So Whats Wrong With This Picture

by go4wealth 7 replies
This message was originally placed in the Main Internet Marketing Discussion Forum and was deleted by the administrator. This may very well have been appropriate because I was not sure if saving money by paying less in taxes would be considered as making money.

Other than that I don't think anything else was wrong with the posting. The original heading was "Saving Money Makes More Money" here is the original post exactly as it was posted there.

Would appreciate any feed back.... does anyone think warriors are interested in this type of information? If so what forum would it be beast placed in.. here it is exactly as originally placed

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Since this is about saving money by paying less in taxes hopefully this is the proper forum for this post. If not would welcome suggestions as to the best place to post tax saving tips for warriors. Even though I am moving out of the tax prep business I ran a lucrative tax business and ran a tax school for many years so hopefully I can share something useful in this area.

Welcome any suggestions as to best place to post this type of information
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As internet marketing warriors you are more likely than not to be running your business from your home. There are tremendous advantages to doing so. However there even more advantages to having a home office.

Now some individuals may be wondering what the difference is. Well for IRS tax purposes there is a huge difference. In fact you can have a home office even if you do not run your business from out of your home.

Any business can deduct normal business expenses such as paper, ink, advertisement, equipment etc. And if your business is ran outside of your home normal business expenses also includes the rent or mortgage, utilities, insurance and all other expenses needed to maintain your facility.

In no case, regardless if your business is operated in your home or outside of your home, can you deduct personal expenses. All expenses associated with your residence are considered personal expenses. That means you cannot deduct any part of your rent or mortgage, utilities, repairs or insurance that are used for your personal residence.

The only exception is if you can qualify a portion of your residence as a home office or as storage space for your business. The percentage of space that qualifies as a home office or storage space becomes the percentage of your personal expenses used for maintaining your home that can be converted to business expenses and thus becomes deductible. Since storage space is primarily for individuals who sell and store physical products I am going to focus on the criterion for having a home office.

There are two key tests that a home office must pass.

The first is the exclusive use test. To meet this test you must use a specific area of your home only for your business or trade. Meaning that this room or space is never used for anything else, your children cannot use the room to study or play games nor can it double as an exercise room. All activity must be related to your trade or business. If you do not operate your business from your home your home office can be the location where you take care of administrative and or management activities for your trade or business.

The other test is regular and continuous use. To meet the regular use test you must use that specific area of your home for business on a continuous and regular basis. Incidental or occasional use will disqualify this deduction

Now there are some other nuances that apply to this deduction but we do not have time to cover in this article. However I do want to point out why this deduction is one of the most powerful of all your deductions and why every warrior needs to set up a home office.

1. Unlike business expenses personal expense must be paid in order to live. Your business can go bankrupt, you can go bankrupt but you still must pay expenses for a place to live. Being able to convert nondeductible costs that you must pay into deductible into a business is very powerful

2. Your mortgage or rent are two of your biggest expenses and being able to deduct a portion of your taxes, insurance, repairs and utilities can greatly reduce your tax burden.

3. Unlike your standard mortgage deduction your home office deduction is an above the line deduction. Without trying to explain the difference between above line and below line deductions just know that below the line deductions are good but above line deductions are far better.

4. Home Office deductions associated with your business affect earned income (Note you can also have home office deductions associated with rental properties or non-reimbursed employee's expenses. Neither of these affects earned income). This means that this deduction could help you qualify for special credits that are most often tied to your earned income such as the Earned Income Tax Credit.

If you found this information helpful let me know
#off topic forum #irs #saving money #tax
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  • Profile picture of the author mojojuju
    I don't know why your post got deleted (I suspect it's because of Leprechauns), but this is what I see when I visit the blog in your sig while using Google Chrome..



    Better get that checked out...
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    :)

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  • Profile picture of the author KimW
    If you posted it in main forum and it got deleted then you are asking for trouble by reposting it. anywhere.
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    • Profile picture of the author go4wealth
      Originally Posted by KimW View Post

      If you posted it in main forum and it got deleted then you are asking for trouble by reposting it. anywhere.
      I do not think anything in this post violates any rules except that I may have posted in the wrong forum or maybe something happened to the server in which my domain is hosted as pointed out by mojojuju. So i removed

      However if posting about how warriors can save on taxes is a violation I certainly will cease.
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    • Profile picture of the author go4wealth
      Originally Posted by KimW View Post

      If you posted it in main forum and it got deleted then you are asking for trouble by reposting it. anywhere.
      OOPs just went back and re read the rules... you are right... should not have re-posted...
      My Mistake.... oh well the damage is done

      I will not do it again
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  • Profile picture of the author go4wealth
    mojojuju,

    Thank You. sent support ticket and removed blog from sig line till resolved.
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  • Profile picture of the author KimW
    Wasn't giving you a hard time, just setting you down the right path.
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  • Profile picture of the author go4wealth
    Someone pointed out that I should have posted were info comes from. Here is IRS publication 587.... which has details http://www.irs.gov/pub/irs-pdf/p587.pdf
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