How to play the "Tax Game"

[Tyler]

Hey guys, check out my latest post on why the rich get more taxes than others and how to play the "tax game."

http://www.slybaldguys.com/serendipity/archives/186-The-Tax-Game-Why-The-Rich-Get-More-Taxes-Back-Than-You-Do.html

I know we have a lot of CPAs here, so it would be good to hear what they have to say.

[yak]

Tyle good blog. My wife actual just started 2 contracting jobs (Trivia DJ and Avon Rep) ..She is a stay at home wife, typically be we found great advantages to having her do these jobs that have minimal time requirements.

Trivia we can deduct the price of her laptop, milage, and other cost
Avon we can deduct marketing items, milage, internet access, and the list goes on ...

[Tyler]

Yeah, my wife and I tend to have at least one or two active businesses going on each year.  This allows us the tax benefits along with the extra income.

[tomgallagher]

You can only deduct that part that is actually used for business, correct.?

[Tyler]

You can only deduct that part that is actually used for business, correct.?

Correct.  But some things like a cell phone and internet can be fully deducted according to my accountant.  Then again, I'm on SBG everyday, so I use it every day. 

[tomgallagher]

OK...I was under the impression, for instance, that you would have to use your cell phone just for business in order to deduct it all. I like his way better.

[schro]

If I remember correctly, for such home based businesses you must show a net profit in 3 of the first 5 years of operation or it's considered a hobby (i.e., no profits, no deductions, ho business).

[Razor X]

If I remember correctly, for such home based businesses you must show a net profit in 3 of the first 5 years of operation or it's considered a hobby (i.e., no profits, no deductions, ho business).

It's been a while since I've been up to date on tax stuff, but that sounds about right.

[Tyler]

If I remember correctly, for such home based businesses you must show a net profit in 3 of the first 5 years of operation or it's considered a hobby (i.e., no profits, no deductions, ho business).

Yes, this is correct, but does not prevent you from deducting expenses the first couple of years if you lose money.  You just need to makes you make money the last three years.

By all means, if you're going to play the game, do it to make money, not for tax purposes, but to make real money.