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Old 02-03-2019, 04:42 AM
 
1,285 posts, read 536,565 times
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I am self-employed and therefore my own business. I can deduct my legitimate business expenses, legitimate business meals and entertainment, legitimate business mileage, self-employed health insurance, 1/2 of my self-employment taxes, my solo 401k traditional contributions (which are limited to the employee cap every years and and the employer cap of 20% of net income minus self employment taxes), and now the 20% pass-through deduction (which is the lower of 20% of my Schedule C net income minus the SE health insurance and minus SE tax deduction minus SE 401k contributions OR 20% of taxable income).

That's right off the top of my head.... It gets complicated!
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Old 02-03-2019, 11:51 AM
 
Location: Aurora Denveralis
8,717 posts, read 3,923,077 times
Reputation: 13380
Quote:
Originally Posted by Lucy_C View Post
I am self-employed and therefore my own business. I can deduct my legitimate business expenses...
As do I. (And have at many business levels from Sched C to S Corp, C Corp and LLC...)

What puzzles me is how many people have a strange interpretation of this process - that doing all this somehow makes it "free" or makes Unca Sam pay for it or something. We've got several posts now with OPs or suggestions along those lines - do this that or the other thing, and you magically have more money or something. Spend $100k a year on housing or property, and you can write off the return income. Etc.

Just to clarify for those who have never done business writeoffs or are doing it as mystical mumbo-jumbo, expenses are expenses - money that's gone and not coming back. No tax tricks pay for rent or insurance or make them free. The only gain is that you do not pay taxes on that money spent, which is often a pretty small fraction of the actual expenses - that is, if you hadn't spent $500 on postage, you'd pay around $75 more in taxes. But you're still out $425 net, hopefully in good furtherance of your business efforts.

Maybe that's dead obvious, but I've read too many fairly wild (anti-taxer) posts and suggestions that essentially boil down to it being better to burn a thousand bucks than pay taxes on it, hee hee hee.
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Old 02-03-2019, 01:03 PM
 
Location: Forests of Maine
31,755 posts, read 51,683,551 times
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My Dw would much rather spend more by her choice on business related stuff, rather than to pay a dime more in taxes.

We fully understand that we could spend less on the business, pocket more for ourselves and pay a bit more in taxes.
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Old 02-03-2019, 01:06 PM
 
Location: Aurora Denveralis
8,717 posts, read 3,923,077 times
Reputation: 13380
Quote:
Originally Posted by Submariner View Post
My Dw would much rather spend more by her choice on business related stuff, rather than to pay a dime more in taxes.

We fully understand that we could spend less on the business, pocket more for ourselves and pay a bit more in taxes.
I have neither praise nor objection; I just goggle at people who make a religion of it. We spent a lot on our employees for 12 years, but it wasn't for the tax breaks.
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Old 02-03-2019, 01:44 PM
 
7,823 posts, read 3,412,148 times
Reputation: 7076
Quote:
Originally Posted by Submariner View Post
My Dw would much rather spend more by her choice on business related stuff, rather than to pay a dime more in taxes.

We fully understand that we could spend less on the business, pocket more for ourselves and pay a bit more in taxes.
Now that’s some very strange sub-optimal behavior right there. Doing that when you don’t know any better is one thing, but doing it while fully understanding the implications is just, well, strange.
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Old 02-04-2019, 05:08 PM
 
3,204 posts, read 1,064,033 times
Reputation: 4768
Quote:
Originally Posted by TaxPhd View Post
Not deductible.
So now business conferences are not deductible as a business expense?

Quote:
Originally Posted by Quietude View Post
As do I. (And have at many business levels from Sched C to S Corp, C Corp and LLC...)

What puzzles me is how many people have a strange interpretation of this process - that doing all this somehow makes it "free" or makes Unca Sam pay for it or something. We've got several posts now with OPs or suggestions along those lines - do this that or the other thing, and you magically have more money or something. Spend $100k a year on housing or property, and you can write off the return income. Etc.

Just to clarify for those who have never done business writeoffs or are doing it as mystical mumbo-jumbo, expenses are expenses - money that's gone and not coming back. No tax tricks pay for rent or insurance or make them free. The only gain is that you do not pay taxes on that money spent, which is often a pretty small fraction of the actual expenses - that is, if you hadn't spent $500 on postage, you'd pay around $75 more in taxes. But you're still out $425 net, hopefully in good furtherance of your business efforts.

Maybe that's dead obvious, but I've read too many fairly wild (anti-taxer) posts and suggestions that essentially boil down to it being better to burn a thousand bucks than pay taxes on it, hee hee hee.
Right, but what if it's $20k in legit expenses? That's a lot of tax savings.

Quote:
Originally Posted by Lucy_C View Post
I am self-employed and therefore my own business. I can deduct my legitimate business expenses, legitimate business meals and entertainment, legitimate business mileage, self-employed health insurance, 1/2 of my self-employment taxes, my solo 401k traditional contributions (which are limited to the employee cap every years and and the employer cap of 20% of net income minus self employment taxes), and now the 20% pass-through deduction (which is the lower of 20% of my Schedule C net income minus the SE health insurance and minus SE tax deduction minus SE 401k contributions OR 20% of taxable income).

That's right off the top of my head.... It gets complicated!
Are you incorporated? Have you had a problem or been flagged for hobby loss rules yet?
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Old 02-04-2019, 05:10 PM
 
3,204 posts, read 1,064,033 times
Reputation: 4768
Quote:
Originally Posted by TaxPhd View Post
Now that’s some very strange sub-optimal behavior right there. Doing that when you don’t know any better is one thing, but doing it while fully understanding the implications is just, well, strange.
Please expand on the implications...Because this is a point of contention for many and I have not seen any verdict on it yet.
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Old 02-04-2019, 08:49 PM
 
7,823 posts, read 3,412,148 times
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Quote:
Originally Posted by Tencent View Post
So now business conferences are not deductible as a business expense?
I’m sorry, I should have been more clear. The day before, the day after, and the plus one aren’t deductible.
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Old 02-04-2019, 08:50 PM
 
7,823 posts, read 3,412,148 times
Reputation: 7076
Quote:
Originally Posted by Tencent View Post
Please expand on the implications...Because this is a point of contention for many and I have not seen any verdict on it yet.
Paying more taxes than necessary is sub-optimal. Why is this even a question?
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Old 02-04-2019, 11:43 PM
 
Location: Chicagoland
5,720 posts, read 9,046,821 times
Reputation: 6914
Incorporate as a pass-through business, expense everything your accountant says you can get away with, claiming losses carried forward - we can no longer do this , maximizing owner share of 401K and profit sharing, buying/renting out your commercial building(s)... And a new one I’m just beginning to explore - having the cash flow to self-fund a company health savings account for your employees...

Last edited by GoCUBS1; 02-04-2019 at 11:52 PM..
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