Strategies For Limiting Taxes If You Are Your Own Boss

Strategies For Limiting Taxes If you​ Are Your Own Boss
Self-employed individuals always cringe at​ the​ amount of​ taxes the​ pay to​ the​ IRS and state .​
Here are tax strategies for self-employed individuals that reduce those tax amounts .​

Strategies For Limiting Taxes If you​ Are Your Own Boss
The good news is​ being self-employed is​ one of​ the​ best tax strategies out there .​
Unlike a​ salaried employee,​ the​ full scope of​ tax credits and deductions available in​ the​ tax code are now available to​ you​ .​
The key,​ of​ course,​ is​ understanding the​ available deductions and organizing your business in​ a​ manner that allows you​ to​ maximize the​ write-offs .​

The number one tax strategy for self-employed individuals is​ to​ keep receipts for every business expense and write them off .​
Practically anything can be deducted,​ so do it .​
Acceptable expenses include cell phone usage,​ business mileage,​ office supplies,​ home office deductions including part of​ mortgage or​ rent and so on​ .​
If you’ve filed a​ tax return while self-employed,​ you​ are probably already aware of​ this so lets move on​ to​ more specific tax strategies for self-employed individuals.
Maximizing you​ non-capital losses can result in​ major tax savings .​
If your expenses exceed your income for a​ year,​ you​ obviously will not have to​ pay taxes for that year .​
What most people don’t realize,​ however,​ is​ that such losses can be carried forward for seven years and deducted against future income .​
Alternatively,​ the​ same losses can be carried backward three years to​ recover past taxes paid .​
The end result of​ this situation is​ you​ can turn a​ bad business year into an​ income generator by applying the​ losses to​ taxes in​ other years which effectively wipes out your tax bill for those years .​

Another tax strategy is​ to​ look at​ your side businesses .​
If you​ have one business,​ you’ll often have a​ second one that is​ tailored to​ making some money off a​ personal interest .​
While you​ are in​ it​ mostly because you​ like it,​ you​ may not realize it​ qualifies as​ a​ business and can help you​ reduce your taxes .​
Let’s assume you​ are primarily a​ self-employed consultant,​ but also write travel articles on​ the​ side .​
You may view the​ travel articles as​ a​ hobby,​ but it​ is​ in​ fact a​ business .​
If you’ve sold or​ even tried to​ sell any of​ your articles to​ a​ publication,​ all of​ your expenses related to​ travel writing can be deducted from your taxable income .​
This includes trips and so on​ .​
These,​ deductions can significantly reduce your taxable income from the​ consulting business .​
Make sure to​ get a​ grasp of​ your overall business efforts,​ even if​ you​ don’t really consider them to​ be a​ business .​
Consider employing your children to​ save on​ taxes .​
a​ child under 18 that works for you​ does not have to​ pay FICA and so on​ .​
If the​ total wages for the​ year are under $4,​250,​ they will pay no taxes and you​ can write off this amount as​ a​ legitimate business expense .​
Of course,​ the​ child needs to​ actually be doing a​ legitimate business task,​ but filing and similar manual tasks certainly will qualify .​

Tax strategies for the​ self-employed are plentiful .​
If you​ are self-employed,​ consider getting professional help .​
a​ good professional will save you​ thousands upon thousands of​ dollars in​ taxes,​ more than making up for their fees .​
Oh,​ you​ can also deduct their fees!
Strategies For Limiting Taxes If You Are Your Own Boss Strategies For Limiting Taxes If You Are Your Own Boss Reviewed by Henda Yesti on June 28, 2018 Rating: 5

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