How to Make Your Life Tax Deductible

June 26, 2012 by  Filed under: Taxes 

It is important for you to keep in mind that taxes are neither fair nor logical, and this becomes painfully obvious the more you learn about the Tax Code and the role of the Internal Revenue Service (IRS).

Furthermore, IRS Tax Code is subject to change at a moment’s notice. The United States Congress approves taxing concepts; then the IRS is responsible for writing the Tax Code, which is the set of rules and regulations (in the form of tax law) detailing the specific rules that all taxpayers must follow in The preparation, filing, and paying of their taxes. Then the U.S. Congress passes tax law reflecting the Tax Code created by the IRS. The IRS is empowered to administer and enforce all federal income tax laws and to collect all pertinent taxes.

It is very difficult for you to dive into the IRS Tax Code in an effort to understand all the details and to stay current with all the changes. All of which have been developed to allow you to take advantage of the very favorable tax laws applicable to small business ownership, to truly make your life tax deductible!

The rationale behind the IRS and Congress using tax law to engage in social engineering regarding small-business owners (creating tax law that leads small-business taxpayers to take actions that are good for the economy as a whole) is that it is becoming evident that the future success of the U.S. economy is increasingly dependent on the growth of small businesses. For example, it is estimated that upward to 60 percent of the future growth in jobs will be directly attributable to small businesses-their creation and subsequent growth. Therefore, it’s beneficial for the economy to give breaks to these small businesses that will allow them to succeed.

In the final analysis, it is up to you! Small business owners enjoy two distinct benefits:

1). the profit that the businesses generate (profit that is under the control of the business owners and can be used as they see fit)

2). Tremendous tax savings (the opportunity to convert personal expenditures into tax deductible expenses and thus to enjoy considerable tax savings). Remember, you can enjoy profits and tax savings no matter what size your business is; small businesses are just as able to generate both profits and tax savings as larger businesses.

The goal in applying small-business tax strategies is to match all the allowable business tax deductions of your business against the taxable (gross) income of the business. In this manner, you will minimize its taxable income.

If you work for someone as an employee, the income you generate (in the form of W-2 wages) is subject to income taxes. This means that before you can spend any of these dollars, you must first pay all federal and state (if applicable) income taxes due. The tax due can amount to tens of thousands of dollars-drastically reducing the after-tax dollars you have available for your personal use.

However, when you become a small business owner, tax law turns in your favor. You no longer have to pay taxes first, before you spend the profit your small business generates. Before you calculate any taxes due on business profit, you may first deduct the dollar amount of all “ordinary and necessary” expenditures that your business has incurred (in pursuit of profit). Although these tax-deductible expenditures must be related to your business, you’ll soon find that much personal expenditure-for travel, cars, home, and even entertainment-become tax-deductible business expenses. As a small business owner, you can literally make your life tax deductible.

For more information here on converting and filing Financial Information of the Company in XBRL Format as per MCA mandate.

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