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 Free Newsletter For
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February 15, 2006
Copyright ©2006 KDM Publishing
Publisher: Donesia Muhammad
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In Today's Issue:
===================
>> Welcome From Your Publisher
>> Home Based Business: Your Ultimate Tax Shelter
By J. Stephen Pope
>> Ezines R Us Ads
>> SubscribeMe.Net Ads
>> Subscription Info
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Welcome From Your Publisher...
===================
Hello again everyone. Sorry for the delay in publishing MIBW.
It has been a hectic past few weeks getting things together.
But I am BACK!!
Since this is tax season, it is time to learn more about your
taxes, especially your business taxes and what you can and
cannot deduct or receive a credit. You don't want to end up
getting audited because of false information, so make sure you
always speak with a qualified tax specialist, before you
submit anything to the IRS.
By the way if you have already filed your taxes and want to
know when your refund is coming, check here
http://www.irs.gov/individuals/article/0,,id=96596,00.html
Have the following on hand
> Full name of person who filed. If filing a joint return, use
the first filer's name.
> Filing status: Head of household, single, married filing
jointly, married filing separately, or qualifying widower
> Exact amount of refund in dollar amount.
http://www.irs.gov/individuals/article/0,,id=96596,00.html
Enjoy today's issue everyone.
Donesia Muhammad
http://DonesiaMuhammad.com
http://EzineAdHelper.com
http://MyIBizWeekly.com
http://ReprintedArticles.com
http://KDMPublishing.com
Questions or Comments
mailto:owner@myibizweekly.com?subject=mibwfeedback
===================
Home Based Business: Your Ultimate Tax Shelter
===================
By J. Stephen Pope
Starting and operating your own home based business is the
ultimate tax shelter.
Although this article has been written from a Canadian income
tax perspective, the principles should be practical in other
tax jurisdictions.
1. Non-Deductible Personal Living Expenses
All of us have expenses that we incur in everyday living.
Either you rent an apartment or house or you own your
residence. Utilities, insurance, rent, mortgage interest,
property taxes, and maintenance and repairs are typical costs
of operating your home.
Likely, you have a vehicle which also consumes large amounts of
cash.
Add to this, dining out, entertainment, gifts, alcoholic
beverages, office supplies, telephone and many other
expenditures, and you have a significant cash outflow.
In most cases, as an employee, retired person, investor,
student, or homemaker, few of these expenses are tax-deductible
to you.
This means that you must earn a considerable income, pay your
income taxes first, and then use what is left to pay all your
expenses.
Some employees may be able to write-off some of their
employment related expenses, if such are required by their
contract of employment. However, even in this situation, the
tax deductions are very limited.
2. Your Own Home Based Business Means Tax Deductions
Now consider the situation where you decide to start your own
home based business.
Suddenly, many of your everyday expenses are now being used for
business purposes and are now tax-deductible.
If you use one quarter of your home exclusively for business
use, you will be able to deduct (or write-off) one quarter of
all related occupancy costs. These expenses may include
maintenance and repairs (that are not capital in nature), rent,
mortgage interest, house or apartment insurance, power, heat,
water, and property taxes.
As well, your vehicle expenses used for business purposes are
another tax write-off. If you use your car ninety percent for
business purposes, you can deduct ninety percent of your
vehicle insurance, gas and oil, maintenance and repairs, car
washes, license and registration, auto club, loan interest
(within certain limits), and other costs from your income. You
may also write-off one hundred percent of your business related
parking. Capital Cost Allowance (C.C.A.) on your vehicle is
also allowed for income tax purposes; depreciation is the
accounting term for this tax deduction.
The Canadian government also allows as a deduction, fifty
percent of your business related entertainment expenses.
Also tax-deductible are business related telephone expenses,
Internet access, office supplies, travel, books, memberships,
and a host of other expenditures.
3. Income Splitting with Your Home Based Business
If you have a high paying job, you will pay higher taxes
because the rates of tax increase as your income does.
With your own business, you can pay reasonable wages to your
spouse and children. In this way, you can legally divert income
taxed at your higher rate to your family members that are in a
lower tax bracket.
This tax saving technique is called income splitting. It is
another good reason why your own home based business is the
ultimate tax shelter.
4. Even a Part-Time Home Based Business Works
Even if you have a full-time job, running a part-time business
can be advantageous.
Of course, you must actually run a real, moneymaking business.
Any attempts to write unprofitable hobbies off will ultimately
fail with the taxation authorities.
If you earned eight thousand dollars during the year from your
part-time business and were able to deduct eight thousand
dollars in car expenses, home office expenses, entertainment
costs, office supplies, and other business related
expenditures, you would have a net business income of nil. You
would pay no tax on this additional income.
Don`t miss this important point! Although these tax deductions
are actual, legitimate business expenses, these are
expenditures you would probably have made anyway, whether you
had a business or not.
Thus, by rearranging your affairs to start and operate a home
based business, you have been able to convert non-deductible
personal expenditures into legally deductible business
expenses. You have successfully sheltered your income from tax
and have split your income with family members in lower tax
brackets.
Yes, indeed, your home based business has become your ultimate
tax shelter.
About The Author: J. Stephen Pope, President of Pope Consulting
Inc., has been helping clients to earn maximum business profits
for over twenty-five years. For more profitable Work at Home
Small Business Ideas, visit http://www.yenommarketinginc.com/
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