Archive for April 11, 2007

How to Create Wealth - The Secret is Leverage

Welcome back to the Wealth Practicum - A practical application of tools, techniques and approaches to creating wealth in the 21st century. Millionaire status is closer than you think.

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5 Things You Should Know About Tax Deductions

Tax deductions are one of the great, if only, things that are good when concerning tax time. We all grudgingly send in those papers knowing that at least we should be getting potholes filled and new textbooks in the school systems.

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Tax Deduction Checklist

A tax deduction checklist is one of the most important items a small business, or home based business, can have. This will always allow you to review it, and refresh your memory as to what is tax deductible and what is not. There can definitely be some gray areas when taking business deductions, but if you are not sure, or if it will raise a red flag, then just don’t do it. It is not worth it. But I have compiled a tax deduction checklist I use, and it is one I put together with my tax accountant.
Automobiles: 2 ways to deduct this, either by miles, or by all of the receipts of your expenses. Personally, I recommend just using the mileage deduction. You will probably be able to deduct more money this way, and it is just plain easy. Write down the number of miles it takes you to go somewhere for business. Then add them up and multiply it by the dollar deduction for mileage. This number may change.
Office: Anything used in the operation of your office, whether at an office, or in the home office, is tax deductible. Just keep receipts.
Bank charges: Any amount of money you are charged through a bank, or through a credit card processing company, is deductible.
Business Gifts: Be careful with this one. If it is truly a gift, then deduct it. But this can cause a red flag with auditors if the amounts of the gifts become very large. It looks as if you are just trying to not pay taxes.
Health Insurance: Any amounts of premiums you pay for your self employment are deductible. This included medical, life, and dental.
Charitable contributions: Any donations made to charities can be deducted.
Professional Fees: If you have an accountant, which files your taxes, and charges you a fee, it is deductible. Same goes for lawyers and consultants.
Depreciation: Check with your accountant on this one. Some things must depreciate over a certain number of years. And, it all comes down to how you label it. If I bill someone for a “Website Design”, they are suppose depreciate it. But, if I call it “website updates”, they can write off the entire amount. Kind of tricky, so be careful.

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