Tools at Standdown Tax Prep

BASIC RULES OF A HOME BASED BUSINESS:

1. Business deductions can reduce your personal tax bracket if you show a loss.
2. Business deductions may assist you to qualify for larger tax refunds,
3. Uncle Sam wants to help you start your very own home based business, PROVIDED YOU FOLLOW THESE RULES:
   • You want to eventually make a profit to help the U.S. Economy and pay more taxes!
   • You do not abuse the system
   • You follow all of the tax rules
   • You keep all your business income and expenses totally separate from your personal income and expenses
   • You maintain accurate business records
   • You file quarterly estimates when showing a profit
   • You file the necessary income tax forms as required by law

CHOICES FOR MILEAGE DEDUCTIONS - 2007

Business Miles Deductions for 2008

Choice A

Standard Miles @ $ 0.505 cents per mile

Choice B

Actual expenses + Auto depreciation
(if auto is used at least 51% for business)

For new cars placed in service in 2007 and after, in addition to regular depreciation allowance, a bonus depreciation of $ 10,610 is permitted for vehicles under 6,000 lbs, and $ 25,000 for vehicles 6,000 lbs and over, providing the vehicle is used at least 51% or more for business purposes instead of using the standard mileage, and the vehicle must not be leased.

DEFINITION OF A BUSINESS DEDUCTION:

Generally a business deduction must meet the following characteristics:

1. IRS Definition: To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.
2. Deductions must be supported by required receipts and/or other documentation.

THE REAL TAX BENEFITS OF A HOME BASED BUSINESS:

1. Ability to choose the most advantageous way to conduct business.
2. Legally minimize your tax liability.
3. Leverage legal tax breaks to help you build your business.
4. Establish and take control of your own tax favored retirement plan.
5. Utilize the tax savings to help you achieve all of your financial goals