US IMers - Tax Season Is Coming

I did that years ago...by hiring an accountant. Also a legit deduction.

Brent

Great tips and reminders. I have always done my own taxes and it really isn't too bad when as you say "you stay ahead of it." Being organized all year makes it quick and simple.

Yup, I've had an s-corp for 5 years now, in addition to the bookkeeping & accounting services we have for TCE. A real business owner cannot do their own taxes unless they are a certified accountant. Nor can you use H&R Block or whatever consumer service you've been using until now.

But it is always a good idea to understand the basics of how tax is calculated yourself. That way you can ask your accountant good questions and make sure they're:

a) taking the deductions they should--not all of them know about everything they can use, and many are not familiar with the IM business model, and

b) they're pursuing the tax strategy at the level of aggressiveness or passivity you desire.

Also you want to be aware of how deductions work. Being an employee is different than being a business owner. Regardless of how you feel about Trump, he and his accountants were doing exactly what they should have to get him to $0 taxes owing. Employees generally do not understand this because their game is to earn as much as possible, then pay taxes on it.

In contrast, a business owner earns as much as they can, deducts all the expenses they are able to based on the aggressiveness of the tax strategy they're pursuing, and then that taxable revenue figure is what the money owing to the IRS based upon. So in business it's not too hard to drive taxes payable down to zero because of your ongoing expenses.

That being said, I'll bet he paid a pretty penny of taxes on employee paychecks. No escape there.

....true but within certain limits.

It's dangerous to give any tax advice other than 'hire an accountant'. You can deduct expenses to a certain point but there are limitations. People too often take forum legal advice as 'fact' and that's not good enough when it comes to taxes.

Know YOUR country's tax requirements and get advice from official tax authority sites or from a professional tax expert.


One of the saddest questions on the forum every year is the one from the marketer who assumed he didn't have to claim online income for taxes ...

TurboTax for life! I can't find a better software than this one - even the guys at AARP who do your taxes for you for free at the library will tell you this. Now learning what documents to file and report has made my life even more simpler. They tell you everything you need to know, and where it's going to shown at on your 1040 and schedule C.

Aren't a lot of the deductions going away (eventually) with the new tax bill?

I was audited by the IRS a few years ago and they did not ask for receipts. They relied on bank statements for expenditures.

If your business involves recruiting new people, such as network marketing or MLM, tax season (Jan-April) is the second top time of the year for recruiting. We show hourly workers how they can save an average $200-$500 per month on income taxes alone just by starting a home business.

Disclaimer: Always consult with a tax professional who is competent in home business income tax laws.