If you have been a reader of this site or client of ours for any length of time, you are well aware that we are a huge proponent of everyone having a small business or a side business. It simply boils down to this...
There are two tax systems in the United States and have been for quite some time. The first system is one where you are an employee for someone elses company and you receive a W2 at the end of the year. You are entitled to Itemized deductions on Schedule A which include mortgage interest, real estate taxes, charitable contributions, and even unreimbursed business expenses from your employer (these are subject to a 2% adjustment, more on that later) along with everyone else. Your W2 income is your income. (There are some strategies that you can employ to possibly reduce this income a little, but for the most part that's it.)
Now if you are self employed or own your own business you are under a completely separate tax system. You have all the income that was generated by your business less all the expenses that you had to generate that income that are reasonable. So the trip you take to the Florida Keys to "touch base" with your supplier is deductible. How about the nice Land Rover you drive to make your sales calls - deductible. Or how about the Continuing Education seminar in Lake Tahoe every year - deductible.
And it gets even better... all the deductions you were able to take when you were a W2 employee as Itemized Deductions - you get those too! Yes it really is the best of both worlds!
Now don't take this little piece and use it to do something stupid. You really should seek expert advice on how to make your tax support document bullet proof. That is where we can help.
Want more info on how to make your life tax deductible? Fill out below and we'll be in touch.
Paramount Tax and Accounting LLC offers expert advice and guidance for tax preparation, tax planning, IRS representation and accounting services. We are currently serving the Suwanee, Buford, Sugar Hill, Flowery Branch, Oakwood, Gainesville, Duluth, Johns Creek, Cumming, Alpharetta, Roswell, and surround cities in North Atlanta out of our Suwanee and Oakwood offices. We also work with clients virtually by using technology to our advantage.