W2 Employees – How To Keep More Income

W2 Employees – How to Keep More Income

What is the biggest single financial obligation of each person in the USA? Taxes. With all the bailouts, and government spending we can be sure that our taxes will not be being reduced any time soon. W2 workers are taxed before they get their earnings. Then they are taxed every time they spend their earnings as well. Then they think that because they put some money into a qualified plan that is tax deferred, they are saving on taxes, but the reality is they will be paying more on taxes in the future when they try to use their savings. It is like having the choice of paying taxes on the bag of seed now, or paying taxes on the bag of seed and the harvest later on. Which do you prefer? Inflation, the printing of more green backs, is also a tax. We think inflation means the price of goods has gone up because they are now worth more but the reality is that the value of the dollar has gone down, so we have to spend more dollars to buy the same item. This means the government collects more dollars of taxes from us and our income level rises so our tax bracket gets higher so we have to pay more taxes because of that as well. People would be outraged if the government just sent them a bill for the actual amount of taxes they are truly charging them for each dollar they earn. That is why instead, they (the government) have created this hidden system of stealing our money from us, pretty much at gun point), with the threat of jail time if we don’t pay up and people feel powerless to do anything about it. This blog post will be looking at how to increase your net worth by just becoming a part-time home-based business owner, and withOUT necessarily making any more money. But making more is always a good thing, if you know the tax rules. Why own a home-based business? 1. Be your own boss. 2. Capture the power of residual income 3. Be rewarded for business achievements 4. Reap the tax benefits – This is a major major benefit. We all know that the more money we pay in taxes, the less money we get to keep.  So let me ask you this, what can give you a better bottom line, a $2000 raise or owning a home-based business? Keep reading and you’ll guess and understand the answer. If you have a W2 job and you have a part time business as well, you are entitled to take the same tax deductions you would receive if you were a full-time home-based business owner. What are the IRS qualifications for owning a home-based business? There are only three things that show you are a legitimate business owner. 1. You must have profitable intent. (It does not say you have to actually make a profit, just that you intend to be profitable.) 2. Be consistently working in your business. (So rather than spending one whole weekend a month working your business, it would be better to divide the time into weekly increments. IRS says 10 hours a week is acceptable) 3. You must keep accurate records. (I would say the majority of part-time, small, MLM and home-based business owners find keeping acurate records is the hardest to do, yet it is the most necessary for proof of your business) Your main goal in keeping accurate records is to keep track of all your legal and ethical tax deductions so you are able to KEEP MORE of the money you are already earning, lower your tax bracket or lower your taxable income. This is the HUGE advantage of having a home-based business. Being self employed can trigger about $10,000+ in potential deductions, on average, before you even begin to earn any money. But how many people fail to take advantage of these deductions even while owning a business? The average over-payment of taxes by small business owners in 2008 was $11,000. What could you do with that amount of extra cash flow? Let us identify what constitutes a legal and ethical tax deduction. Knowing the tax rules can make it possible so almost everything you do could become tax deductible. The three questions that must be asked for each expense is: Potential – Does this expense have the potential to help me MAKE more money or GROW my business? Intent – What is the primary intent in spending this money? Can I prove the purpose of spending this money was for business gain, rather than for personal use. Necessary – Is the expense reasonable, ordinary or necessary? There are over 100 potential deductions available to the typical small business owner – including 100% medical deductions (through a medical reimbursement plan) and business education expenses. Other deduction areas you might want to maximize deductions for are your vehicles, travel expenses, entertainment, special sporting events, presentation expenses, bonuses, business gifts and clothing. Consult a tax advisor – take a class – buy a home study course! Knowledge put to use = Power = Money = Wealth Building!!! What are the two largest expenses that we are obligated to pay? 1. Debt – An amount owed by a person for funds borrowed. There is intent to pay back an amount owed by a specific date. Do you like paying the bank more in interest for the home you are buying, than you actually purchased the home for?  Wouldn’t like to know of a legal and ethical way of paying a lot less interest charges on all your debts thereby keeping more of your money in your pocket? 2. Taxes – Do you like paying taxes?  Doesn’t everybody want to keep more of the money they earn? Owning a home-based business is such a huge advantage because it provides a legal and ethical way of doing that, of keeping more of your hard earned dollars in your pocket. moneycircle1 …It’s all about cash flow… What type of tax payer are you? W2 employees Only make about 60% of everything they earn and have to purchase everything with AFTER TAX DOLLARS Business Owners Purchase everything with BEFORE TAX DOLLARS and when they pay taxes, they only have to pay on what they have left over. What type of tax payer do you want to be? W2 employee The two main deductions a W2 are * Mortgage interest * charitable contributions Business Owner As a business owner you can deduct * travel expenses * entertainment * mileage – 55c on every mile in 2009 * home office % of mortgage interest in addition to mortgage interest you’re already deducting. * % of utilities * % of insurance * medical costs There are potentially over 100 legal & ethical tax deductions for the small home-based business owner Once again, which type of tax payer would you rather be?   Call me if you also want to Become Your Own Banker and run your business cash flow through it, which has even more tax advantages. Jennifer Hansen 845-649-7487 or Jennifer@DebtDiagnosis.com    
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May 4, 2009 · Jennifer · One Comment
Tags: , , , , , , , , , , , , , ,  · Posted in: W2 Employees / IRS, What type of Tax Payer Are You?

One Response

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