How to make more tax-free money in 2018
Life is becoming more and more expensive day by day. You are paying for business expenses, personal expenses and paying Uncle Sam. It feels like your wallet is open all the time. There are ways to make tax free money!!! and how to make tax free money?!? that I will explain in the article below. One of the best ways is to save money every year is to find legitimate ways to write off that overlaps, both personal and business expenses. There isn’t any directing list which is included in IRC (Internal Revenue Code), but simple tax principle set forth in Code Section 62. The principle states a valid write-off is any expense acquired in income generation, each exemption has its own criteria.
You should think above the line, that is your Adjusted Gross income line on your tax return form; you may consult an account for that. The meaning of thinking above the line is regularly thinking of your personal expenses which may have a business purpose. If you have a small business project on your tax returns and have a proper business reason for that expense you can convert your personal expense to your business expense and get it deducted.
There are two types of tax forms, W2, and 1099 one is for employee and other for contract and self-employed respectively. The game is to use both of them, paying on your employee i.e. W2 and write-off expenditure from you 1099. There are different personal expenses that can be written off as your business expenses few of them are mentioned below.
1. Saving on your House Rent
First one is the house rent you can save every year, by simply starting a small venture that can be operated from your house or by designating some area of your house for running your business. This area is completely dedicated to your office work. You just need to be cautious about your deduction by following the basic rules, because anything unusual or inconsistent with your income level, that is something the IRS will check.
Measure your home office space, it is recommended do not measure it by yourself, but rather get it done by a professional contractor. If you do it yourself there is a chance that you may rip off yourself. If you have contract0r do it professionally, they will give you a letter stating the exact space required for home office, that you can prove to IRS. Once you have figured out the percentage of your home office and your overall home, then you can figure out the amount that you can deduct for running your business through different utility bills and house rent. you can also check out this amazing book Rich dad Poor dad by Robert Kiyosaki. I personally recommend this book to everyone for tax-free money.
2. Travel Expenses
This write-off sometimes is difficult because it gets hard to draw the line where to stop. You can get your travel expenses deduct if you can justify that your trip was your business trip, you can even get is deducted if you went to Vegas to see a show as long as you prove, you were treating your customer or client. Want to take your partner along with you, you can even get that travel expenses deducted along with 50% on related to meal and entertainment, again as long as you prove that your partner is either your business partner or employee of the business you run.
The tip here is getting all your receipts and put them in hotel envelope. Mention the name and date on the envelope so that you remember the trip. The game is the more correct your record, more chances are that they will be accepted and validated positively by IRS if you get involved in the audit.
3. Other Expenses
There are lot other things you can get written off from your tax, like stationary for your business use, your cell phone bill if you justify the usage for your business, your home computer if you use it for your business, one more thing you can do is and write-off your tax is don’t buy a car lease your car for $400-$500 a month and get all that deducted.
Again the solution to this very simple and very important, proper maintaining of your record so that you easily and clearly justify all your expenses were related to your business use, rather than personal use. Better your record keeping and documentation better your chances for it to accepted by IRS.
The biggest Red Flag is the audit, you should be careful when you want the deduction on your taxes here are few points that will help you be more cautious if you want tax free money. The below-mentioned points will help you in not making that mistakes that IRS picks out.
If you hire any of your family members or get support for them, make sure to document that properly and authentically giving it a special treatment. You have to make sure their job description is aligned with their age and experience. And make sure they are on your payroll just to be more cautious. you can learn more about investments in business and work with family members in this book the intelligent investor by Billy Graham.
Make sure your income generation compared to previous months or previous years is on the same page, because higher the increase in income may trigger the audit against you. It is so the more increase in your income more you are involved in the complex business transaction and more checks being implemented on you by IRS.
Know your accountant
An accountant is your preparer, means he will create your business case for deduction of your tax, it is better to have the know-how of your accountant before consulting him. IRS has developed quite a few software to check the unusual transaction other things. If you get high lighted in audit it is not only you but also your preparer that runs your accounts will be audited. It is better to have your preparer’s knowledge before proceeding further.
If you are nominated for audit in the court, make sure you have representation in the court, because according to their former employee it is good to have representation because nowadays they merely focusing on imposing the tax without any professionalism.
Filing as taxpayer
It is important to file as a taxpayer because if you keep your mind engaged in deducting tax and not paying that is to be paid, you are committing a felony and may do jail time. As experts say it is better to file and not being able to pay than not file because it may lead to serious consciences.
As you get more mature in running your business, you will be able to keep a record of every expense that you make and even get this fixed in your brain that it will become hard for to buy anything before considering its tax purpose. If you are thinking about how to earn tax-free income?!?. You should keep a record of all your expenses and consult with your account at the end of every year to deduct your tax, may sure all the deduction is only a legitimate one, both to reduce your risk of audit and have all the proper documentation in place in case IRS ever comes knocking at your door. Before ending this topic, I will personally suggest you to read this book how to pay fewer taxes by Sandy Botkin.
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