| The taxes you have to pay each year have nothing to | | | | from my home as an Independent Travel Consultant. |
| do with how much you earn. How much you income | | | | As a travel consultant I write reviews of hotels and |
| taxes you pay is directly impacted by how much you | | | | resorts and recommend an alternative to time share |
| know about legal and acceptable income tax | | | | condos to people looking for a great deal on hotel |
| deductions. Doing your income taxes yourself or | | | | stays. |
| handing all your income statements and receipts to the | | | | Now since I own a small business I am able to claim |
| tax preparer at the mall each spring is a sure-fire way | | | | the use of my car as an income tax deduction. I can |
| to pay way more income taxes than you should. | | | | claim most of my automobile expenses because I use |
| The tax system is complicated but with the help of a | | | | my car mostly for business. Every day I make a list of |
| tax specialist or a qualified accountant you should be | | | | where I am going to drop off or post advertising for |
| able to recover a large amount of the income taxes | | | | my business. That list could include the dentist, where I |
| that are taken from your pay check each week. | | | | have an appointment after I post a flyer. It could include |
| There are many legal way to reduce or completely | | | | the super market, after I post a flyer on their bulletin |
| eliminate the amount of taxes you have to pay each | | | | board I might get some groceries done. It could be golf |
| year, and this article will focus on one of them. How to | | | | course club house, where I ... You get the point. Every |
| save money on your income taxes by starting your | | | | place I go during the day I go to advertise my business. |
| own home based business. | | | | If there is something around that place I need to or |
| The current tax system is progressive in the sense | | | | want to do, that's just a coincidence and it makes 90% |
| that the more money you earn the higher the | | | | of my automobile expenses tax deductible. |
| percentage of taxes you have to pay. A person | | | | Since I have an office in my house I can also claim a |
| earning $30 000 a year might pay close to 30% in | | | | portion of my mortgage, taxes, heat, lighting, |
| income taxes while someone making $100 000 would | | | | maintenance, etc. My office is in the basement and |
| be in the 40% tax bracket. | | | | that constitute a large percentage of my house. The |
| You are not taxed on your total income but on what's | | | | percentage of house expenses I can claim as |
| called your "Net income". This is calculated by | | | | deductions is close to 30%. This means 30% from the |
| removing personal and basic deductions from your | | | | mortgage, taxes, water bill, heat and house |
| total income. Most companies will take income taxes | | | | maintenance. This can add up to a few thousand |
| from your pay check each week based on your | | | | dollars in income tax deductions each year. |
| estimated net income for the current year so that you | | | | The use of a telephone, the internet, professional |
| don't have to pay income tax at the end of the year, | | | | membership, website hosting and any other fees are |
| but you will not receive a refund either. | | | | required for me to conduct business they too can be |
| So if you earned $40 000 for the year and your basic | | | | claimed as business deductions. |
| deductions came to $8 000 your net taxable income | | | | I am a travel consultant, so most of the expenses |
| would be $ 32 000. This amount taxed at 30% would | | | | incurred during my vacations are tax deductions. That's |
| mean that you would have had to fork $9 600 over to | | | | airfare, hotel stays, car rentals, meals and other |
| your governments tax department throughout the | | | | expenses. Every day while I'm on vacation I produce a |
| year. | | | | small video about the resort or the locations I visit using |
| Now that you understand that you are taxed on net | | | | my camcorder. These videos are then used as |
| income after deductions doesn't it make sense to find | | | | internet commercials for my business and this makes |
| ways to legally increase the number and total amounts | | | | my vacations completely tax deductible. That is 3 or 4 |
| of these deductions? If you earned $40 000 a year | | | | trips a year that are a legal tax deduction for my |
| and had $40 000 in income tax deductions, your | | | | business. |
| taxable income would be zero and you would recover | | | | Computers, DVD players, cameras, camcorders, cell |
| 100% of the income taxes you paid for that year. That | | | | phones are all essential tools of my trade and are |
| is how the wealthy manage not to pay income taxes | | | | therefore tax deductible. |
| each year; by having enough deductions to offset their | | | | As you can see, these are things I owned and |
| total income. | | | | activities I did before having a business. But now that I |
| One of the best ways to create substantial tax | | | | am a travel consultant I can deduct them and lower |
| deductions is by owning and running a small business | | | | the amount of income taxes I have to pay each year. |
| from your home. By having a home based business | | | | These practices in particular allowed me to save more |
| you can start claiming deductions on things and | | | | than $4 000 in income taxes last year. |
| activities that are considered of a personal nature by | | | | Do yourself a favor and consult with a tax specialist or |
| others. | | | | qualified accountant to discuss the advantages of |
| Here's my example | | | | starting your own home based business and get your |
| I have a full time job but I also run a small business | | | | income taxes back. |