One person and family owned businesses have so many tax benefits that Merri and I have paid so little tax from all our earnings, that we are almost embarrassed. I stress the word almost.
Our tax savings have been based on really conservative advice as well. In fact we probably could pay less. At one stage, the IRS conducted a full field audit that took two years. The examiner tore our tax returns apart and looked at everything in the deepest detail. The end result was a $114,000 refund. We had been so conservative that we paid more tax than required over the two years audited.
Conrad Oertwig (far right) at our North Carolina home.
This is why I rely on our tax preparer, Conrad Oertwig, who is a master of tax savings information for small business tax savings ideas.
Conrad Oertwig can assist you on tax matters. IN FACT THIS FALL, Conrad will be offering a course and personal service on ways that one-person and family business owners can have more cash via tax savings. Conrad is offering a report on seven ways to put more cash on the table when you earn and is releasing a course on how to save taxes this fall.
Conrad’s report is “7 Secrets to Paying Less Tax… for the One-Owner Business”. He sent me this note to share with you about the report.
From: Conrad Oertwig
One hard fact of life is that taxes are cash. It’s a mistake to think of taxes as taxes. If you want to create more net worth, you need to think of taxes as cash.
How much tax cash are you leaving on the table? Thousands? Tens of thousands?
Here are just three of seven secrets I will share with Gary Scott readers at the October 17-18 Value Investment Seminar and in my report. Learn how to pay less tax, have more cash, and build your net worth.
Secret # 1: Gain $12,976 by using two vehicles for business. In the past, your tax adviser likely told you to drive one vehicle for business and the other vehicle for personal purposes. This old advice made it easier to claim the one car as a business car because no business mileage log was required back then. But that’s no longer true.
Today, tax law requires you to keep a mileage log to prove business use. That changes the game. With today’s rules, you gain nothing by using only one car. But the new mileage log rule gives you a possible opportunity to increase your tax deductions.
First, you might ask: Will the IRS allow me to use more than one vehicle for business?
Yes! The IRS official method for computing business use of a single vehicle is to divide business miles by total miles driven. IRS Form 4562, which is filed by proprietorships and corporations, contains spaces for up to six vehicles. In other words, yes, the IRS recognizes that you can drive more than one vehicle.
Here are the two basics that make the two-vehicle strategy work:
1: You drive more miles than your spouse, and
2: Both vehicles are somewhat close in adjusted basis.
To see if you can benefit from this two-vehicle strategy, and by how much (the minimum amount, really), apply the arithmetic from the before-and-after example below to your vehicles.
Before. You drive 2,000 personal and 28,000 business miles on your vehicle (93% business). Your spouse drives 8,000 personal miles on vehicle 2. Each vehicle has an adjusted basis of $24,000. Your maximum depreciation and/or Section 179 deduction is $22,400 (93% times $24,000) on the one vehicle you currently drive for business.
After. You switch vehicles with your spouse every week. You now have 73.7% business use of vehicle 1 and 73.7% business use of vehicle 2. This produces $35,376 in maximum depreciation and/or Section 179 deductions (73.7% x 2 x $24,000).
You gain $12,976 in new deductions ($35,376 minus $22,400). You did not have to drive one mile further or spend one additional penny. You simply had to know (as you learned here) that this strategy could work for you.
Secret #2: Have a second office in the home.
Have you been told that because you have an office outside your home that you may not have an office in the home? That’s wrong!
IRS publication 463 states, “You can have more than one business location, including your home, for a single trade or business.” Learn why in the free report due to IRS publication 587 you want your office in the home to qualify as an administrative office.
Secret #3: Travel by cruise ship and deduct up to $680 a day.
When you know the rules, it’s easy to travel to a business meeting by cruise ship rather than by airplane or other mode of transportation. Tax law provides various ways for you to deduct a cruise. The free report shows an example of a trip to St. Thomas in the Virgin Islands from California or New York.
Learn about IRS Regulation 1.274-4 that gives you two one-owner business friendly rules that you can use to your benefit:
1: The United States means the 50 states and the District of Columbia.
2: Transportation cost to a foreign destination for seven days or less, excluding the day of departure, is not subject to an allocation between business and personal days.
In the example if you fly to Miami, Florida, board a cruise ship that will take five days to arrive at St. Thomas your deductions will include the cost of:
1 : Travel to Miami
2: Cruise ship fare to St. Thomas (not to exceed tax law’s luxury boat limits that range in 2014 from a low of $566 to $680 per day, depending on the dates of travel)
3: Food and lodging in St. Thomas
4: Airfare to Miami
5 : Travel from Miami to home
You have to admit, tax knowledge can be fun which is why I want to send you this free report.
I specialize in “nuts and bolts” tax strategies that bring tax law to life so that business taxpayers and professional tax advisers can put the law to work for them. In fact, my mission is to clarify taxes so that you take control of your money.
Plucking common sense from the tax law is time consuming and difficult work. Yet, after more than 25 years, I still get great satisfaction when I can clarify and extract tax dollars from the tax law not only for your pockets but also to add to your net worth. In fact I have extracted over 400 tax savings tips and would like to share the most important lessons with you so am creating a course that will share seven tax secrets each month for the next year.
Learn how to have a tax advantaged one person or family owned micro business.
Conrad has dozens of tax savings secrets. To help you get an early start, we will send you Conrad’s report “7 Secrets to Paying Less Tax… for the One-Owner Business”, contact Conrad at firstname.lastname@example.org.