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Title: "Tax Breaks For MLM Businesses"
Written By: Peg Bastin
Web Site: http://www.BastinMarket.com
© 2005 Peg Bastin
Everyone knows there are lots of tax advantages when you have a home business. Even MLM, right? Are you sure?
Yes there are, as long as you meet certain requirements to qualify for these tax breaks. The requirements are not difficult to meet, but don't take these deductions without knowing the rule to qualify.
IRS auditors are given a set of 8 Secret Factors to use in determining if your activity qualifies as a legitimate home-based business. They're called 'secret' because they are not disclosed openly to the taxpayer.
You can qualify for thousands of dollars in legitimate tax deductions if you meet the most important of the 8 factors. These factors are not classified, so here are the four most important criteria:
- Expertise of the Taxpayer or His/Her Advisors. MLMers qualify cause we all have upline who have expertise, even if we do not.
- Time and Effort the Taxpayer Puts Into Running the Business. How much time and effort is enough? The rule says 45 minutes a day, 4 to 5 days a week qualifies.
- The Manner in Which the Taxpayer Carries On the Business Activity. Conducting your business mostly on the telephone, on the Internet, and in-home presentations are the best ways to qualify. You can still claim deductions for business done on the golf course, at lunch, or the pub, but keep the necessary records and be sure to conduct your business like a business, not a hobby.
- Is the Primary Purpose of Your Activity to Produce a Profit, or to Produce Tax Write-Offs? Have a Business Plan that includes a Table of Income and Expense projections, clearly showing profitability in the future. You are not required to show a profit, but you must show that you intend to produce a profit.
Congress has told the IRS to give huge refunds and deductions to taxpayers who have a home-based business, OR anyone who operated one at any time in the past 3 years. Why? It's good for the economy. If you get downsized in your job, you'll have another source of income you can work on full time. This will also help keep unemployment rates down. They're hoping maybe some of us will strike it rich, and then pay a LOT in taxes!
You may even qualify for these deductions retroactively! If you had a home-business in any of the past three years, you could be eligible to file an Amended Tax Return, and possibly get a refund plus interest!
Just as a traditional business can write-off utility, rent or mortgage bills as "costs of doing business," you too, can write-off a portion of your utility bills also.
You can claim huge tax deductions for your vehicle if you use the "IRS Two Business Location Rule" to convert non-deductible "commuting" miles into fully deductible business miles. Learn this rule and follow some simple procedures and vehicle mileage deductions can be worth up to $3,000 to $5,000 in new tax deductions.
Do you give your kids an allowance? If you "employ" your kids to do part-time work in your home business their "Allowance" would become "Payroll" and therefore be tax deductible to you, and tax-free to them.
Do you talk business while on vacation? You could deduct up to 100% of your expenses, including play time, if you plan your trip properly in advance.
A brand new tax law allows you to immediately write off up to $100,000 on the purchase of business equipment, including certain new vehicles. Be sure your accountant is aware of this new law.
These deductions are 100% legal! There are many others also. If a traditional business can deduct it, your home business probably can too. So follow the rules, keep proper records, have fun, and make some money!
I'll be back again soon with some more tips and resources.
About the Author
Written by Peg Bastin, who is an avid Internet marketer, glad to help others get started in their own online biz, with Ron Mueller, author of "It's How Much You KEEP, That Counts! Not How Much You Make" © 02/15/2004
Tired of Overpaying Uncle Sam? http://www.bastinmarket.com/taxpreparation.html
Free ebook: http://www.bastinmarket.com/taxesdl.html
Today's article was originally received for publication in February 2004. The author has given full permission to publish it either electronically or in print, free of charge in its entirety as long as the article content remains unchanged as is published here today and that the authors copyright with resource box are included.
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