Ella Posted July 11, 2021 Share Posted July 11, 2021 What are some common taxation loopholes that are worth knowing if you run/own a business be it big or small? I know there are tons of them out there but they seem to be hidden or not widely talked about, likely because the average joe/jane isn't meant to know about them. 1 Quote Link to comment Share on other sites More sharing options...
James Posted July 12, 2021 Share Posted July 12, 2021 Lease your car. That one is one of my favorite. Get your business to lease your car for you. Then you have the home office write off. https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction I honestly do not know very many I have a team that takes care of the taxes for me and I trust it is their job to understand all the inefficacies in the tax code for us to take advantage of. Another little thing when you are coming up close to the end of the year and you see you may be pulling some profit you can invest back into the business as an expense. Maybe have a big party for the team for a job well done or something. Get that net profit down to zero and have no taxes to pay. 1 Quote Link to comment Share on other sites More sharing options...
Sophia Posted July 13, 2021 Share Posted July 13, 2021 2 hours ago, James said: Lease your car. That one is one of my favorite. Get your business to lease your car for you. Then you have the home office write off. https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction I actually know about this one! My aunt's ex does this for her. He owns a business and leases a car through the business for her so they effectively pay nothing for it when all is said and done. 1 Quote Link to comment Share on other sites More sharing options...
Scarlett Posted July 18, 2021 Share Posted July 18, 2021 There are some states, from what I heard (I never verified this) where you can get money back for things like pet items and child care, even without being on any kind of welfare system. Instead of getting monthly checks like a welfare system, you will receive money back with your income taxes. Now I don't know the process nor do I know if this is legit, but it might be worth looking into if you have a lot of pets or kids! 1 Quote Link to comment Share on other sites More sharing options...
Damon Posted July 18, 2021 Share Posted July 18, 2021 I'm not aware if any loopholes myself, but am curious to find out. Are there any loopholes for someone working a freelance job? Quote Link to comment Share on other sites More sharing options...
James Posted July 19, 2021 Share Posted July 19, 2021 On 7/18/2021 at 10:18 AM, Damon said: I'm not aware if any loopholes myself, but am curious to find out. Are there any loopholes for someone working a freelance job? Nerdwallet has an alright list of the most common self-employment tax deductions https://www.nerdwallet.com/article/taxes/self-employment-tax-deductions Quote Link to comment Share on other sites More sharing options...
Brenden Posted July 19, 2021 Share Posted July 19, 2021 Whenever I hear "Loopholes" I automatically think it's something bad and would be frowned upon if I tried to use it. I don't know why, but maybe because it feels like you're finding these secret ways to cheat or something. But in reality, it's not cheating, it's something allowed, that's why it's a loophole. Anyway, I guess I had to say that for myself, as I always worried about Loopholes being something you shouldn't do. Quote Link to comment Share on other sites More sharing options...
James Posted July 20, 2021 Share Posted July 20, 2021 21 hours ago, Brenden said: Whenever I hear "Loopholes" I automatically think it's something bad and would be frowned upon if I tried to use it. I don't know why, but maybe because it feels like you're finding these secret ways to cheat or something. But in reality, it's not cheating, it's something allowed, that's why it's a loophole. Anyway, I guess I had to say that for myself, as I always worried about Loopholes being something you shouldn't do. I would much prefer a flat tax system and to be able to fire my CPA team. It does not seem like that is to popular with a lot of society though. I think it would be the most fair to just say ok 20% taxes on everyone. No write offs, no deductions, just tax net income. The tax system seems like it was built for the wealthy to take advantage of and to build jobs for the accounting world. A flat rate system would be super easy to administer and require so much less work that it would likely save govt money and they would collect more. Loopholes is a bad sounding word but unfortunately they are there and you have to take advantage of them or you are putting yourself at a disadvantage. We play the hand we are dealt but it does not mean we agree with it. The bills that passed in the name of Covid relief in 2020 benefited the wealthy in such a disproportionate way that I just wish the population knew what was going on. Check out carry back losses and what changed. It will make you sick. https://tax.thomsonreuters.com/blog/how-the-cares-act-affects-net-operating-losses/ Quote Link to comment Share on other sites More sharing options...
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