Ten Golden Tax Deduction Secrets
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One of the key secrets to tilting the tax laws in your favor is to own your own business and shift the taxing structure to your advantage. In this article, we are going to cover just a small fraction of the 300 deductions that are available to you as a business owner.
But first, I’d like to start with a question: At any point in your life, did your accountant make it a point to do a comprehensive review of the tax deductions that you can put to work for you? If you are like most people, the answer is probably not. I don’t mean that as a slam against accountants. It’s simply a wake up call to the fact that most accountants and C.P.A.’s are simply income tax preparers, not income tax planners. They may do a fine job of preparing tax returns but the information that you are now learning is simply outside the scope of their services.
With that as a background, let’s take some time to highlight a few of the more powerful, yet lesser-known deductions that are available. When I speak at seminars, I often teach people about my Top-Ten favorites or what I sometimes call “The Golden Tax Secrets”. In no particular order, they are:
1. Achievement Awards: Each year, your company can give away to its employees three separate awards. Each of these awards is worth up to $1,600 per year in kind. That means that you can’t write the employee a check for $1,600, but rather, you can present him or her a tax deductible gift (in kind). Examples include ski equipment, a plasma TV, golf clubs, cookware, etc. You get the idea. The gift can really be anything other than cash.
The first gift is for longevity. This is reserved to companies in existence for five years or more. You can present the gift to your longest standing employee and if you are the ONLY employee of the company, then this would definitely be YOU.
The second is gift is for safety. This gift is typically reserved for companies in a risky business like construction or a factory. I suppose rehabbing real estate would qualify.
The third gift is for sales excellence. You can award your best salesperson this award based on their outstanding performance during the previous year.
2. Your Annual Corporate meeting: The law requires you to update your formal corporate documents each year. This includes keeping accurate financial records, corporate resolutions and minutes, etc. So, as the owner of your business, you can combine your annual meeting with a vacation, kill two birds with one stone and make the entire trip tax deductible! And you can bring your family, too.
3. Your Corporate Gym: Unfortunately, the IRS won’t let you directly deduct the cost of your gym membership. However, under section 132 (h) of the tax code, you can deduct the cost of the Gym equipment. So that Nautilus set, your Bow Flex machine, even the Gazelle Trainer that you’ve seen on television – not to mention free weights, a work out bench, etc – are all tax deductible through your company.
4. Business Gifts: Your company can give gifts to individuals of up to $25.00 per year. Often, these gifts are given as year –end or holiday bonuses. But a little known nuance is that your company’s gifts to other companies are unlimited. So I suppose your company could give a corporate gym membership away to your friend’s company. I I can’t see any reason for your friend’s company to provide a corporate gym membership to your company in return.
5. Meals and Lodging: Under section 119, your company can cover the costs of meals and hotel expenses required for overnight stays. These trips might involve researching new products, better sources of supplies, new real estate deals, etc.
6. Put Your Kids on the Payroll: Instead of paying your kids an allowance, hire your kids and put them to work. They’ll learn first hand, the importance of having their own business, and their salary is fully tax deductible.
7. Seminars: Your company can pay for the cost of educational seminars- even if they have nothing to do with your current business. So, for example, if you want to learn how to invest in foreclosures, your comapy can pay the freight. What about things like golf lessons, ski lessons, dance lessons or scuba diving? These can all be included!
8. Dependant Care Plan: The tax code allows you to deduct up to $5,250 for the costs associated with caring for dependants This includes young children and our adult parents who, nowadays often have to turn to us for help.
9. Moving Expenses: Your company can pay the cost of an executive move – whether it is across town or across the country.
10. Your Retirement Plan. Your company can establish its own retirement plan. It can include you, your spouse and even your kids. There are MANY different types of retirement plans to choose from, and a retirement specialist can help you choose the best types of plans for you and your family. Imagine hiring your child, grandchild, or niece/nephew to work for your business and paying them a tax deductible salary which they place into a tax deductible retirement fund from the time they are age 7. You might also want to self-direct that plan into your favorite investments. Just imagine the financial head start that would give them.
And those are just ten of my favorites. There are many more available to help you save on taxes. By applying these tax deductions, along with the other 300 deductions available to business owners, you can save yourself thousands of dollars each year on your tax bill. Take some time to see what deductions are available to you, and be sure you aren’t overpaying your taxes like millions of other Americans!
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By: Drew Miles
I have spent years studying the tax code looking for ways to help people lower their tax bill and keep more of what they earn. I have uncovered several tax deduction strategies that can be used by anyone to slash their tax bill and save thousands of dollars each and every year. I also focus on helping people protect themselves from the potential financial ruin of lawsuits. Drew Miles Find out more and get three powerful tax saving tools at: www.TaxSlashing.com/