015 max contribution employee + employer limit is $53,000.

I had my wife be a part time employee and had her salary go towards her 401k.

Christmas parties for employees, which was just me, my wife, and my mom.

Home office deduction

Office snacks.  Food that goes in my home office.

Company car and all associated auto expenses

My company had a lot of revenue, so my accountant said that my expenses were justified. 

TheBuddha

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Re: Eliminate your taxes
« Reply #7 on: July 08, 2015, 10:21:04 PM »
As a truck driver I can deduct ~$15k per year for meals and incidental expenses on the road.

foobar

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Re: Eliminate your taxes
« Reply #8 on: July 09, 2015, 06:59:54 AM »
When I had my business, here were some things I did to reduce my taxes:

Max out 401k. The 2015 max contribution employee + employer limit is $53,000.

I had my wife be a part time employee and had her salary go towards her 401k.

Christmas parties for employees, which was just me, my wife, and my mom.

Home office deduction

Office snacks.  Food that goes in my home office.

Company car and all associated auto expenses

My company had a lot of revenue, so my accountant said that my expenses were justified.

You end up in gray areas. You can hire your wife. But she needs to do work that you would pay an outside person. And getting the 401(k) contribution is great but you might end up paying extra in SS and unemployment taxes. Company cars are great. But you have to remember that any personal use of the car results in taxable income to the employee. And I have no idea how an employee party for related people would turn out in an audit.:) And yes I know a ton of small business people push the limits. You probably will not get caught but you have to decide if your ethical system will allow you to do that.

NearlyThere

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Re: Eliminate your taxes
« Reply #9 on: July 10, 2015, 12:49:09 AM »
Who is to say your business is restricted to one area also?

My blog while in its infancy could become an earner and this business does have associated costs too. Like travel to financial conferences, hosting of the web domain, purchase of new computer for the purpose of blogging etc etc. I know this does become grey but is anything really plain and simple?

Turning your hobby into a job can help.

JennaF

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Re: Eliminate your taxes
« Reply #10 on: July 10, 2015, 02:55:54 AM »
thans for sharing

clarkfan1979

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Re: Eliminate your taxes
« Reply #11 on: July 11, 2015, 09:52:59 AM »
I own two out of state rentals that are close to different sets of parents. When I go visit them with my wife, I stop by each house and fix a few things. I can to write-off all of the travel and 50% of the meals. I probably write-off about $2000 in travel for each rental. They are trips that we would do anyways, so it's a nice way to reduce our tax bill.

MidWestLove

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Re: Eliminate your taxes
« Reply #12 on: July 11, 2015, 07:59:37 PM »
to original poster - just be careful there. I see a lot of crazy talk (write everything to business! No taxes! ) that makes little sense (same as buying the biggest biggest house and have a huge mortgage, think of the massive deduction you can have!).

if business needs something , it needs something - taxes are actually of little consequence
If business does not need something , it does not need it - spending a dollar to get 25-39 cents is still spending money you do not have do.

and if you going to expense things ,get a decent understanding of how it works and good accountant - i.e. same laptop means you now dealing with depreciation schedules, business use of home has its own gotchas , it is not 'free'.


 


Erica/NWEdible

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Re: Eliminate your taxes
« Reply #13 on: July 11, 2015, 08:14:53 PM »
I'm a lifestyle blogger. Highly recommended gig if tax optimization is your goal. :)

NearlyThere

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Re: Eliminate your taxes
« Reply #14 on: July 14, 2015, 11:56:03 AM »
to original poster - just be careful there. I see a lot of crazy talk (write everything to business! No taxes! ) that makes little sense (same as buying the biggest biggest house and have a huge mortgage, think of the massive deduction you can have!).

if business needs something , it needs something - taxes are actually of little consequence
If business does not need something , it does not need it - spending a dollar to get 25-39 cents is still spending money you do not have do.

and if you going to expense things ,get a decent understanding of how it works and good accountant - i.e. same laptop means you now dealing with depreciation schedules, business use of home has its own gotchas , it is not 'free'.

completely agree, its not a saving if it wasn't needed and ALWAYS remain beyond reproach in the eyes of the taxman