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Tax and Tax Information * Income Tax

OMG-More Discussion About The Home-Based Business   
Ron Piner, CPA

"Oh My God", cries out my fifteen year old daughter. "Oh My God Is Right", replies her brilliant and handsome father. This is an example of two people saying the very same thing, but for entirely different reasons. I can't help but wonder when I read other income tax and business articles if the writer has the same understanding of purpose that I hold so very dear. When we go into business, the idea is to make money by fulfilling a dream. If we are not in pursuit of profit, we are not in pursuit of a dream, and we don't have deductions against taxable income. This my friends is how we play the game and I am about to explain what running a business is all about. Let me assure you that economic benefit is first, followed by the art of practicing income tax to enhance our return on investment.


Income tax deductions can be a beautiful thing. In order for a tax deduction to be beneficial, there must be some income. Income is the spice of life and how we survive and thrive in a free market society. When we first think of starting a home-based business (or any business for that matter), we are in hopes of providing goods or services that folks are willing to buy. If and when we can master this very difficult task, we can think of the joys of revenue enhancement as it relates to income tax savings through planning. When I think of the home office deduction, I am thinking of a profitable business that has thought long and hard in regards to its entity selection, its operations, and its plan for the future. I know that I can use expenses that would otherwise not have been deductible and use them to reduce not only income tax exposure, but will reduce exposure to payroll taxes as well (please check out my audio CD at www.mwibonline.com for the full picture on the home office deduction). When others write of the home office deduction, it makes me wonder whether other issues have been taken into consideration. Should the business be organized as a sole proprietorship to take advantage of this home office deduction? Would it have been better to incorporate and rent office space from our personal residence thus changing the way we record this transaction on our personal income tax returns? Does the person who has written the article have a good understanding of revenue procedure 2005-14, thus explaining how the sale of a principal residence, with business use of the property, is handled for income tax purposes? As an aside, the treatment of selling a principal residence with business use in the property can be quite favorable (audio CD for Home Office Deductions at www.mwibonline.com).

Article to continue below----------------------------------------------

Let Bush Tax Cuts End, Economists Say (Fox News)
NABE economist said Congress should let the Bush tax cuts expire.

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I think it is important to note here that the home office deduction is only of value when the business is profitable. In a year where the business is at a loss, the home office deduction is not currently deductible but can be carried over for future use. Remember the hobby rules when starting a new business venture and be sure that the business is seeking a profit. The guideline to follow is 3 out of 5 years should be profitable (2 out of 7 years for businesses involving the horse trade) to keep the burden of proof on IRS regarding whether or not one is seeking a profit motive. If this test is not met, it doesn't mean the jig is up, it just means that the burden switches to the taxpayer to determine profit motive. I just can't help but wonder, when I say home office deduction, and someone else says home office deduction, if we are actually both saying the same thing. "Oh My God", I really do wonder.


Ron Piner, CPA
Host of "Better Business"
Saturday Mornings at 10ET
ON WBIS AM 1190
www.wbis1190.com
www.mwibonline.com


Article to continue below----------------------------------------------

Rally To Push For Hike To Georgia Cigarette Tax (AP Via Yahoo! Finance)
Anti-smoking advocates say they know a way to help fill Georgia's $1 billion budget shortfall: hike the tax on cigarettes by $1.

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Ron Piner is a practicing CPA in Maryland. He hosts a weekly radio program, "Better Business", Saturday mornings at 10ET on WBIS AM 1190 (www.wbis1190.com).

What Other Authors say about Taxes

Being Careful To Choose Legal Tax Shelters by Carl LaFresnaye

There are some types of corporations that try to find loopholes in the tax laws that allow them to get out of paying such high taxes. There are some companies that look for tax shelters, which are ways...

Tax Credits for Retirement Savings by Richard A. Chapo

It is a well-known fact that Americans are miserable failures when it comes to saving for retirement. Well, the government is offering tax credits to change this for some of us.Tax Credits for Retirement...

RETIREMENT TAX HAVENS by Ken Morris

RETIREMENT TAX HAVENSFinancial planning is really life planning. Choosing a home, particularly a retirement home, involves many factors. With state and local taxes on the rise, retirees should look closely...

About That Tax Rebate Check... by Carl LaFresnaye

You're getting a tax rebate check! Lucky you! I'm sure you're already planning how to spend it – who wouldn't? There are plenty of ways to spend it – and a lot of things you can do in the meantime, while...

Minister's Housing Allowance by Alan D Campbell

Churches often provide ministers of the gospel with the free use of a home, which is often called a parsonage. The value of the parsonage is not subject to income tax up to the rental value of the home....

The Principles On Paying Tax by Teguh Budimulia

Why Tax Loop Holes Must ExistA long long time a go, in a country far far away, in China to be exact, there was a hunter that put nets in 4 sides of the forest. The hunter wanted to catch all animals. Then...

Don't Forget About These Frequently Overlooked Tax Deductions by Gray Rollins

When an individual files their tax returns each year they are able to claim a number of tax deductions. Many times a tax deduction can reduce the amount of money that is owed to the Internal Revenue Service...

Tax Breaks Make Homeownership Affordable by admin

<p>How Does Buying Beat Renting?<p>Melissa is single with no dependents and earns $50,000 a year. As a renter, she doesn't itemize deductions. Melissa eventually purchases a home and ends up...

The Tax Gifts Keep On Coming by Jeffrey Voudrie, CFP

<p>Capital gains tax must be paid when you sell an asset for a profit. For instance, if you buy a stock at $10 per share and sell it two years later for $15 per share, there is a $5 per share gain...

When To Use A Tax Attorney by Carl LaFresnaye

While most people would not require the use of a tax attorney, those who own their own businesses or who have a multitude of assets are wise to consult a tax attorney. In addition to the accountant that...

Consumer Energy Tax Incentives by

What the Economic Stabilization Bill Means to You The recently passed Emergency Economic Stabilization Act of 2008 included, extended and/or amended many consumer tax incentives originally introduced...

YEAR END TAX PLANNING AND PREPARATION FOR INDIVIDUALS - Tax Tips for 2004 including new tax relief due to the Working Families Tax Relief Act of 2004 by Dianne Goodman, CPA

Now is the best time to start thinking about your year end tax planning. These tax strategies can be put into effect by the end of the year and some as late as when the tax return is due. Planning now...

How To Prepare Your Income Tax Return by Don Kransteuber

The first step in your income tax preparation is to work out your total income. A person's total income includes many kinds of receipts such as wages, interest, alimony, lottery winnings and many more....

Top 7 Ways to Reduce Income Taxes by Kristine McKinley

Are you paying too much in income taxes? Are you getting all the credits and deductions you are entitled to? Here are 7 tips to help you minimize taxes and keep more in your pocket:1. Participate in company...

A Guide To Tax Forms by Carl LaFresnaye

Looking at the Internal Revenue Service's website (www.irs.gov) can be a bewildering experience. A vast array of tax forms greets you and figuring out which ones to use can be a chore. This guide is designed...


Who are the CPA Moms?      Your Tax Professional Forever!!!!

“CPA Moms - Tax Moms - EA Moms" are trade names given to Accounting and Tax Professionals who chose to work in an “relaxed” environment. Some "Moms" work from home, other work from personal offices. Not all are Moms, there are some Dads. We call them Mr. Tax Moms. CPA Dads or Enrolled Agents Dads.
Each Mom is independent. Once a client starts working with a Mom, the client will keep the same “Mom” year after year regardless of where the client moves or relocates. Being in a “relaxed” environment has many advantages. Lower overhead, faster response time, more availability, etc.
To be a member a CPA Mom, Tax Moms, or an Erolled Moms the Tax Professional must ALWAYS be in good standing with their state licensing agency, experienced, and must demonstrate a high level of ethics, professionalism and proficiency.
Tax Net Inc, the parent company for all CPA Moms, Tax Moms and Enrolled Moms, developed the marketing and on-line systems to help qualified Tax Professionals who "choose" work from their “relaxed” environment and offer better service at a lower price to the consumer.
Since the “Moms” do taxes and accounting of all complexities, there is always a Mom available for every level of work. Since each Mom has a private 800 number, you are just a phone call away, regardless of where you live.
For reliability and dependability of Tax Net, Inc, the parent company of the “Moms” organization click on the Better Business Bureau (BBB) icon.

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Index of Articles about Taxes

What Other Authors say about Taxes

Being Careful To Choose Legal Tax Shelters by Carl LaFresnaye

There are some types of corporations that try to find loopholes in the tax laws that allow them to get out of paying such high taxes. There are some companies that look for tax shelters, which are ways...

Tax Credits for Retirement Savings by Richard A. Chapo

It is a well-known fact that Americans are miserable failures when it comes to saving for retirement. Well, the government is offering tax credits to change this for some of us.Tax Credits for Retirement...

RETIREMENT TAX HAVENS by Ken Morris

RETIREMENT TAX HAVENSFinancial planning is really life planning. Choosing a home, particularly a retirement home, involves many factors. With state and local taxes on the rise, retirees should look closely...

About That Tax Rebate Check... by Carl LaFresnaye

You're getting a tax rebate check! Lucky you! I'm sure you're already planning how to spend it – who wouldn't? There are plenty of ways to spend it – and a lot of things you can do in the meantime, while...

Minister's Housing Allowance by Alan D Campbell

Churches often provide ministers of the gospel with the free use of a home, which is often called a parsonage. The value of the parsonage is not subject to income tax up to the rental value of the home....

The Principles On Paying Tax by Teguh Budimulia

Why Tax Loop Holes Must ExistA long long time a go, in a country far far away, in China to be exact, there was a hunter that put nets in 4 sides of the forest. The hunter wanted to catch all animals. Then...

Don't Forget About These Frequently Overlooked Tax Deductions by Gray Rollins

When an individual files their tax returns each year they are able to claim a number of tax deductions. Many times a tax deduction can reduce the amount of money that is owed to the Internal Revenue Service...

Tax Breaks Make Homeownership Affordable by admin

<p>How Does Buying Beat Renting?<p>Melissa is single with no dependents and earns $50,000 a year. As a renter, she doesn't itemize deductions. Melissa eventually purchases a home and ends up...

The Tax Gifts Keep On Coming by Jeffrey Voudrie, CFP

<p>Capital gains tax must be paid when you sell an asset for a profit. For instance, if you buy a stock at $10 per share and sell it two years later for $15 per share, there is a $5 per share gain...

When To Use A Tax Attorney by Carl LaFresnaye

While most people would not require the use of a tax attorney, those who own their own businesses or who have a multitude of assets are wise to consult a tax attorney. In addition to the accountant that...

Consumer Energy Tax Incentives by

What the Economic Stabilization Bill Means to You The recently passed Emergency Economic Stabilization Act of 2008 included, extended and/or amended many consumer tax incentives originally introduced...

YEAR END TAX PLANNING AND PREPARATION FOR INDIVIDUALS - Tax Tips for 2004 including new tax relief due to the Working Families Tax Relief Act of 2004 by Dianne Goodman, CPA

Now is the best time to start thinking about your year end tax planning. These tax strategies can be put into effect by the end of the year and some as late as when the tax return is due. Planning now...

How To Prepare Your Income Tax Return by Don Kransteuber

The first step in your income tax preparation is to work out your total income. A person's total income includes many kinds of receipts such as wages, interest, alimony, lottery winnings and many more....

Top 7 Ways to Reduce Income Taxes by Kristine McKinley

Are you paying too much in income taxes? Are you getting all the credits and deductions you are entitled to? Here are 7 tips to help you minimize taxes and keep more in your pocket:1. Participate in company...

A Guide To Tax Forms by Carl LaFresnaye

Looking at the Internal Revenue Service's website (www.irs.gov) can be a bewildering experience. A vast array of tax forms greets you and figuring out which ones to use can be a chore. This guide is designed...