Sly Bald Guys' Blog

I just got back from meeting with my tax accountant to have my taxes done. Every year I meet with him he talks to me about how to play the "tax game" a little better each year. The one thing that he always reminds me is that there are two types of forms that are provided to list the things that you can deduct or "write off," a Schedule A and a Schedule C.

The typical American person or family will use the Schedule A to list deductions such as Medical Expenses, Other Taxes Paid, Mortgage Interest, Charitable Deductions, etc. It is good to have items to list on the Schedule A as it does lower your adjusted gross income (also known as the amount you get taxed on) but, it's not as good as having things to list on the Schedule C. Here's why:

A Schedule C allows you to write off any business expenses that you have accrued throughout the year. Things like Advertising and Marketing costs, Automobile Expense, Rent, Utilities, Insurance, and most other expenses that have to do with a business. How is having these things better? Without getting into the math, having Schedule C expenses write your income down quicker than having Schedule A expenses. For example, having $5,000 in Schedule C expenses will decrease your adjusted gross income by almost $5,000, close to dollar for dollar. Having $5,000 in Mortage Interest may only write your adjusted gross income down by $2,000 depending on your tax bracket. Remember, the goal is to LOWER your adjusted gross income as far as you can.

You may have noticed a couple of the items in the list of things on the Schedule C that you pay on a monthly basis, but don't get to write off; things like Automobile Costs, Rent, and Utilities. Yep, the people that own businesses can actually write off things like their Internet Access, Electrical Bill, Rent, and any miles they put on their car due to business and in 2007 that was 48.5 cents per mile or $48.50 for every 100 miles you drive. That's right, people are actually writing off the things that people like you use everyday just because they own a business.

If you're not happy with your tax return, or having to pay this year, then consider starting a business of some kind. It doesn't have to be a fancy busines that cost a ton of money to start up. Here's a list of 10 Legitimate Business that you can start for $20 - http://entrepreneurs.about.com/cs/businessideas/a/10startupideas.htm

Obviously, I'm not an attorney or a CPA, so don't take my word for this. Contract a tax accountant or tax attorney and find out how to play the "tax game" to your best advantage.