"Keep More Money With These Tax Tips!"
By Peg Bastin
This is the second article dealing with tax deductions for
your home business. I'd like to show you how very simple it
is to meet all the IRS requirements with a minimum of
documentation.
Writing-Off Meals and Entertainment Just Got Easier!
The "Associated Entertainment Rule" states a business
discussion held during dinner in a quiet restaurant, just
before or just after attending the theater, makes both the
dinner and the theater expenses 50% deductible.
The Tax Court defines "immediately" as "any time during the
same 24-hour day." If you have a business meeting with a
prospect in the morning, and you invite them to to be your
guest for a round of golf several hours later, the golf
expenses are tax-deductible at the 50% level, even though
you didn't discuss business during golf.
Business discussion doesn't even have to be in person! You
could have a business discussion on the telephone in the
morning, and then take that business acquaintance to a
movie that evening, and both movie tickets will be 50%
deductible under this rule!
Be sure you record the information required to document
each deduction, and be sure to comply with the requirement
that you record that documentation within 24 hours of
incurring the expense.
YES You CAN Tax-Deduct RENT!
The ONLY way the average taxpayer can legally write-off
rent of a home, condo, apartment or houseboat is if you
have a home-based business. So, if you don't have a
business in your home, now is the time to start one.
If you have a home-based business in which you use 40% of
your home in your business - then you can deduct 40% of
your rent as a business expense. You can also deduct 40% of
your gas, electric, water, sewer, and routine repairs and
maintenance, etc!
In this category, for any particular year, you can only
deduct an amount equal to the profit you earned on your
home-based business. Most home-based business don't earn
much profit, in the early years, because we put those
profits back into marketing the business.
If you are not eligible to take these deductions this year,
you can "roll-forward" the amount of these deductions for
up to 20 years!
How to Make ALL Medical Costs Tax-Deductible.
When you have a home-based business, you can hire your
spouse as an employee of your business and give them an
Employee Benefit called "Self-Insured Medical Reimbursement
Plan." All medical expenses not paid under other health
insurance coverage will be reimbursed by your home-based
business. This means any members of your immediate family,
including the kids.
All non-reimbursed medical costs for everyone in your
family, can be deducted as a Business Expense. Costs like
annual deductibles, co-pays, not-covered procedures such as
acupuncture, hearing aids and contacts or glasses.
Over-the-Counter Drugs ARE NOW Tax-Deductible,
If you Have (or will set up) an FSA
Here are the details.
The U.S. Treasury Department and the IRS issued a "joint
guidance," ruling that employees participating in an
employer-sponsored health care "Flexible Spending
Arrangement" (FSA), may claim reimbursement for over-
the-counter drugs, which excludes those costs from your
taxable income. (This applies to everyone currently in an
FSA, OR who has a home-based business.)
Revenue Ruling 2003-102 states:
"Reimbursements by an employer of amounts paid by an
employee for medicines and drugs purchased by the employee
without a physician's prescription are excludable from
gross income under §105(b)."
What this means is that all non-prescription drugs,
including common ones such as aspirin, laxatives and
anti-itch cream, may be purchased with before-tax income.
If you are self-employed, even with a part-time home
business, you can set up an FSA to cover employees of your
business, even if that is just you. FSA's cover
non-reimbursed health expenses of the employees AND his/her
spouse AND all dependents.
That could save many people a lot of tax money!
If you spend substantial amounts on supplements you take
for specific illnesses or health conditions consult with a
home business tax professional for rulings in this area.
Setting up an FSA for your home-based business is not
complicated or expensive, but should always be done by a
tax professional who specializes in home-business tax law.
These tips should give anyone a reason to start their own
home business. Keep records to avoid any trouble with the
IRS. Don't mess with Uncle Sam, but don't cheat yourself
either! I'll be back again with more tips and resources.
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Written by Peg Bastin, who is an avid internet marketer,
glad to help others get started in their own online biz,
with Ron Mueller, author of "It's How Much You KEEP, That
Counts! Not how much you Make" © =01/19/2004
Warning: Do Not File Your Tax Return Until...
You Find Out How To Keep What's Yours. Free details
http://www.bastinmarket.com/taxpreparation.html
Free ebook:
http://www.bastinmarket.com/taxesdl.html
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You have permission to publish this article electronically
or in print, free of charge, as long as the bylines are
included. A courtesy copy of your publication would be
appreciated.
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