How to Make Any Expense Tax-Deductible! | Paul Mladjenovic | Skillshare

How to Make Any Expense Tax-Deductible!

Paul Mladjenovic, Raving Capitalist

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20 Lessons (1h 20m)
    • 1. Promo- Why take this course?

      1:38
    • 2. Visiting the IRS site first...

      5:49
    • 3. An important tax principle: Context

      3:22
    • 4. Screencast: Business expenses...a tour of Pub. 535

      8:52
    • 5. How your passion can give you greater tax benefits

      3:34
    • 6. Recordkeeping...the secret sauce of tax dedutions

      3:38
    • 7. How to deduct BEFORE you are even in business

      2:09
    • 8. A simple scenario showing you great tax benefits

      4:35
    • 9. How to deduct Meals

      3:12
    • 10. How to Deduct an Enjoyable Trip

      2:54
    • 11. Screencast: Pub.463 and Auto Expenses

      7:31
    • 12. How to Deduct a Luxury Cruise

      2:25
    • 13. Screencast: Deducting Entertainment & Gifts

      6:27
    • 14. Deducting the Home Office expense

      4:05
    • 15. SC How to Deduct Kids payment

      3:26
    • 16. Understanding the difference: Assets vs Expenses

      3:59
    • 17. How to Get a Refund of taxes you never paid!

      3:48
    • 18. Screencast: Investing Your TaxSavings

      2:58
    • 19. Screencast Small Biz pension plans

      4:23
    • 20. Conclusion

      0:45

About This Class

From a former tax consultant and the author of Micro-Entrepreneurship For DummiesKEEP MORE OF YOUR HARD-EARNED MONEY!

Learn How to Maximize Tax Deductions and Save Thousands in Taxes

Safely This Year and Every Year!

“How to Make Any Expense Tax-Deductible” will easily give you what you need to know  to maximize your tax deductions

…with the full blessings and guidance of the IRS!

Can you take donuts, meals or vacations as tax deductions?

How about a trip to the mall or a meal at your favorite restaurant?

How about writing off toys, electronics or other personal items?

Payments to your kids or other family members?!

If you do it right…YES…you can write these off!

…and see your taxes go down drastically (or see your tax refund get much bigger). Tax savvy folks work the tax code to gain maximum tax benefits…and you should too! (Hint: a home business helps!!)

You see, properly and legally deducting something isn’t just what you deduct…it is also about HOW you do it. It is more than just keeping a receipt…it is about understanding some very important tax principles and more.

The great thing about these deductions (and many more) is that the IRS will help you do it! This is what I want you to keep in mind…you are not taking my word for it…

You will be able to take these deductions with the full blessings and guidance of the IRS!

This course takes it a step beyond just keeping thousands more in your pocket…it is also about how to use your tax savings to build long-term wealth!

The bottom line is that if you manage your taxes…you build wealth and future financial independence. Click the button below…

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 The video lessons will cover tax topics such as…

* vacations and other trips

* Meals and restaurants

* auto expenses and other forms of transportation

* how to write off a luxury cruise

* Assets vs. Expenses…how to treat these types of purchases

* How to write off payments to your kids (or other family members)

* writing off a home office…save thousands in taxes…and do it safely!

* How you can make non-deductible expenses…DEDUCTIBLE!

* How to get a refund of taxes…that you NEVER paid!

* How to turn your tax savings into an added 6-figures to your nest egg!

* and the proverbial “much more!”.

The great thing about this is that you don’t have to take my word for this…it is straight from the IRS!

Publications and forms are included (I even show you where to find the proof).

About the Author…

Paul Mladjenovic, CFP is the author of Micro-Entrepreneurship For Dummies and did tax preparation and planning for 25 years. He specialized in home businesses so everything he covers in this program is from decades of experience as well as directly from IRS publications.

Transcripts

1. Promo- Why take this course?: how to make any expense tax deductible isn't just the title of this course, but it's also about strategies that you could put into play today, tomorrow and all year round and every year. For that matter, imagine being able. Keep thousands of dollars in your pocket versus paying it out to government authorities. Keeping Mawr of the fruits of your labor. That's what this course is all about. Imagine all the expenses you could be able to deduct and doing it the right way, all because of the program information that's here in this particular course medieval right of things like your meals, automobile expenses, trips. Imagine be able to get a refund from taxes you never paid. You imagine being able to take your tax savings and leverage them so you could add six figures to your net worth down the road or for your retirement. Your nest egg. There's a lot you can do in this program. Consider this treasure hunting. Don't consider it. Oh my God, it's about taxes. No, it's about treasure hunting looking in the tax code, and I'm gonna be your private guide. And who am I? Well, I've been doing taxes for 25 years, and my specialty was a home based businesses. Now, I retired a few years ago from that, but since then, I kept up the education and kept up with the with the research on this. So I give you the best of what is in the tax code today. So what are you waiting for? Come on in and start saving on your taxes immediately. This year and next year and start making thousands of dollars in a way that doesn't cost you anything, is just keeping mawr of the fruits of your labor. Listen, thank you for viewing this hope. I see you on the inside. This is palm a genetic CFT, author, but more importantly, your tax guide so that you can keep more of the fruits of your labor. Thank you. 2. Visiting the IRS site first...: Hello. This is Palma Genetic. And again, you're inside the program entitled How To Make Any Expense Tax Deductible. And just so you know, in spite of the fact that however I'm communicating some of this to you may be in a breezy , a lighthearted manner or it seems casual. The point is, is that everything I'm talking about is straight from the I. R s. And right now you're actually seeing riel time. The website I arrest on gov. So you get a chance. A look at some of this stuff directly, which is, ah, the whole point. Everything we're talking about is within Well, you know the letter of the law, and you're doing everything you can to be compliant. And the great thing is is that for many people look in terms of saving on your taxes, it's not doing anything crazy or aggressive. It's just simply utilizing what's there in black and white. So here at the website, hopefully see my, uh, my mouse going across the main sites to look at here we have Ah, I haven't actually only help screen believe or not. Anyways, if I go back to the home page a moment all right, You'll see what I do. All right. I want you to get it right from when we got on board here. Okay, So now there, this is the actually the main website for the I. R. S. And this is as of November 3rd, actually. So November 3rd, 2016. So you see hot topics and news alerts, etcetera, and the main things for you to look at to help you get you're the full benefit of your tanks. Strategies is credits and deductions. Here's forms and publications and years helping resource is okay. And again, you know, even if using a tax pro, uh, this the more you know, the better off you utilize their than these. Anybody helping you prepare your taxes, tax consultants prepares whoever the more you know, the better they will serve you because what many people do is at the end of the year, they just give their person whatever box of receipts and say good luck. But you should know what these things are before they happen. You know, tax plan doesn't happen, you know, after the years over, and it's tax season and you've got to get things filed or doing a an extension or whatever . You should realize what you're looking for from January 1st onward. Besides just holding receipts over here. Credits and deductions. So you see what we're looking at? Their credits and deductions. And I mentioned in my videos about, like, personal expenses and business expenses here. They actually talk about it. Individual credit, individual and business. Can you just move it up a bit? The credits and deductions here, individual credits, individual deductions, business credits, business deductions. I hear standard mileage. I hadn't I didn't discuss this. I covered this before. Business expenses, more deductions for business. Scroll down some more. Oh, and you get an idea about taking a look at this. So it's very easy to do more deductions. Just click on that for a moment. So you see there, here it list is you could bring him up. Deducting business expenses. Let me just scroll down some more amounts, leaves the area. All right. A lot to take advantage of over here. They're looking business expenses. Yeah, I click on this. What comes up? Everything. What can I deduct? Cost of goods sold. So everything I'm telling you about, you can be able to easily reference in five years. And what can I deduct? Right? What about personal castle expenses? Cost of good soul? That's for those of you were selling products, whether it's an inventory or your wholesaling products. More references to publications that I help you when we scroll down some more. All right on this. Any difference in this business use of your home business? Use of your car. Other times they're business expenses and they even have this. They have a small businesses sinful and self employed site. Hey, look, It is Publication 5 35 and a separate screen camps we covered that can rate the small business and the self employed site Guaracy on operated business. Self employed, starting a business, you know. So they have been if you're going to a corporation or partnership for international business, etcetera. So you have a lot to partake of. And that's all within the confines of credits and deductions and ah, links. The resource is forms and publications. If you're not certain, you come over here and you're typing, you know, uh, but uniform number or a particular word and you can find it. Let me to scroll down some more so you can see more of what we're doing here. All right, so there are a lot of stuff, All the forms you go to prior years, if you like. Here, that's easy. And again, don't get helping. Resource is, you know, you shouldn't be out in the cold. I mean, you know, uh, you know, whether it's your tax prepare, you know, or the i r. S. Directly. Yeah. You could be able to ah, ask a tax question. All right. Sign up for a tax tips. All right. Taxpayer Bill of Rights download attacks counter for businesses. Get a tax i d. Number if you haven't already. And this is No, this is an employer. Even if you are one person operation, you can get a tax I d. Number. All right, so that's not difficult. Free tax preparation. Help. Okay, so a lot of stuff to partake of Just so you know where to go again. This is I r s dot gov. Thank you. And I'll see you in the next video. 3. An important tax principle: Context: All right, Welcome again Today programme how to make any expense tax deductible. And you know what probably may be the single most important word that you have to understand the terms of making sure that your deductions are good and proper, and everything else is the word context, the word context. Because sometimes people ask me pull, is this expense tax deductible? And I I answer, Sometimes it depends. You know, when you see anything being spent out there, somebody is able to deduct it properly. I mean, like, when module I mentioned about apples to zippers what you could be able to write off who can write off apples and zippers. Well, if you have an apple farm or you're doing products with the apples in it, you could probably deduct the coast of apples. Right? If that's your business, right, Zippers? Well, you know, if you are in your habitat, Cherie, you know, and you will sell clothing. Of course, that's part of your materials. When you're creating clothing that's tax deductible. Can you write up donuts? Sure. If you're in a business involved with donuts, you could probably easily dinner donuts, right? And on and on So for you, the most important thing to keep in mind is context. I mean, why can a business write off one thing, but not another? Well, what is proper for that type of business? What is the right context now? Keep in mind. Expenses could be personal or business. Some personal expenses you can take on the personal side of your room off of your form. 10 40 like Schedule A and business expenses taken in the business portion. Like if you're a proprietorship, you take it on schedule C or, if you're incorporated, you take it on your form 11 20 so forth. Various types of forms. But again, what is proper for one type of business is not proper for another type of business and a type of expense that you could be able to take. It's going to depend. For example, you could have two people who can go from the same neighborhood and dual the traveling to say a location downtown, and one person can write off the trip and the other person cannot write off the trip. Okay, why is that? Well, one person went down to downtown because they had a job and it was commuting. And commuting is a personal expense, and that's not tax deductible. Whereas the other person was, ah, Home based consultant, and they went to go visit a client. Okay. In that case, even though it might have been the same exact expenses, one was in the context of a personal expense. Commuting the other one was in the context of a business expense, and therefore it was tax deductible. Okay, context means everything. It's one those words that you could have a difficult time finding a tax code. But once you understand context and understand what's a business expense and what's generic and ordinary and reasonable for your type of business, then you'll understand all right, and then be able to do it properly. Okay, if you're never not. Sure, obviously, just bring us up with your tax person and discuss it and look at the publications that come along with this program. All right, life exact for General business expenses, Publication 535 and I give you a little tour in the next video on that, so don't forget context, one of most important, if not the most important word for you in terms of your overall planning for this year and next year about those expenses and how you make these things proper, legitimate and deductible and how it's not. Thanks for viewing, and I'll see you in the next video. 4. Screencast: Business expenses...a tour of Pub. 535: So you load air. Welcome back. This is Palm Lee. Jennifer could get in the program how to make any expense tax deductible. And what you see in front of you is publication 534 again straight from the IRS, and this is on business expenses. And even though this is 2015 again, I'm doing this in November 2016. Um, generally, 99% of the information will be a applicable to the year 2016 and they're gonna release the 2016 version of Publication 5 35 No, probably in early January. Sommella means get your hands on a copy soon enough. When you take a look. Discover is the general realm of business expenses and also what qualifies as a business expense and what doesn't qualify as a business expense. And they always give you what's new for 2015 and even what's new for 2016. So this will definitely have value for you. Chapter one, having looked business expenses and goes into a variety of different categories as well as you move down taxes, interest rents, amortization depletion, business, bad debt, and we'll even take a look at Chapter 11 other expenses. You could take a look. It is also how to get tax help. The great thing about this is you can deduct it, but that doesn't mean that you are Ah ah, you know, you're stuck that you have to guess about this. Now, let me just go down. To importantly, as the first section tempted one is deducting business expenses. So please, by all means, go here. So you get a general overview. I mean, you have to read every page of this. By all means, you know, you're your tax person. Should be a familiar with this. So, uh, so you could be able to just know the generalities of it. Then let them work out the details with you. What? You can deduct how you can deduct it and so forth. And here what can I deduct? Let me just to cover this little paragraph to get you on the straight and narrow with this all right. To be deductible of business expense must be both ordinary and necessary. An ordinary expenses, one that is common and accepted in your industry. Unnecessary expenses, one that is helpful and appropriate for your trade or business. And an expense does not have to be indispensable, you know, or that one that you have to beg your forced to pay to be considered necessary. So given that ordinary and necessary are two very important words and just on the stand this nobody knows what's ordinary necessary mawr than you do. Yes, the Iris has basic ideas about this, but the great thing is, is that you know you're the expert as well. So when it comes to deducting some of these expenses, it's not just a tax law or your tax person who is there to help you or the documentation involved, like receipts And such thing is ordinary and necessary is a very important concept. And you should know better than anybody what is ordinary and necessary in your particular business. So let me just say shoot down here somewhere. There's a lot of stuff here. How much can I deduct? They go into personal versus business expenses and like example, general, you cannot deduct personal living or family expenses. All right, And remember our video what we talked about, the difference between you know what makes something personal or business. It's the context of the purchase if it's in a benefit your business, even though it looks personal. But it's bona fide, Lee and legitimately a business expense. Then that could be all right. Um, and it goes further into this a swell and even interest now business use of your home. You see right there business use of your home and business use of your car. It goes into very clearly written ways of you to help you understand the concepts Now business use of your own. My some of you know, I do a program called the Home Office Tax Kit, which goes into business use of your home because I think that such an important one and so relevant and so, um so valuable to you by itself, business use of your home is worth thousands of dollars to you year in and year out. So I do a home program. Just finance what year you get a general idea about this business use of your car. Definitely mileage and so much more You'll win. Can I expense it? So I'm just gonna scroll down. Go away, Teoh. You know, Let's see here. I'm going to go all the way to Ah, chapter. Chapter 41 is which is gonna put down the middle. So forgive the how fast I'm going here. OK? But as you can see, look, it goes into a wealth of information. Is the start, Of course. Look at this. In other words, sometimes you may have costed and deductible even before you started the business. That's right. Imagine if there during 2015 you were researching businesses and saying You finally started when the year after keep good records because you may be able to have the deduction. Babel is a startup cost, it's called, is referred to as Amadeus Ammons. I am. It is I advertising costs. The start, of course, could be advertise herbal. So by all means and how to Amer ties. You see it over here. You have a lot of great stuff here, partake of. It's a soon as possible, so forgive quickly. I'm going. I just want to get down to, uh, Chapter 11 towards the bottom is 53 Beijing. It covers an awful lot of even things that you might not come across like oil and gas wells and depletion and things of this nature already. And, uh, so forgive up quickly. A Chapter 10. We're almost there, OK? Business debts, you know? So you have somebody able to deadbeat was not paid you back? You might be able to, uh, all right. That becomes I'm gonna come down here and look other expenses. Look, how much more standard mileage how you could be able to write off using your carpet business purposes. In 2015 it was 57 a half. A sensible mile do doesn't 16 54 cents. They're assuming that the general cost of operating a vehicle is less in 2016 in 2015. But look at his travel in and meals be able. Write that off. We're gonna do a separate video just for that. Okay? And look at so much more that you're able Teoh duck car allowances, miscellaneous expenses, advertising when that's on miscellaneous. I mean, if you expending anything on advertising at all, or marketing or promotion, those air usually, uh, tax deductible. All right, All right. So, basing with 1/2 year right. Demolition costs, club and dues credit card fees. If you, uh, use a credit card for business friends actions and the the fee that's and encourage on behalf of the business that can be deducted as a business expense. So continue reading about that. So tax preparation fees, somebody helping you, you could be able to deduct it. Okay, lets see legal and professional fees. Internet related expenses. Look, it's generally you can deduct Internet related expenses, including domain registration fees and Web master consulting costs. All right, so again, a lot of what you need to do online can be deductible as long as it's related to your business. Bona, finally, your business and you can see so much more. And then here, Chapter 12 is on how to get tax help. If you're not sure about a business expense, don't be shy. Give him a call. They have, ah, business centers, you know online as well. So, uh, there's plenty of ways to, uh, take help and see. The important point I think I made to people is that whenever you're ready being, you're doing your business expenses and etcetera. Look, you know Lauren before your filing, a tax return you have the resource is you can reach out to people and you can know this long in advance. So getting your record keeping system in line and understanding basic concept like what's ordinary and reasonable in terms of your business, all of this will go a long way. Because for you to save a small fortune in your taxes is not because you have receipts and that because you know, you, you hurriedly do this during tax season. You should make you know the idea about understanding business expenses and what sword in reasonable. And if you're the concepts that you should be second nature to you all year round so that for the full year you're busy deducting expenses, you know, and doing it the right way. Okay, So thank you for viewing this video this little tour on publication for 5 35 see you in the next video. 5. How your passion can give you greater tax benefits: How often have you heard the phrase? Yes. You should be passionate about your business. You should do what you love and love what you do and all that sort of stuff, you know? And just to put it in perspective for you in this program now, I'm not gonna give you a ride, ride or positive thinking or whatever. I mean, but you should be doing that stuff anyway, right? Then you should be enjoying business. It should be your passion. But I want you to take this important point that you've heard from a lot of business starts of gurus about having a passion in your business to really? I want you to flip it around and look at it from a tax angle. I think you choosing business that you have a passion in will help you maximize your your tax strategy. Without a doubt, for example, let's say you have a passion for movies, okay? And so you decide to do a movie blogged, you know, or some type of business related to movies. It would make sense because if you take a look at your situation and see what you spend a lot of money on in your personal life. You know, if you spend, think about this is where you need to win. Analyze your personal situation like as the year ends, take a look and see what you spending a lot of money on. Odds are beside the necessities that you're spending a lot of money on, things that you have a really interesting. I mean, if you're the type who loves restaurants, for example, and you're spending thousands of dollars on restaurants, then why not? If you're considering a business and you don't know what is it to be in? Why not consider doing a business that is aligned with your passion and what you're spending money on? Because in that regard, you could take an activity, turn it into a for profit legitimate, bona fide business. But now those expenses that would have been personal before. Now they're part of your business. Now, the chance to make the deductible grow that much better. So passion absolutely have passion your business. But keep in mind that that will help you choose the right business from you. From a tax efficiency point of view and a tax savings point of view, review your budget. Take a look at what you're spending a lot of money on and how much better would be if those personal expenses which again from a tax point of view, are wasted down the drain? I mean, you enjoying it? But I'm talking about again from attacks. Angle from a tax perspective, consider having that as a business. Now, second point is this If you're already in business and you love what you're doing but you have a hobby out there and you're doing doing something there, you're really enjoying Well, why not make that a second business as long as your first business and your second business are are separate our books separately and accordingly, the things that are ordinary, reasonable physicians are in this one, like it could be in a schedule C, for example, you could be one reporting, and yet one could be in a separate reporting that what you keep it separate. Bifurcated and incoming expenses and proper business expenses are by for gated and done properly that all of a sudden you're able to convert personal activity in tow business activity, which becomes in a bona fide legitimate business source for you. Okay, So keep this in mind passion that way before expenses that were not ordinary, reasonable for that type of business. Now, because it is a business and the obvious is expenses. And you are doing a for profit bonified pursuit that all of a sudden those become ordinary and reasonable expenses for your type of business. And therefore you able to do Maurin terms off deducting MAWR in terms of reducing your tax liability, more money in your pocket, more money you could devote to other purposes. You know, for your sake down the road and truly maximizing your situation, your passion and your ability to deduct. Thank you for viewing, and I'll see you in the next video. 6. Recordkeeping...the secret sauce of tax dedutions: Alrighty. Welcome back. This is Paul Meligeni, Vic. And what you see in front of you here while you're inside the program of how to make any expense tax deductible is one of the first pump publications you should be looking at whether you're starting a business or you're gonna be doing taxes. Oh, are you reporting your first year of being in business? And that is publication 583 starting a business and keeping records. So it's a fairly straightforward publication. I mean, they've made publications much more readable in recent years, which is always a plus. What new business owners need to know? I'm trying to have a business sold there. Those who you're not sure about how to get a night. Thanks I d number. Or whether you even need one. This will help you out right here, because I just keep in mind that for many of you who are freelancers, for example, your social security number is an acceptable time. Psyche number the I arrest. So it may not always be necessary or a tax i d number have. You know, of course, Somalia. But right it should I do attack. You can also give you a little warning about things such as what? This is thanks that would be aware, of course, everyone's income tax, self employment tax really like Social Security and Medicare access. Employment easily noted publications from here and this part of a deal publication is included with the program, so over cover ready made copy. I know it's for the found 15. But do it will come, general by January following year when I get an opportunity to include 2016 ZAY will. But by and large, you know, very little, infinitely interesting you start hearing it was new Congress like, Is this a whole keeping? This is an important one, because for you to play with fixed Sinuses, it just what you also You got a lot to do. Its part of me moving around too much. But to tell you what, why keep records? That said, it makes it very clear when to keep track of deductible expenses, the kinds of records to keep Yeah, they talk about receipts, etcetera. And of course, the better Your records aren't the better off you're gonna be. So this publication. Ah, so I guess the important point to keep in mind is, is that you know, there is no mystery tous a long before anybody inquires. Or once I look into your transactions long before years before you know exactly what's necessary, what to hold on to, and it's a matter of doing it. So this becomes second ation instead of trying to do it at the end of their full years over with. You consider doing it like five minutes a week, our, you know, half on hour a month and now many caps and software packages to make regarding goes to go back to the home page for now. So go get your copy of you and thank you kindly saw the war to see you next video. 7. How to deduct BEFORE you are even in business: Could you write off expenses before you're even in business? Is that possible? We'll believe or not. It is possible. One thing I'd like you to take a look at and discuss with your tax person about a concept called startup amortization. How does that work? Let's say, for example, that during the year 2016 you were doing research into a business. Maybe you went to a conference. You had to take a trip to a business site. You know, you have to spend money on, you know, something researching and investigating a business that you were thinking about getting into. And let's say you had spent $5000 already. But again, you were not even in business that you haven't started. You haven't started soliciting or marketing for anything yet, but let's say that 5000 was spent before you got into business. And then afterwards you did get into business, okay? And then you started late at, say, the beginning of the new year with a brain new business. Are those $5000 lost? No. Think about this. Before you start researching a business, talk to your tax person about what qualifies you be surprised what qualifies. But in that case, if those $5000 were used to start an enterprise or research or investigate an enterprise, and then later you started the enterprise in a subsequent period, then take a look. Speak to a tax person about startup amortization. Startup Amortisation is finally the same tax section when you talk about the appreciation and some of you know depreciation means you take an asset and you can write it off over a number of periods, like expensive it on the installment plan. Startup amortization works. Similarly, where that $5000 you may get the opportunity to write it off over five years going forward and therefore 1000 1 year, 1002nd year and so forth. Okay, every business a little bit different. I don't know what you're researching, but it's good to know in advance about startup amortization, and you might pick up an expense that you could be able to write off even before you started a particular business already. So look at the accompanying PdF, and I'll tell you more about started glamorization. Thank you kindly and I'll see you in the next video 8. A simple scenario showing you great tax benefits: Okay. Hello. This is Paul Mladenovic. And what you see upon the screen is actually a spreadsheet. And it does accompany this video here with the course. And this is actually just a simple projection, because I want you to see the potential for what happens when you make the effort Teoh tractor deductions and see what you can squeeze out of your situation. I mean, you and I know that when you're running a business, you know, it's difficult to make a profit. You know, it's not always as easy as you see projected out there and in this example spreadsheet. Keep in mind, this is not meant to be an actual spreadsheet that you can use to prepare your taxes. It's meant for projection purposes only. All right, because would tax software used the attack software or your tax person with their assistance? This is just giving you an idea about what you're able to do. And I'm using a schedule C example again. Now he I'm giving you two scenario scenario one in scenario two. And what would you do with your deductions now, in this case, noticed, I've given the same gross income all right. In other words, you didn't make $1 more in terms of gross income. This is purely from how well you played your tax deductions. Because every single tax deduction you dio lowers your net income, of course, but also means you have the potential of saving on more than one particular tax. All right, so he had gross income. I put down 10,000 expenses of $5 which means net income in the first scenario is and that income of $5000. Then we have a Home Office expense because that's usually, uh, tabulated separately from expenses in terms of your schedule C. And they're your taxable net business income is $3000. Okay, and of course, that's taxable. All right, and again, your tax person should be aware that this goes against is obviously taxable. But in addition, things could go against this, like to stay in the deduction, itemized, etcetera. But in this situation, let's assume that your federal income tax rate is 28% and let's assume you're self employment taxes 14% again, this is not Agnes is just meant as an example. So you see the principle behind this and your state tanks, I'd say 3%. So on the taxable business income of $3000 28% is $840 self employment tax will be $420 estate tax would be, say, $90. And when you add these expenses up, your total taxes will be $1350. All right. But now, if you were applying all the strategies in the course that was presented, and you're doing the receipts and taking mileage and you know everything else and planning your situation accordingly to really maximize your tax deductions here, what if during the course of the year, you only found $2000 extra in expenses? In this regard, notice what happens here instead of 5000 in expenses from the first scenario you have in scenario number 2 7000 which means now your net income is 3000 and again using the same home office expensive 2000. That means your taxable net business income is $1000. All right, now what now? Applying the same amounts 28% and 14% and 3% you come out with these amounts total taxes that would come 450 which means that just those deductions that you were able to track and be diligent about all year round produced for you an additional $900 in your pocket, right, Because instead of you know, taxes of 1350 your taxes were lowered to 450 because you were diligent and found more in the course of your year. And finally, a few $1000 extra in the course of a year is not difficult, especially since if you're doing this beforehand and you know what you're doing and you plan it accordingly. It's not that difficult. And in this situation means an additional $900. Okay, so with the spreadsheet putting plug in your numbers, what would it be if you didn't do in your situation? Put in your gross income, you know, putting your expenses and then see what would happen if you started applying mawr of the things in your situation. All right, so take a look at this and again, this is just meant as a just a very simple estimate. A very simple projection. Do not consider this as they say, something you could use to prepare your taxes again. There is, you know, bonified tax software for that, because every year is different and everyone's difference. And this is just meant as a sample scenario. All right, well, thank you for viewing, and I look forward to seeing you in the next video. 9. How to deduct Meals: can load air. Welcome to this screen cast. And on this brief screen cast, I'm just augmenting the the live talking video I did about meals and over here for travel, entertainment, gift and car expenses. This is gonna publication for 63 And as you come over here when you're deducting Ah, travel meals, it you could be able to click on a number five again. This is a pdf that stared with your program, so that's fine. And as I come down here, uh, if you take a look, just remember, we talked about gifts and a prior video, just transportation and in a separate video and record keeping, this is what I just want to take a look at and over here, how to prove expenses. It's on page 25 So I'm gonna go there right now. They look and see this on page 27. How long to keep records and receipts So it's all laid out for you very easily, so that you never have an issue. So we just move this over so you can see this better very go recordkeeping and being more simple in it, right? And what I had mentioned about proving expenses. This goes into Chapter five record keeping. Pretty much it backs up what I've been mentioning. What are adequate records? We talked about canceled checks, bills, etcetera, receipts, support the expenses. And if you scroll down and give you exceptions, sometimes you can deduct something you bought out that particular receipt involved. And what are the conditions for that? So that's definitely available. And the adequate evidence I even mentioned to you about, You know, how do you prove the travel stuff? It's all here. School down on approved expenses. One thing you may want to take a look at is if you come down here table table five. How to prove certain business expenses. It was travel and entertainment, all right, and business purpose of business relationship. This is a very important column for you. The area just relates to things such as your receipts and your times and destinations. So because I scrolled all right here entertainment, which includes the things we were talking about in this particular video, and they even tell you how to keep a particular a lot like I do a spreadsheet where I put down and you're the the amount of a meal out. I pay for it. So I have a receipt check. You know who did I meet? Business purposes. And this is just backing up what I discussed in the video. All right. And so here's another table that I help you out with the traveling expense entertainments. So this augmenting with the actual documentation, like receipts and such and credit card statements, uh, and even breaks that down as well. So recordkeeping. Very easy. And it's looking definitely with the meal sign And what will document it as a business meal ? All right, so, uh, I will leave it at that. Okay, So go take a look at the pdf that comes with your A program publication for 63 and I'll see you in the next programme. 10. How to Deduct an Enjoyable Trip: Can you write off a vacation? You know, you know, some enjoyable trip that you're out, then that's usually a vacation. Or at least we hope it's a new, enjoyable trip. Can you write that off? No. Vacations are personal in nature, and therefore they're typically not tax deductible. Ah, but what if it's a business trip? Now we're talking business trips are tax deductible, you know, included things like flight or whatever. Car train, whatever. You know, Boat. And also you're talking about lodging as well and any associated costs as well during the cost of the trip, as long as it's business related. Okay, now. But here's the thing, though. What the difference with the vacation and a business trip in terms of your enjoyment? All right, well, here's the thing to me. You know, the iris doesn't care if you enjoy your business trip or not. The point is, what was it for? A bona fide legitimate business purpose. And here's what I got to tell you something. You know, I have been on vacations that I hated. Okay. Dry being and Disney in the in August. Oh, my God. OK, but I've also been on business trips that I really enjoyed. Look, this almost ties back into what we spoke about in prior videos. If you are conducted business in the area that you love and enjoy and you are taking a trip , this is why many people do conferences in nice locales like Florida, California or whatever. You know, I mean so by and large, no, this in events. Try to plan your trips for in advance, which you you do anyway. But business trips you could do them for in advance. Start taking a look at you know, the what's happening in the world across the world in terms of conferences and everything else. Find out what's in your particular craft. Sometimes your business association is doing an event, you know, or your trade group, etcetera. So why not take a look into this? Keep in mind that you could even gain some great deductions even if you blended them. For example, let's say you're on a two week trip. One week was on business and one week was on vacation in a personal time. Well, guess what? Even though it's 50% business and 50% personal, the trip, the travel there and back could be 100% tax deductible because the IRS reasons that you would have made a round trip if it was holding business or business and personal regardless . So they let you deduct in the entire amount. But in terms of once you're on the ground, where every Iraq the business portion of your trip tax deductible, including meals, etcetera, lodging, personal part, you can't deduct. So keep these separately a booked and you should have no problems with this. Where do you find out more about this publication for 63 Look on trips and is always what I say. Talk to attacks person. So you do this right? And again start laying this out long before so that when you finally do take all the deductions, you know what to watch out for with the document. Well, you don't worry about documenting taking it the right way, deducting it. And I hope you have a fun business trip. Thank you again and I'll see you in the next video. 11. Screencast: Pub.463 and Auto Expenses: load area. This is a bold Magellanic, and again, this is the how to make an expense tax deductible and up on the screen. You see first page of publication for 63 which is on travel, entertainment, gift and car expenses. And even though it's for 2015 uh, they they were very modest changes the 2016. So the bulk of this information will be good Then, too. Publication, the the updated version of Publication 463 52,016 will become available in January of 2017 . So here the contents and in this particular video, we're gonna be concentrating on car expensive, and it's easier to deduct you think so over here as I scroll down there Chapter four, transportation car expenses and basically the two different ways of deducting car expenses even what's called a standard mileage rate or the actual expense rate. And there you see the pages and they get this publication. This pdf is there cos your videos, you'll find it here somewhere in the program and it Meanwhile, I'll go to Chapter four and I'm gonna click on page 14 and, uh, as you see here they're chapter for all right. Even have a nice ah spreadsheet. Here. Let me see if I could just move it over a bit so that we get better viewing of it. There we go. It doesn't come down Chapter four transportation, and I'm gonna scroll down. Okay. A lot of details here. Office in the home. All right. If you have an office in the your home that qualifies as a principal place of business, you can deduct your daily transportation costs between your home and other the work location in the same trade or business. Now, this is a crucial difference between having a whole business and being an employee. See, whenever you leave your home to go travel toe work location, that's called commuting and commuting isn't is a personal expenses generally not tax deductible. Even if you're a home, even if you run a business like if you live in home and you travel to the other side of town because you have a store there are in office that's commuting expense. However, if you have a business in your home, it's a principal place of business, and you travel from your principal place of business there in your home to a work location , like visiting a client or to a conference or whatever. Then guess what? That's not commuting expense. That is business expense. So I'm glad I caught this year before we went on to the other aspects of it, because here and even give you examples of the global transportation mileage all right, because it's amazing how much people pay in community expense. That's not tax deductible. But if you have a home office, you could be able todo easily structure it so that the travel is tax deductible. So Atlantic caught this and stop here along the weight. So now let me continue on to the next page. There we go. Page 16 which is car expenses and year is the critical area. If you use your car for business purposes, you can. Ordinarily, you ordinarily can deduct a car expenses. You generally can use one of the two following methods to figure your deductible expenses, standard mileage rate and actual car expenses. Now the standard mileage rate means that and you track your business miles and multiply that by the mileage rates given to you by the IRS. For that given year. For 2016 it's 54 cents, whereas in 2015 it was 2000. It was 57 a half cents in 2015. So again, for the year 2016 it was 54 cents. So you're able to take. So let's say you did 1000 miles of and you took the state of mileage rate, so 1000 times 54 is $540. So what can you deduct that amount 540 for the standard miles in the example I just gave you. But in addition, tolls and parking, don't forget that tolls and parking like many people like, for example, I've been in your city area, so we have easy pass. Make sure you look at your statements because they don't tell you about the tolls. That also helps to verify the mileage. When you're going from one work location, toe another work location, and don't forget parking. If you're paying 10 or 20 bucks parking somewhere, that's tax deductible again. If it's for a business purpose like you're visiting a client or go into a business conference or some of the purpose that applies ordinarily, you know, and for necessary purposes for your business. So that's car expenses. Let's continue to give you examples right here. This is fine. Their standard mileage rate notice over here that for 2015 this is what I told you. 57 a half cents per mile. Very valuable deduction. And what this does is that for your simplicity, this imp utes not only the amount of gas you use Forgiven Mile, but also the wear and tear on your vehicle. So it's a very simple way of doing it now. What I suggest for you to do is to calculate it both ways, both the standard mileage rate and let's see where it is. An actual car expenses for many of you. If you actually track your car expenses, you might get a better deduction. Let's say, for example, that you did 10,000 total miles in your vehicle. And let's say that of the 10,000 miles total vehicle that you did 4000 business smiles well , using the actual car expense method that comes out to 40% 10,000 total miles, 4000 business miles. Therefore, 40% of your total vehicle usage is for business purposes. Therefore, you would be able to just 40% of your registration fees, repairs 40% of gasoline usage, 40% of licenses, payments, garage at seven so far, plus tolls and parking. Now we could depreciation. Normally, a personal asset is not depreciated. But if you're using a vehicle for business purposes, then in an example, I just gave you 40%. 40% of the vehicle could be depreciated so many times using actual car expenses. Yes, it requires more paperwork and more diligence on your behalf and more recording. But believe it or not, maybe four times out of five, actual car expenses will actually save you mawr on your, uh, from taxes. Okay, so keep that in mind as well. So as we go down here, let's see whatever else is at this page, you see, they have, oh, plenty to partake of, okay. And they also go to various other examples. But using your vehicle because your asset your automobile becomes an asset, you could be able to also depreciate as well. So there's a lot that you could be able to partake of in terms of car expenses. So going back it. Pardon me? You're gonna use actual car expensive ended, which was on page 17 or the state of mileage method, which is on page 16. All right. Thank you for the tour on this segment of publication for six Tree on car expenses. See you in the next video. 12. How to Deduct a Luxury Cruise: you know? Welcome back. You know, I mentioned earlier in a video and the program about you. Can you write off a cruise? I mean, could you imagine that taking a cruise and being able to deduct it? And that sounds like something like your tanks person might say. Are you crazy, Della? They'll drag in a prison for tax front or what? No, no, no. Listen, if you doing it the right way, I think will definitely help you notice what you have up here. This is publication 463 travel, entertainment, gift and car expenses. And you look over here on the travel. I mean, is a lot of stuff here, you know, meals and what's deductible and travel expenses. But take a look at this. How interesting. Luxury water travel. Right here. Publication 463 So if I, uh, take this there, I am interesting enough, huh? I am now down in the in the page where we're talking about a Pardon me a luxury water travel. Look at this. It tells you how to be able to send this re different from here. If you travel by ocean liner, a cruise ship or other form of lunch rewarded transportation for business purposes. There is a daily living three months you can deduct. Well, it's amazing how many people had no idea you could deduct anything at all. So this is just great and even tell you what you're able to do daily limit, how much you could be able to deduct. And actually, I think the limit. The upside limit is over here. Look, cruise ships Look. If you see my amounts of a year, you can deduct up to $2000 per year of your expenses of attending conventions, seminars or similar meetings held on cruise ships. All ships that sail are considered cruise ships, and it goes into the requirements that are right here. So can you be able to deduct a in the course of a cruise ship? Absolutely. Just look up luxury water travel. And the big thing is what context? If you're on a cruise ship for the fun of it, and you're trying to figure out and let me see if I can deduct it, No, it ain't gonna work. You'll be in trouble for here. But if it's for business purpose, a legitimate business purpose and you do it right with the right documentation, Then you could be able to write off luxury water travel like a cruise ship as long as you do it the right way and you'll do it with the full with the full compliance and acknowledgement of the I. R. S. All right. See you the next video. 13. Screencast: Deducting Entertainment & Gifts: Hello there. Welcome back. This is probably genetic. And you see upon the screen again travel, entertainment, gift and car expenses. I mean, this is probably a, you know, one of most important publications for you because it's amazing how many your deductions that seemingly you can't deduct, but you can deduct if you look at it the right way. Like, for example, entertainment. Like if you take lines to weigh a sporting venue, you know, or theater, you could be able deduct it. And here, this is the kind of publication which tells you how to do it properly. So in this particular video, I just want to talk about entertainment and gift expenses. And over here, as you look over here to sign, you see my mouse chapter to entertainment, you know, and this is something you should take a look at. Look, if you're gonna entertain any weight if you're gonna go, you know, to ah, you know, a a fun event, your amusement, you know, or theater or sporting goods are sporting event. Then you should long before you ever step into it along. Before you make that expense find out here, they make it very easy here and Chapter two for entertainment directly related test associated test. It tells you what entertainment expenses are deductible and what you're not deductible. You could take a look right here, and then you see Chapter three about gifts, and we'll cover this in this one as well. But entertainment. Let's click on. Ah, you know, we'll go down here and, uh, make sure we move it over so we can see what we're doing. But there it is. Let's read entertainment. You may be able to deduct business related entertainment expenses you have for entertaining a client, customer or employee. The rules and definitions are summarized in Table 2-1 which is down below. You can deduct entertainment expenses on Lee if they are both ordinary and necessary. Then we go again. Remember those words ordinary, necessary and meet one of the following tests directly related test or associated tests. Okay, in other words, disease. A test for like, how much is it? You know, how much is this entertainment related, You know, are these people involved in the event like customers and, you know, employees? How are they related to your business? And these are actually very easy tests to ah, meet and you'll find him out in this in this publication. But let me just continue moving there. Uh, the other one here, um, me scroll down because I want to get to a past here, take a look, even tell you here and figure eight. You know, about the, uh, the limited, the expenses here, You know, where your meal into the expenses reimbursed? No, they weren't. Then you could come down here if an employee, if an employee did radically account to your Ah, your employer under accountable plan? Yes and no. And then they go through this, uh, various parameter here, which makes it very easy to figure out what you can deduct. And if you're self employed, it becomes very easy for you. All right, we scroll down what David expenses are deductible. Entertainment entertainment includes any activity generally considered to provide entertainment, amusement and recreation. Examples include Listen to this and entertaining guests at nightclubs, social, athletic and sporting events. Theatre sporting events. You can. It's yachts, hunting, fishing, vacation and similar entertainment also may include leading personal living or family members of individuals such as providing meals. The hotel suite or car to customers or their families. Okay, you give you examples for Ah, what counts? All right, let me continue forward. All right? And I told you this deduction may depend on your type of business. Your kind of business may determine if a political activity is considered entertainment and give you, for example, for exams. Any continues. All right, in one tape, I'm not deductible, For example, club dues and membership fees. I mean, don't get me wrong. If you have a professional. If you're a C P and you're in a secret association, that would generally be tax deductible. It has a membership fee, but summer, but some type or not. So we're like, for example, like, if you are a member of a country club, you know where the it's not directly associated with your business, then you probably will not be able to deduct it. And that's just for the fun of it. What you're doing here. Okay, but find out here what are not deductible. All right? And then we come down here. Look at this. Gifts. If you give gifts in the course of your trade or business, you can deduct all or part of the cost. $25 limit. Let's say, for example, you have I don't know, 20 clients, and you gave all 20 clients out of a bottle of wine that was, like, say, a $10 bottle of wine now in general, a bottle wine unless you're in the wine business. But for a general entrepreneur, you couldn't write off a bottle of wine, because if it's in the context of a personal transaction and it's, you know, alcohol, you probably couldn't deduct it. However, if it's in the context and we go again context of a gift and he meets a $25 limits, it says, Hey, you can deduct no more than $25 of business gifts you give, directly or indirectly to each person you're in your tax year, a gift to a company that is intended for the invention. All personal use or benefit of a particular person or live in a class of people will be considered an indirect gift. But the bottom line is, if that it is less than 25 you probably will have an easy time. We're deducting it. Let me continue if you give a gift to a member of a customer's family that gives us gently considered to be an indirect gift to the customer. This rule does not apply if you have a bona fide independent business connection with that family member, and that gives us not intended for the customers eventual use. So here it tells you very easily how to write off gifts, and as long as you don't make it crazy or lavish, you could probably have an easy time being able to write off gifts. So there we go. You just had a chance to take a brief look at entertainment expenses and gift expenses, and all you have to remember is is there you go. You take a look at publication for 63 It's all outlined there and in generally easily of readable print. And if you're not sure, at least be generally aware off the expense and the business purpose and then discussed with your tax prepare about how to book it properly. All right, so thanks for viewing. See you in the next video 14. Deducting the Home Office expense: All right, Welcome back. Well, let me tell you something you can't do and and a program or course on tax savings for home based entrepreneurs without remembering the biggie, which is the Home Office expense Now, the Home Office expense. It's such an important one and such a lucrative one for you in terms of tax benefit that I did an entire program all about the home office expenses called the Home Office Tax Kids. So someplace on the site, take a look and see about it so you could be more thoroughly knowledgeable about the home office expense. That's an important one. That's a powerful one. And by all means, look into this. If you're doing the primarily your business from home, then you shouldn't ignore writing off the home office. Now, I'm not gonna go, you know, into greater depth with this, I will include the publication that comes along with the Home Office expense straight from the I. R. S, which is publication 587 But let me at least wet your appetite about the Home office expense, at least briefly to get the right point of view on it. And point is this. Remember these two words now regularly and exclusively, regularly and exclusively when you're running a business from home and you want to write off the home office, the point is that the Home Office must be used regularly and exclusively for the whole business. In other words, if it's gonna be a legitimate business, it needs a legitimate location. It's not like you could use it like any old room. You know, you got to do it the right way, and the reason why you want to do this is because in that way you could be able to write off the expenses for that particular space. And let me give you an example about how powerful this is as a deduction for you. Let's say, for example, that in your home, let's see your renter and, again the rules for writing off the home, office or justice. Good for renters. As for people who owned a home or condo or whatever again, Publication 587 gives you the full details, complete with examples on this, and a greater treatment of this is again in the Home office tax kit. That's a separate program, but he's a thing. Let's say you're a renter and you spend $10,000 a year on rent. OK, well, in that situation, let's make believe that you have a room in your place and that this room is, say, 25% of the $10,000 of rent. And you're using this area regularly and exclusively for your home business. Well, 25% off. $10,000 is $2500. All right, so the thing is this think about this. Now, here you have yourself a 25 $100 tax deduction. But think about this. You didn't pay a penny for that. Well, why is It will think about this before you have a whole business. You had annual rent of $10,000 but after you had your home business, you still had the same rent of $10,000. And that awards whether you had a home office or not, you're still paying the same rent $10,000 for the year. But now because you have a home office that get using again regularly and exclusively for your whole business. Now 25% of that 10,000 rent becomes tax deductible. That's a 25 $100 deduction right there that goes against your net profit in your business. And this normally is done with a Schedule C and Public, and the home of his expense is typically done on form 88 29. All right, actually, the Home Office tax kit. I actually include both of those and filled out to show you exactly how it's done, all right, and then feel free to share this with Tax person, etcetera. But the bottom line is you have to investigate the Home office expense. It is a powerful deduction. It's worth thousands of dollars to you if you do in this year in and year out, and it's a fantastic tax benefit that you should definitely look into. Now your tax person might say You don't qualify for a home office. Well, you know what? Look at publication 587 And if it doesn't qualify, find out how you can make it qualify. It's worth the effort, and it's worth it to do it the right way again because it's worth thousands of dollars to you. Anyway, thank you for viewing this on the Home Office expense. Take a look at Publication 587 to find out more about it, and I'll see you in the next video 15. SC How to Deduct Kids payment: Is it possible that you can, you know, pay your kids or the family members and deduct it. Now, this is a question of people. It's on people's mind, right? Few pain allowance to somebody or other family members. You can you deduct it. And the answer is yes. You can deduct it, believe it or not. But the amount must be for legitimate work, and that is needed in the business. And you mount is a fair market rate, like for work performed. And you can easily find out more details by checking the IRS site for family help. And I will go there right now. All right, here we are. This is the I. R. S section. Dissident page entitled Help and Resource is Okay, So I'm gonna just scroll down here right at the site. Yeah, I'm gonna do an iris Beta search. All right, So you see Campbell to look over a year, and just like I said, family help. Okay. And I'll click on that. All right, and look right out of the starting gate. Look, you'll see out of documents as well. This is on family help. Like hiring family members and how to do it the right way and businesses would employees and even down here, I know if you can Ah ah, see, See here if you employ family of workers they have planned. If you're a farmer small business, you know, leaving the scroll down a little bit more. All right, so you see a lot of help on this, You see, even if your family care giver and the self employed tax, etcetera and other details but really just just wetting your appetite for this. But I'm gonna go to the 1st 1 which is family help right here. Let me click on that. And there you are. Family help and look what it says. One of the advantages of operating your own business is hiring family members. However, employment tax requirements for family employees may vary from those that apply to other employees. Child employed by parents. Parents payments for the services of a child under age 18 who works for his or her parent in a trade or business are not subject to Social Security and Medicare taxes. If the trader businesses a sole proprietorship or partnership in which each partner is a parent of the child now look at that. In other words, you conducted payments, and plus, they don't have toe take Social Security or Medicare taxes out of their pay. So isn't this great? As long as they're under the age of 18. And here's a covered services of a child one spouse employed by another. So this is some real goodies here for you. You look, if you're gonna pay kids anyway or pay filming members anyway, some monies, then why not have them work legitimately in your business? Performed legitimate service pay fair, market rate documented properly. Make sure you have things like a payroll record. And you know what? What was the work performed, etcetera. So it's gonna be a lot easier than you think. And your tax person should be more familiar with this. But there you go. Yes. You can write off be of payments to family members, provided they're doing legitimate services to you, which means it becomes a business expense. All right, so take a look. And by the way, a pdf of this document you see in front of you does a company this just in case you can't find it or, you know, whatever. So it's right there for your benefit. All right, Like I said, straight from the I. R. S. See you in the next video. 16. Understanding the difference: Assets vs Expenses: Okay, welcome. In this particular video, we want to talk about assets and expenses, something you should know. There's a There's a distinction between the two of them, for the most part in this program again, how to make any expense tax deductible. The emphasis has been on expenses and really in the world of expenses on accounting and taxes and expenses actually referred to as a period expense. And what does that mean? So what happened to commas? Yeah, well, the period expense means that expenses, something where you're spending money on something that is used up or consumed. And it could be happening with one period like, for example, you buying office supplies or say advertising for this Sunday's circular and you're spending that kind of money. All those things get used up or consumed within one period. And whenever we talk about a period we're really talking about in our case, in terms of the scope of this program, we're talking about the calendar year like a 12 month period. Okay, so again, expenses of those things you spend on that I used up meals that day, automotive expenses, you know, payments to people and advertising and things that it's nature, subscriptions and the like, you know, publications and whatever. But here's the thing. What happens when you buy assets, for example, when you're buying things like furniture or computer equipment or any other thing that has adorable life beyond one year, I guess you can refer to this is a non period expense. When you're buying an asset, assets tend to be depreciated. In other words, if you bought, let's say you spend $5000 on equipment for your and the furniture for your room, your home office. Okay, in general, you couldn't deduct it all in one shot, although I'll show you how to do that later in this video. By and large durable things such as assets and its two types of assets, there's tangible assets and non tangible assets. Tangible assets means the stuff that you can, you know, get equipment and computers in. You know, those kind of assets, a non tangible asset is more or less like goodwill or intellectual property, and that this has a useful shelf life beyond one year. So with assets, you know, tangible assets, we talk about the appreciation with intangible assets like goodwill and intelligent property. There is amortization, and all these things really mean is that you deduct these things off. Funding Installment plan Basically $5000 in equipment might be written off over five years or seven years or longer. Real estate. When you buy real estate that's business related real estate or like rental property, the appreciation timeframe could go into decades. It could be 28 years and beyond. Okay, so talk to your tax person about how to treat assets. Now keep in mind about the following when you get a chance, and I include the publication along with the video, Take a look at Section 1 79 right off. And what that means is that based little intelligence that you could use. You could take an asset that normally would be depreciated, and Section 179 allows you to expense it or writing off immediately within one shot. Okay, so if you bought $5000 worth of equipment, normally you'd have to depreciate it or write it off a piece by piece over an extended period of time. But with Section 1 79 that allows you the ability to write off that entire asset purchase or equipment purchase in one fell swoop, much like an expense. Okay, so again, assets are treated differently than expenses with assets, you may have to end up writing them off over an extended period of time, such a depreciation. And in those cases, you might get a chance to get around it with something called Section 1 79 Your tax person should be much more aware of this. But at least I'm glad I did this video. So you get the distinction between expenses and assets. Listen, thanks for viewing. Take a look at the accompanying video. Talk to your tax person about any asset person, just York. Any asset purchases you're going to make either now or never in the near term. That way you can book this properly and get more tax benefit out of it. All right. Thanks again. And I'll see you in the next video. 17. How to Get a Refund of taxes you never paid!: Hello. Welcome back. This is Paul Magenta Vic. And look up on your screen. You have an intriguing question. Is it possible for an entrepreneur to get a tax refund from the federal government? Even if they didn't pay taxes? The answer is yes. It actually is possible. And it's something that it may not have occurred to entrepreneurs. You could do that, especially in your first year or two when you may not be making a lot of money as you're launching your business. So let's go straight to the IRS page. And there you go. Oh, pardon me. There you go. Over here, up on the screen, you see the earned income tax credit. And many people have the idea that the earned income tax credit is only for, you know, low income people who have a job in some dependence, and it might not have occurred to them. They look when they say earned income or an income can come in one of two ways either a through a job like a w two position or if you are self employed, all right, and so even here, do I qualify. Let me just give you an income limit. So you get an idea about the earned income tax credit. And as I'm showing you this, keep in mind your tax preparer should be familiar with this. Believe it or not, bring it up for them. Because let me tell you something. If you made $100,000 in your business and you had expenses of 95,000 that means that your net income would be $5000 Of course. Well, in that case, then that 5000 as net income, that is a that is a low income and could qualify you for the earned income tax credit. Because look at this. What you have here, these are the basic limitations here. Earned income tax credit on the earned income and a G I or adjusted gross income limits. If you're single and you have no dependence and your income is under $14,880 this is for 2016 so you take a look and the amount should be a little bit higher, I believe in 2017. So again, check with the I. R. S and take and check with your tax person. So if this is your income and your other investment income is, say, less than $3400 for the year. Little words, You could have a huge tax portfolio and no dividends. That means that you have no investment income. So it means you could basically qualify. Believe they're not in that regard. Then for the maximum credit again, this is a refundable tax credit. Is this obviously first get three or more Children and this is your income situation. You can qualify Teoh, get a refundable tax credit of up to $6269. But even if you have no kids, you know, maybe you're a single person self employed. You know I don't working from home and you're your program Europe. Your business is in the basement. You could be able to get a credit of up to $506. So let's say you had low income in and get business and you you pay $200 in federal income tax. Well, then, in this regard, then you get you will get a refund of about $300 in that individual situation. Okay, so this is the income limits and this page of the IRS. I'll give you more information about this, and that goes into basic rules that you need a social Security number and filing status, etcetera. And last but not least, the best place. Get full details with this is right here. And this is accompanying the video publication 596 which is on earned income credit. And it goes into the basic rules and money. People could have been applying this very easily and what form to fill out etcetera. So why not? This is more money and the idea you can get back money that you didn't even pay in. You know, this is an intriguing example, but it is possible and doable, even for the home based entrepreneur. Okay, so look up, Publication 596 And discuss this with your tax person, not ready and have a great day and keep more than fruits of your labor 18. Screencast: Investing Your TaxSavings: already. Welcome back in. Ah. Glad you're in this lesson. In the last module of autumn making expense tax deductible, you might recall, from the first module we talked about general tax principles and ideas record keep in context. And like in the second module, we discuss specifics, writing of things like automobile expenses, payments to kids and entertainment and and so much more, actually. But in this particular lesson of the last module, I just wanna be able to cover a point where it says, you know, why don't you leverage it to true wealth building all of the tax savings that you have were able to accrue? Deducting this deducting back. Been doing this this year and next year and future years. Don't just have that money be in your pocket, which is great. I'm glad. And I hope you get a chance to spend it on something good for you and your family. But you know what? Take it a step further. What if you did the following you had your tax savings. Add six figures to your nest egg and let me just scroll down here and give you an idea. All right? Like over here What do we have say that you apply all the tax deductions and strategies that are covered in the course. And, let's say, for example, that that gives you next for $5000 in tax deductions. And let's say that that friends late see you being able keep $2500 war, you know, in your pocket, keep aboard the fruits of your labor and somebody's depends also on your state, too. Some states are high tax states, someone little tax states, so I'm just giving you an idea. A rough idea. So $5000 in extra deductions for that year means 2500 extra in your pocket. Let's say you were doing this year in and year out for 20 years, so that 2500 if this was invested on a monthly basis, 2500 divided by 12 months would be $208. And assuming that you were doing an average annual growth rate of 8% yes, some years more, some years less. But $2208 invested monthly at an 8% annual investment growth rate for 20 years means your nest egg gets an additional $122,712. So I think this is an important point to make, you know, great. Save on taxes. Keep more the fruits of your labor. But why not take it to the next level? You know, take that money and put it in to your ah investment program for a long term, you know, building for your nest egg. I mean, many of you know that to me. Probably. Jenna Vic. I wrote the book Stock Investing for Dummies. And I do help people with the investing. And the thing is, is that this is one case when your money could work for you. So put it on forward. Uh, really leverage your tax savings and make money for the long term build. Build your nest egg and more financial independence. And you know what? And the don't just stop there. Let's talk about tax advantage. Pension plans in the next video. Thank you. Currently 19. Screencast Small Biz pension plans: Hello. This is Paul Magenta Baking again. Thank you for being in the program. How to make any expense tax deductible. And as we're nearing the end of the program, I just want you to understand that saving on your taxes by deducting as much as you are a legitimately able to claim isn't just something for your current expenses and your current that income and taken advantage of, you know, for a given year. But, of course, that's always good to do. I'd like to see you take your tax saving strategies and really up your game So you're really building wealth for the long term. But what you see in front year is publication 5 60 where time and planes to small businesses and again, and whether you are maximizing your tax deductions or not, the point is that why are you having a business is to build long term wealth for you and your family or, you know, whatever other purpose you deem fit. And at some point you wanna have the fruits of your labor working for you and retirement plans for small businesses that just a tax advantage way for you, for you to be able to build wealth. And, you know, I just want people to plant the seeds. And you say, You know what if I put a portion of my my Net profits into these kind of plans and the idea that doing so is going to increase your net worth and, you know, expand your nest egg and make it that much more financially secure down the road. I mean, this is just a powerful extrapolation from you, saving as much as possible, you know, on your on your taxes and fully, legitimately and even safely taking those dax tax deductions. And we've spoken about throughout this program and your net savings, why not fall it? Funnel them into a program such as this and your tax person or tanks of voices should have no problem helping you with this. Sometimes these have to be in a particular venue, like a financial institution or brokerage firm, and all of them, all of them, have departments of specialists to help you get this set up as simply as possible. And over here as you see my mouse coming over here, you know what's new, etcetera the definitions. But Chapter two simplified employee pensions again. Even if you're an individual will get to that in a moment. And then look at this simple 41 K plan. You know what even is a one person operation? You could have your own for a one k plan. And if I just just you could see all the way here. And this, of course. Pdf is in, you know, companies all the video so you can find what they're very easily and again. Share this with your tax person. But let me just scroll down if I may to, ah to head down here. And so you see Ah, you're on page three. Key retirement plan rules. You know, when you come what you get If you look at, it's a separate area, Ray. You could be ableto have up to $53,000 or 25% of your your your net profit from your sole proprietorship as an example and and over here, simple IRA and simple 41 K plan and how much you're able to put in there and I hear it says employees an employer. But look, if you're the only person operating that it's just you. So again your tax person should have no problem with this. So let me just come back to the main page and just scroll down a little bit. So we see that it's a little They're all the details air their tables and work sheets for the self employed Look at us and how to get tax help. Yeah, let me just take a quick look at the page. You know, 23 you know, for what you're able to do. See, there you go. Look into your deduction for self employment. I mean, I'm not gonna blow you buy go through this, but this helps you figure out how much to be able to set assign very easily, you know? So, beside having your tax savings, keep help. You keep more than fruits of your labor helping your net more income from your business. If you were able to take those and have them go into a plane such as this so they could then work for you in the future, right? All those years you're working for your net profit. Now, this is a way for your net profit to start working for you. So great stuff. I'm just gonna with your appetite finance, your tax person should be able to help you and something for you to consider. And again, thanks again for being in the program. I hope to see you in, Ah, get the conclusion video, and we'll take it from there Continued success to you. 20. Conclusion: already. I hope I made a tax course as painless and as easy as possible to get through. Because, let's face it, you've worked hard to making that profit. People don't know how tough it is to run a business, and I always tell people I want to see you keep more of the fruits of your labor. So these tax strategies are a nearly painless way. It's never painless when you talk about taxes. But the point is this. You made it through and I gave you, hopefully some ideas that you could implement with your tax person so you can start not only saving on your taxes but building wealth with these strategies, not only this year but in future years to come so that your long term future is very prosperous. Thank you again for being part of how to make any Spence tax deductible. This is pulled the genetic, and I hope to see you down the road in the future course. Thanks again