Home-Business Tax-Deductions ­
Do YOU Qualify?
Are You SURE?

by Ronald R. Mueller, MBA

Whether you’re a seasoned MLM pro or brand new to the MLM business, you’ve probably been told that there are lots of tax advantages to having a home based business, right?

But I’ll bet the well-meaning people who told you that, failed to tell you that there are certain requirements you must meet to qualify for those tax breaks. The requirements are not difficult to meet (if you know what they are), but taking the tax deductions without knowing the “rules to qualify,” is very, very risky.

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 not called “secret” because they’re classified, but because they’re not disclosed openly to the taxpayer.

If you meet the most important of the 8 factors, your business can qualify for thousands of dollars in legitimate tax deductions. Since they’re not ‘classified,’ here are the four most important criteria…

#1: Expertise of the taxpayer or his/her advisors.
This is a slam-dunk for MLM’ers, because we all have upline who have expertise, even if we do not.

#2: Time and Effort the Taxpayer puts into ‘running the business’.
They just want to make sure you’re running a real business, not just engaging in a hobby. How much “time and effort” is enough? The United States Federal Tax Court has ruled that “45 minutes a day, 4 to 5 days a week” qualifies.

#3: The Manner in Which the Taxpayer Carries On the Business Activity.
This one is common sense. Do you conduct your business mostly on the telephone, over the internet and in-home presentations (these are good), or mostly at the golf course, during lunches and at the pub (not so good). Just treat your business like a business.

#4: Is the Primary Purpose of your activity to ‘Produce a Profit,” or to ‘Produce Tax Write-offs’?
The best way to pass the profit-motive test, is to have a Business Plan, and that Business Plan should include a table of Income and Expense projections, clearly showing profitability at some point in the future. Note that you are not required to actually produce a profit in order to qualify for home-business tax deductions — just to show that you have the intent to produce a profit.

Congress wants to encourage the average taxpaying American to have a home-based business because it is good for the overall U.S. economy. So they passed legislation telling the IRS to give thousands of dollars in tax deductions and tax refunds to anyone who has a qualifying small or home-based business — OR who had one at any time in the past 3 years!

Why??? If you to have an additional stream of income in place, and you get caught in a downsizing/layoff situation, you’ll have another source of income which you could ramp-up to fulltime almost immediately. That helps lessen the impact of sudden unemployment on the U. S. economy.

They’re also betting that some of us will hit on a winner, strike it rich, and, then pay a LOT in taxes. Of course we won’t mind paying a lot in taxes if we’re making a boatload of profits, right?

By the way, you may even qualify for these deductions retroactively! Most of the tax deductions and write-offs now available to taxpayers who run a small or home-based business, also apply to the past 3 tax years.

That’s right! If you had a home-business in any of the past three years, you could be eligible to file an Amended Tax Return (Form 1040X), and possibly get a Refund Check for THOUSANDS of DOLLARS ­ plus interest!

Think of your home as a ‘place of business.’ Does a traditional business write-off its Gas, Electric, Water and
Sewer bills as ‘costs of doing business?’ Yes, of course, and so you can write-off a portion of your utility bills, too.

How about a business’s Rent or Mortgage? Yes again. So, if your ‘place of business’ is your home, you too can claim a tax deduction for a portion of the rent or mortgage on your home. (Finally, renters get a tax break!)

Your Vehicle can be worth HUGE tax deductions if you use the ‘IRS Two Business Location Rule’ to convert non-deductible ‘commuting’ miles into fully deductible business miles. Every 1,000 commuting miles could be worth $360 in tax deductions, if you understand this Rule and follow some simple procedures For many taxpayers, vehicle mileage deduction alone are worth some $3,000 to $5,000 or more in new tax deductions.

Do you have Kids who you give ’spending money’ or an ‘allowance’ to? If you ‘employ’ your kids to do part-time work in your home-business, money that used to be called ‘Allowance,’ can become ‘Payroll.’ That means the money you pay them would become tax-deductible to you, and the income they receive would be tax-free to them.

Do you, like most people, spend hundreds (or thousands!) of dollars on health-related expenses that are not covered by insurance? For example, annual deductibles and co-payments, or non-covered items like orthodontics, hearing aids, chiropractic, etc. By employing your spouse in your home business, there is a way you can claim every single dollar that anyone in your entire family spends on non-reimbursed health costs.

Do you find yourself talking business while you’re on Vacation? If you’re a serious entrepreneur, you’re always talking business, right? If you plan your trip properly in advance, you could deduct up to 100% of your expenses, including ‘play time.’

Do you know that you can immediately write-off up to $100,000 on purchase of business equipment ­ including certain New Vehicles? This is brand- new tax law, so even your accountant may not be aware of it.

These are all 100% Legal Deductions! There are dozens of others also. The rule of thumb is, ‘If a traditional
business can deduct it, your home-business probably can also.’

Today, anyone who does not have a home based business, is losing a valuable additional stream of income AND thousands of dollars in honest tax breaks.

Save a Bundle!
Ron Mueller
Author

EDITOR’S NOTE: Ron Mueller is co-author of best seller, “It’s How Much You KEEP, That Counts! Not how much you Make,” which he refers to as the “ultimate step-by-step tax reduction system for small & home-based businesses,” available on his web site for as little as $37.00 You can also subscribe to his free newsletter, “Tax Tips You Can Bank On” at the same web site.