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| Hire your children, write off your golf game and other legal tax deductions that you might not know about |
| February 25, 2003 By Laura Tiffany |
So you think the government is out to rob you of all your hard-earned money? Every time you hear the word "tax," you recoil in fear? Cheer up! It's not that bad--especially if you're a business owner. |
| You say that home based business is one of the few legal tax shelters left. What does that mean? |
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| What if your home based business is profitable? How can you still save on your taxes? |
Botkin: By having a profitable home based business, you can set up a host of fringe benefits, many of which I include in my book. You can set up a self-insured medical reimbursement plan and write off all your deductibles, eyeglasses, co-insurance, pre-existing conditions. Usually that stuff has to exceed a certain threshold [7.5 percent of your adjusted gross income] to deduct anything. With a self-insured medical reimbursement plan, you get a deduction regardless. It's dollar for dollar. |
| What other deductions do people not typically know about? |
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| So to protect yourself, you need to do the same paperwork as you would a normal employee? |
Botkin: Good point. You want to have things like time sheets or a tax diary showing what your kid did. So for example, you might say Matthew, my son, sorted files and made 3-by-5 cards for four hours on February 3. That shows what he did, when he did it and how long he worked. |
| Does all this apply when you hire your spouse as well? |
Botkin: Yes, it's all the same. Now for hiring your spouse, you can set up a self-insured medical reimbursement plan. I can deduct all my medical expenses, dollar for dollar--not because I'm paying medical, but because I'm providing a medical reimbursement plan for my employee, who I happen to be married to. And the IRS has approved this, by the way. It's not some loophole I thought up. |
| What are some other techniques for taking deductions? |
You also don't need receipts for entertainment if it's under $75 per expense. Now when you do entertain, the IRS requires certain documentation. So with entertainment, you have to write down what I call the four Ws and an H |
And here's one of the biggest mistakes self-employed people make. You must be specific in the documentation. The word "prospect" isn't specific enough. "Good will" isn't specific enough. Specific would be "try to get a referral" or "talked with a reporter about my book." Don't be general.
If you write down all five things, you'll never have to worry about an IRS audit again. If you leave out any one of the five, your deductions will be disallowed and the IRS will hit you with a 75 percent penalty, plus interest. |
| Why is it so important to make yourself aware of these things? |
Botkin: What amazes me is, say you look at your credit card statement and there's a $200 charge you never saw before. Aren't you going to call the credit card company and find out what's going on? And you might spend an hour on the phone doing that. Yet taxes are the number-one expense in this country. They exceed what most people pay for food, clothing, lodging and transportation combined. [But] 99 [percent of people] give it a 10-minute thought. And the reason is, there's a huge myth in this country. "My accountant takes care of my taxes." |
| What are some audit red flags that people need to avoid? |
I'll give you another nice tip. Many times people call the IRS for information, especially during this time of year. The problem is, the IRS isn't bound to anything they tell you. However, there is one situation where you can call IRS and if you get a bad answer, they'll waive penalties. But you've got to get six things when you call them: The person's name, their badge number, the date of the call, the time of the call, the nature of the question and the answer. If you write down all six things and you get a bad answer that IRS relied on, they'll waive penalties. |
Visit Sandy Botkins site
Tax Advantages
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- of a Home Based Travel Business |
“For Profit” versus Hobby
How to use IRS guidelines to make your home-based travel business a "for profit" enterprise and avoid the dreaded hobby-loss limitations.
Overview
Should your home-based travel activity incur a tax loss in any tax year, you want the activity classed as a business so that you can deduct your losses. Tax law gives no loss deductions for activities not carried on to make a profit. Activities you do as a hobby, or mainly for sport or recreation, come under this limit.
Application
The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations. It does not apply to corporations other than S corporations.
Expectation of Profit
Although the IRS does not require a "reasonable expectation of profit," your facts and circumstances must show that you entered the home-based travel activity, or continued the activity, with the objective of making a profit. The IRS grants a profit motive if you prove that you have a small chance of making a large profit.
Intent
Whether your business meets the test to be a business is a question of fact that depends on an analysis of your intent as determined from all facts and circumstances.
Desire Income
To be a business, you must be involved in your home-based travel business with continuity and regularity and your primary purpose for the activity must be for income or profit. A sporadic activity, a hobby, or an amusement diversion does not qualify as a business.
Presumption of Profit
The IRS presumes you carry on your home-based travel activity for profit if it produces a profit in at least three of the last five tax years, including the current year. You can rely on this presumption every time, unless the IRS shows it is not valid.
Proving Profit Intent When You Have Losses
If you fail the three-out-of-five test, you may still deduct losses if you can prove that your home-based travel activity operated as a business. The IRS lists nine factors that may be important in establishing a profit motive:
1. Businesslike Manner
The fact that you carry on your home-based travel activity in a businesslike manner and maintain complete and accurate books and records may indicate that the activity is engaged in for profit.
2. Expertise
You help your profit motive when you study accepted business practices for your home-based travel activity and consult with those who are expert therein. You especially help your cause when you carry on your travel activity as directed by the experts. Failure to follow expert advice suggests lack of profit intent, unless you can show that your new or superior techniques may produce profits.
3. Time and Effort
The fact that the taxpayer devotes much of his personal time and effort to carrying on an activity, particularly if the activity does not have substantial personal or recreational aspects, may indicate an intention to derive a profit. If you depend on income from your travel business for your livelihood, you show strong intent to make a profit.
4. Asset Appreciation
The IRS accepts profit from appreciation as part of your profit motive.
5. Prior Success
The fact that the taxpayer has engaged in similar activities in the past and converted them from unprofitable to profitable enterprises may show that he is engaged in the present activity for profit, even though the activity is presently unprofitable.
6. Income and Loss History
A series of losses during start-up does not mean the activity is not engaged in for profit. However, where losses continue beyond the period ordinarily required to make the travel operation profitable, that excess period may suggest that the activity is not being engaged in for profit. A series of years where your travel activity produces net income would, of course, be strong evidence that the activity is engaged in for profit.
7. Occasional Profits
An occasional small profit compared to large losses does not show that you engaged in the travel business to make a profit. However, substantial profit, though only occasional, suggests that an activity is engaged in for profit. Moreover, an opportunity to earn a substantial ultimate profit in a highly speculative venture indicates that the activity is engaged in for profit even though you generate only losses.
8. Your Other Income
If you attempt to make a living from your home-based travel business, you usually establish a profit motive and can deduct your losses. Substantial income from sources other than your travel business may indicate that your travel activity is not engaged in for profit especially if there are personal or recreational elements involved.
9. Personal Pleasure or Recreation
Your personal motives for the travel activity may suggest that the activity is not engaged in for profit, especially when you have recreational or personal elements involved. On the other hand, an activity that lacks any appeal other than profit suggests a profit motive. However, your intent to derive profit "does not" have to be your exclusive or sole intent. An activity will not be treated as not engaged in for profit merely because the taxpayer has purposes or motivations other than solely to make a profit. Also, the fact that the taxpayer derives personal pleasure from engaging in the activity is not sufficient to cause the activity to be classified as not engaged in for profit if the activity is in fact engaged in for profit as evidenced by other factors whether or not listed above.
Hobby-loss Limits
If tax law classes your travel activity as a hobby, it limits your deductions to:
- No more than your income from the hobby.
- Reduced by 2% of adjusted gross income - because you report your hobby on Schedule A. Moreover, you may not carry over any unused losses from the current year to any future year.
Planning Tip
Make your travel activity a business, have fun, and enjoy your profits. That way, should you experience a few loss years, you secure your loss deductions.
Filing Tip
Do not agree to make a profit in three of the first five years by filing IRS Form 5213. Instead, make your travel activity a business, keep good records, and attempt to make a profit. Unlike a hobby, if you fail to make a profit in your business, you may deduct your losses.
Fam Trip Tax Deductions
Learn the secrets to writing off 100% of travel agent familiarization trips and using travel rules to sell more travel to your business clients.
Definitions
Tax law allows you to deduct travel expenses incurred while away from home in pursuit of business. If your trip required you to sleep or rest away from your principal place of business, you were away from home and in travel status.
Pursuit of Business
You pursue your business when you pursue your current livelihood. This requires much more effort than entering an activity to make a profit. You travel in pursuit of your business when your travel is:
- Appropriate and helpful to the development and maintenance of your business.
- With the intent to secure a business benefit.
- Customary and usual within your business community.
When you travel in pursuit of your existing business needs, your travel is deductible immediately as a business expense. The law allows the deduction for "carrying on" the business and thus presumes that the business already exists.
Two Categories of Expenses
Your travel expenses fall into one of two categories:
- Transportation to business-destination expense
- Business-day expenses
In addition to travel expenses, you may also incur expenses directly connected to your business activity, such as "familiarization" expenses.
Familiarization Travel for Travel Agents
- Example 1
Deduct 100% of trip to Hawaiian Islands
Anita Flores, a travel agent, plans to market family and group travel to Hawaii. She and Robert, her employee/husband, take a 7-day trip to Hawaii. Each day, they familiarize themselves with and critique local hotels, restaurants, theaters, amusement activities and recreational activities.
- Example 2
Deduct 100% of trip to Scotland and Ireland
Jack Smith, a travel agent and avid golfer, plans to market golf tours to Scotland and Ireland. He and Jill, his employee/wife, take a 15-day trip to Scotland and Ireland. Each day they visit, critique and survey gold courses and familiarize themselves with local tourist activities. - Example 3
Deduct 100% of trip to Orlando, Florida
Pat Jones, a travel agent, plans to market family and group travel to Orlando. She and Fred, her employee/husband, take a 7-day trip to Orlando accompanied by their children, ages 10 and 12, who also work in the business. Each day they visit tourist attractions and the family provides Pat with daily critiques and reviews of their activities. - Example 4
Deduct 100% of cruise ship travel
Tony Alvarez, a travel agent, plans to market cruise ship vacations to families and groups. Every three or four months, he and Melba, his employee/wife, take a 3 or 4-day cruise to familiarize themselves with different cruise lines and destinations. - Example 5
Deduct 100% of FAM trips sponsored by resorts and cruise lines
Even on "no cost" or "free" familiarization trips, you will still be out-of-pocket on some types of expenses. The additional expenses are deductible as business write-offs when directly connected to your business activity.
Caution
Be advised that the burden of proof for such deductions would be greater than normal. You must be able to clearly demonstrate that time and effort is expended to profit from your travel activities. Keep detailed records of your travel activities and promotional activities including written critiques, personal recommendations, photographs and video tapes, brochures and marketing materials, direct mail promotions, speeches to civic and social clubs, etc.
Transportation Rules (based on trip days)
Rule
You deduct business transportation expenses to the extent that your trip passes a test for deducting transportation.
Primary-purpose Test
The primary purpose test applies to the costs of transporting yourself to and from a business destination within the 50 United States and District of Columbia. Under this test, if you spend more days on business than you spend on pleasure, you deduct 100% of your transportation. If your trip is not primarily business, you may deduct nothing for transportation.
General Foreign Travel Test
If more than 75% of your days are business days, you may deduct 100% of the costs of transporting yourself to a foreign destination. A foreign destination is outside the 50 United States and District of Columbia. If you spend 75% or less of your days on business, you may deduct transportation expenses based on the ratio of business days to total trip days.
One-week Foreign Travel Test
You may deduct 100% of the transportation to a foreign destination when your trip involved one business day and is less than seven days, excluding the day of departure.
Foreign Rules Are Clear
Tax law contains clear examples of business days for foreign travel. Although the definitions for foreign deductions are generally stricter than those for domestic travel, they provide a definition guideline that is high useful. Following are the stricter foreign-travel rule definitions of business days.
Work Days
You count as a business day any day during which your principal activity during normal business hours is the pursuit of business. In other words, you must work four (4) hours and one (1) minute (more than half the day).
Tried-to-Work Days
You count as a business day any day that circumstances beyond your control prevented you from actively pursuing your business objectives.
Weekends, Holidays, and Standby Days
Weekends, holidays, and other necessary standby days count as business days when sandwiched by business days during a trip you conduct with reasonable dispatch. The weekend rule applies only where it would not be practical to return home from your business destination for the weekend because of time required or expense involved.
Saturday Night Travel
Airlines generally charge you less if you stay at your destination over a Saturday night. If you save money by staying over Saturday night, you count the stay over days as business days.
Travel Days
Travel days are business days. To ensure business-day status, your total portal-to-portal-in-transit and business-activity time for the day should exceed four hours.
Methods of Transportation
Rule
You may transport yourself to and from a business destination by:
- Automobile
- Airplane
- Train
- Boat
It makes no difference if your car is large or small, if you fly coach or first class, or if it is a private plane. Transportation costs are deductible in full, except luxury boats.
Luxury Boat Deduction Limits
Your water transportation deduction may not exceed twice the highest per diem rate allowed the executive branch of government for travel in the contiguous United States.
Example
On July 7, 1999, when the per diem rate was $180.22, you took a six-day trip from New York to London on QE2. You may deduct no more than $2,160 ($180 x 2 x 6 days).
Car Strategy
Transport family 300 miles toward business destination. Consider driving your car on a combined business and pleasure trip! When you drive 300 miles in direct route toward the destination, the day counts as a business day, just as it does for an IRS agent. Therefore, you:
- Count the day as a business day to satisfy the 51/49 test; and
- Deduct your costs of sustaining life while on the road for that day.
Meals and lodging expenses of family members other than the taxpayer do not qualify for deduction. If the cost of lodging is $80 for single occupancy and $95 for family, you deduct only $80.
Example
You put the family in the car and spend four days driving to and from Chicago and Washington, D.C., for a three-day convention. You then spend six days sightseeing. Your trip is primarily business because you spent 7 of 13 days on business. You deduct:
- 100% of the transportation
- 7 days of sustaining business life on-the-road costs.
Travel for Your Hobby
Should you travel for your hobby, your expenses, including travel, may not exceed your income from the hobby. Worse, you may not deduct any hobby losses - not in the current year or against income of a future year.
Example
You raise dairy cows for a hobby. Your gross income from sales is $1,000. You spend $500 in interest to finance the cows and $900 to feed them. Your $400 loss is not deductible this year, or in any future year.
Licenses in More Than One State:
The IRS notes that some taxpayers have licenses to do business in more than one state. Such taxpayers may have legitimate reasons for business travel.
Get Education Out of Town
You may deduct the travel costs necessary to obtain education or attend a meeting or convention. Tax law does not require study in your back yard, even when the same courses are available there. The Senate noted that a French scholar may deduct his travel to study at the Sorbonne. Similar, a Texas professor deducted the cost of travel and living in Hawaii while studying for her Ph.D. in Hawaii.
Meet With Colleagues
You could travel to meet with colleagues in other parts of the country to learn new skills.
Job Hunting Trips
Rev. Rul. 77-16 holds that you may deduct transportation and travel to seek new employment in your current trade or business. Rev. Rul. 75-120 notes that you may deduct the search expenses whether the search is successful or unsuccessful. The IRS notes that time spent on the search compared to time spent on personal activities determines if the trip is primarily business or personal.
Deducting the Cost of Bringing Your Spouse to the Convention:
Tax law gives no deduction for travel of a spouse, dependent, or other individual accompanying the taxpayer on business travel unless:
- The spouse, dependent, or other companion is an employee of the taxpayer.
- The travel of the spouse, dependent, or other companion is for a bona fide business purpose.
- Travel expenses of the spouse, dependent or other person would otherwise be deductible.
The law makes it clear that your spouse not only must be an employee, but also must travel for a bona fide business purpose. You get no travel deduction when you bring your spouse to:
- Be the socially gracious spouse
- Staff the hospitality suite
- Be the assigned fraternizer
- Type notes, eat lunches, and dinners
The presence of your children at the travel site helps negate the business aspects of your spouse's travel.
Video Tapes at Resorts
You get no deduction for a business seminar that gives you a videotaped lecture that you may watch at your convenience. If you must watch the tape at the seminar or convention site, the video tape counts just as if you attended a live lecture.
Observation
You obviously invite more scrutiny if you attend a resort-based session that consists solely or primarily of video tape.
Convention Delegate
You may deduct the costs of attending a convention as a delegate if you can show that attendance advanced your personal business interests.
Example
You attend the Toastmasters International convention as a delegate. You can prove that such attendance generated more revenue than you spent at the convention. You may deduct the costs.
Travel Cost of Looking for a Rental Property
If your travel results in the acquisition of investment property, the travel is a start-up cost that you may amortize over 60 months beginning when you place the property in service as a rental. We assume here that you are not in the business of investing in real estate.
Attempt to Purchase
If your travel fails to secure a specific property that you identified and attempted to purchase, you may deduct your travel costs as a business loss.
Looking Produces Personal Travel
Generally, you have personal, nondeductible travel when you travel and look but do not buy. This undesirable result occurs when:
- You have no existing rental business to produce general investigatory deductions
- You do not have a rental business in the area to which you travel
- You do not identify and attempt to buy a specific property
Special Rules for Conventions
U.S. Cruise Ship Conventions
You may deduct up to $2,000 for the cost of a cruise-ship convention or meeting provided:
- The meeting relates directly to the active conduct of your business.
- The ship is a registered U.S. vessel.
- All ports of call are in the United States or its possessions.
- You attach written statements, signed by you and the program sponsor, to your tax return.
North American Conventions
You may not deduct a foreign convention unless it is as reasonable for the convention to be outside the United States as to be within the United States. Reasonable is the basic rule. Of course, the law contains exceptions! Convention trips to defined North American destinations do not have to pass the foreign-trip reasonableness test. The defined North American area includes:
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To deduct a convention trip to the above destinations, you must make the trip during the ordinary and necessary course of your business. In other words, you must make the trip for business purposes. For example, you must have a business reason to attend the convention.
Foreign Conventions
Tax law states: "In the case of any individual who attends a convention, seminar, or similar meeting which is held outside the North American area, no deduction shall be allowed under Section 162 for expenses allocable to such meeting unless the taxpayer establishes that the meeting is directly related to the active conduct of his trade or business and that, after taking into account in the manner provided by regulations prescribed by the secretary:
A. the purpose of such meeting and the activities taking place at such meeting,
B. the purposes and activities of the sponsoring organization or groups,
C. the residences of the active members of the sponsoring organization and the places at which other meetings of the sponsoring organization or groups have been held or will be held, and
D. such other relevant facts as the taxpayer may present, it is as reasonable for the meeting to be held outside the North American area as within the North American area."
Technical Note
The Senate Committee Report from which the foreign convention rules originate states: "The bill makes clear that the foreign convention provisions do not apply to normal business meetings for employees of a company."
Examples of U.S. Trips
Example 1:
You travel from Seattle to Miami Thursday, work Friday, standby Saturday and Sunday, work Monday, and return home Tuesday. The six days qualify as business days. You deduct 100% of your transportation to and from Miami. You also deduct your costs of sustaining life for each of the six business days.
Example 2:
Same as Example 1, except you vacation for four days at the end of your stay. Again, you deduct 100% of your transportation. You also deduct the same costs for the six business days. You do not deduct any costs for the four vacation days.
Example 3:
You travel from Miami to Seattle Wednesday, work Thursday, layover Friday and Saturday to save travel costs with a lower airfare, and return home Saturday. You deduct 100% of your transportation. You also deduct your costs of sustaining life for each of the 5 days.
Example 4:
You travel from San Diego to Philadelphia and spend 3 days working and 15 days playing. You deduct your costs of sustaining life for the three work days and nothing (zero, zip) for transportation.
Audit-Proofing Travel Deductions
Timely Records Required
Tax law effectively required you to record travel expenditures "at or near the time" you incurred the expenses. Timely records have a "high degree of credibility not present with respect to a statement prepared subsequent thereto when generally there is a lack of accurate recall."
Diary Entries Needed
Generally, when taxpayers lose court cases involving travel, the lack documentation, mainly entries in a diary.
What to Write Down
You must prove for each travel expenditure:
1. Amount: Amount of each separate expenditure for traveling away from home, such as cost of transportation or lodging, except that daily cost of a traveler's own breakfast, lunch, dinner, and incidentals may be aggregated, if set forth in reasonable categories, such as meals, gas and oil, and taxi;
2. Time: Dates of departure and return for each trip away from home, and number of days away from home spent on business;
3. Place: Destination or locality of travel, described by name of city or town or other similar designation; and
4. Business purpose: Business reason for travel or nature of the business benefit derived or expected.
Receipts Required
Tax law required documentary evidence, such as receipts, paid bills, or similar evidence sufficient to support expenditures for:
- Lodging,
- Any expenditure of $75 or more.
Hint
Keep receipts for all expenses and record the places where you eat the meals, e.g., hotel, Burger King, etc.
Categories of Travel
The IRS lists the following recognized categories of travel expenses:
- Meals and lodging, both in route and at the final work destination;
- Transportation costs, including air, rail or bus fares, and the costs of transporting baggage, sample case or display materials;
- The allocable portion of operating and maintenance expenses of automobiles, house trailers, and airplanes;
- Cleaning and laundry;
- Telephone;
- Public stenographer costs;
- Costs of transportation between an airport or station and hotel, from customer to customer, and from one place of business to another, and
- Tips incidental to the above expenses.
Cleaning and Laundry
To deduct the cost of cleaning your clothes, you must get the clothes dirty while in travel status (out of town overnight). The rules do not require that you get your travel clothes cleaned while out of town.
THE INTERNET TRAVEL BUSINESS
PERSONAL TAX-SAVINGS
ESTIMATOR PROFILE
The best means for saving taxes for the average American is to operate a home-based business. In fact, if you do not currently operate a home-based business you are over paying your taxes by thousands of dollars each and every year. By operating a home-based business and keeping good books and records, any taxpayer can legally convert a major portion of their non-deductible personal expenses into new tax-deductible business expenses and immediately increase the amount of their hard earned dollars they get to keep each and every year. Dollars that can be converted to personal savings and that can be put to work to build personal wealth for you and your family!
The purpose of this estimator is to help you calculate the amount of annual tax savings you can expect by operating your own home-based business. Properly established and documented, your investment in your own home-based business represents a risk free investment guaranteed by the tax laws passed by Congress and imposed by the IRS!
This estimator was prepared by Accounting & Business Consulting, LLC in order to help you determine the amount of tax savings that the average taxpayer could expect by operating a home-based business. You should note that the estimator is designed to only provide you with an estimate of your annual tax savings. Actual results will vary and depend on the ability of the individual taxpayer to keep, record and document all deductions in accordance with IRS rules and regulations. For more information contact us at:
Accounting and Business Consulting, LLC 3303 West Saginaw, Suite D-1, Lansing, MI 48917 Phone: (517) 321-8600 Fax: (517) 321-0410E-mail: Slashyourtax@aol.com
Print this form below and fill it out to estimate your savings.
WORKSHOP TAX-SAVINGS ESTIMATOR PROFILE
1. Estimate the average amount of money you spend on each of
your children per month. This amount should include spending
money, sport and team fees, camps, eating out including school
lunches, trips to the mall, etc. In other words, all expenses that
are above the amount you pay for normal support such as housing
and meals at home. Record your average amount here: $_________.
Multiply this number by 12 and enter here and below in Question2. $_________.
2. How many children do you have between the ages of 6 and 18?
Enter the number of children here:_________. Multiply the number
of children by the total from question 1 above: $_________ and enter to the right. $_______________
3. Do you and your spouse have cell phone, pagers and PDS’s?
If so, enter your total monthly average expense here: $________.
Multiply this number by 12 and enter to the right. $_______________
4. Do you have a computer that has monthly internet and service
fees? If so, enter your total monthly expense here: $________.
Multiply this number by 12 and enter to the right. $_______________
5. Do you purchase newspapers, magazines, books and on-line
media? If so, enter your total monthly expense here: $________.
Multiply this number by 12 and enter to the right. $_______________
6. Do you like to entertain friends and family members in your home?
Please estimate the cost of one evening of entertaining friends
and family members in your home. $_________. Estimate the
number of times you entertain during the course of the year and
enter that number here _________. Multiply your average cost by
the number of times you entertain during the year and enter
this amount to the right: $_______________
7. Do you like to go out to the movies, sporting events, hunting,
fishing, or other similar activities? What is the average amount
you spend on a day or evening for this activity? Enter the amount
here. $_________. How many day or evening outings do you
participate in, on average, per month? Enter the number here _______.
Multiply this number by 12 _________ and multiply this number by
your average cost per event. Enter this amount to the right: $_______________
8. How many miles do you think you drive per year on average?
Enter your estimated mileage per year here _________.
Multiply this number by 65% (.65)_________. This number
represents the number of miles the average person can
convert from non-deductible personal miles to tax deductible
business miles. Multiply this number by 48.5 cents and enter to the right: $_______________
9. How many miles do you think your spouse drives per year
on average? Enter your spouse’s estimated mileage per year
here _________. Multiply this number by 65% (.65)_________.
This number represents the number of miles the average person
can convert from non-deductible personal miles to tax deductible
business miles. Multiply this number by 48.5 cents and enter to the right: $_______________
10. Do you pay for all or part of your current health insurance
costs? If yes, enter your annual cost of health insurance
here $_________. Do you pay any out-of-pocket health care
expenses for your family, such as co-payments, deductibles, or
drug costs not covered by insurance? Enter this number
here $_________. Does your family have any dental expenses,
including braces not covered by insurance? Enter this number
here $_________. Do you have any vision expenses associated with
eye care, such as contacts, glasses, etc.? Enter this number
here $_________ Add up all of your out-of-pocket medical costs
and enter it to the right: $_______________
11. Do you own a boat, camper, motor home or other recreational
vehicles? Estimate your annual operating expenses, including
park or parking fees, annual maintenance costs, fuel costs, etc.
Enter your annual estimated expenses to the right: $_______________
12. Do you purchase season tickets to sporting events, Broadway
plays, or other events? If yes, then enter the amount to the right: $_______________
13. Do you purchase gifts or other items for your spouse
during the year that exceed $500? If yes, please enter $500 to the right: $_______________
14. Add up all the numbers in the far right-hand columns and
enter the total to the right: $_______________
The number you have just entered is the estimated amount of new tax deductions
you can expect annually by operating a home-based business. Now calculate the
average amount of actual tax savings you could expect these deductio ns to generate
on your actual tax return. Multiply the total in No. 14 by 30% (.30) and enter this
amount to the right. This number represents your estimated annual tax savings: $_______________
Copyright by Accounting & Business Consulting, LLC, all rights reserved For more information contact us at: Accounting and Business Consulting, LLC 3303 West Saginaw, Suite D-1, Lansing, MI 48917 Phone: (517) 321-8600 Fax: (517) 321-0410 E-mail: Slashyourtax@aol.com
