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Home Business Taxes - Give Yourself A Raise
By Ron Sedlak
Your take home pay could go up next week.

What? You mean a raise?

Yeah ... sort of ... give yourself a raise.

Get serious! Okay, okay ...

This info came from Tax Expert Ron Mueller at a conference I attended in Tampa in June 2008.

I was quite interested in the concept of immediately increasing your TAKE HOME PAY from your job starting next week.

You can use the extra money to build your home business. This is exactly how it works.

You are allowed to change your W4 form with your employer. This is a form that tells your employer how much tax to withhold from your paycheck.

Legally, any time you have a 'change in financial circumstances that could affect your taxes' you can ask your employer for a W4 form, fill it out
and give it back to him.

Starting or expanding your at home is such a change. You adjust this form so that only the absolute minimum legal deductions are withheld at

Your boss is OBLIGATED to change your withholding rate starting the very next paycheck. He does not verify with the tax department first.

Check with a knowledgable tax pro IN YOUR AREA on this before doing it, so you do it exactly right and legally for your area.

If you think the above does not apply to you, you have a 75% chance of being wrong. 75% of employees have $2,000 too much in taxes withheld during the year and thus get a refund.

Getting a $2,000 tax return is bad! It means you were overtaxed all year and essentially gave $2,000 as an interest free loan to the tax department for
the year!

And you do this every year? What kind of investment is that? To heck with that! YOU could be using that money to create MORE income for you and your family.

You could be building your home with that money.


And how about aiming for a ZERO tax return? That means you are not overpaying taxes. Or maybe you will need to pay a few hundred to the tax department at tax time (you can have it in reserves for the purpose).

Okay, so that is just a start.

You can save $3,000 to $5,000 per year in taxes (additional to above) by creating and running an Intenet you have as home-based

You can take ALL OF the TONS of tax deductions legally due to you as a home-based owner. You do not need to prove anything to start taking these deductions.

They are LAW passed by CONGRESS (USA).

Why? Because in a stroke of genius, Congress decided that it would be good for people to have a home-based busines so that if they got laid off or lost their job for any reason, they would immediately have something they could RAMP UP QUICKLY to a full time income!

This all applies to Canada as well and likely many other areas. Check with a tax expert in your area for exactly how this applies in your area.

You DO have to keep detailed records of what you are doing so you can PROVE what you are doing is valid should you ever receive a tax audit.

What is legally required in order to be able to take home deductions?

1. INTENT TO MAKE PROFIT, meaning you do some advertising of your and do other actions that shows you are clearly trying to make money with it.

Keep an accurate record of all this in a day planner or log so you can prove what you are actually doing in case of an audit.

2. Regularly work your at least 45 minutes per day 4-5 days per week. 4 hours a week is enough to satisfy legal requirements.

Keep evidence of hours worked 'day planner' type notes.

3. Run your like a business. Have a seperate bank account for it, do not mix and personal funds, have a seperate credit card, records, books, etc.

4. Have an office of some sort in your home that is VISUALLY IDENTIFIABLE AS ONE. This means anyone can look and say, YES, that is an office working
space. It does not have to be fancy, BUT IT NEEDS TO BE THERE.

If you have this, you are allowed to deduct a percentage of many common HOME EXPENSES such as mortgage, rent, home insurance, electricity, gas,
oil, etc. etc, AS EXPENSES.

There are books on this subject in your local library or book store. Do some study and make the full list and TAKE THE DEDUCTIONS!

How much of your home expenses can you deduct? For home related deductions it depends on the size of your office in relation to your home.

If your home is 2000 square feet and your office space is 200 square feet, that is 10% and you can deduct 10% of all these expenses as TAX DEDUCTIONS.

It's legal!

As far as car expenses go, you need to keep an accurate MILEAGE log in your car which shows EVERY TIME YOU USE YOUR CAR and whether it was or personal AS THE PRIMARY PURPOSE OF THE TRIP.

So every time you use your car (as much as possible) you can make your primary purpose. It does not matter what the secondary purpose was.

You need to plan all your trips in advance. So if you need to go grocery shopping for example, you schedule your office supplies purchase run for the same time and that is the primary purpose of that trip.

If you need to go to the post office to mail a letter to your mom you need to be checking your P.O. box. Think of these things in advance.

Benefit: every trip by car that you can log as as the PRIMARY PURPOSE increases the percentage you can deduct FOR ALL YOUR CAR EXPENSES FOR THE WHOLE YEAR!

So if you can prove with your log that 60% was use, then you can deduct from your income taxes 60% of ALL CAR EXPENSES ...repairs, insurance, maintenence, car washes, GAS, oil, etc.

That is a lot of extra money in your pocket right there!

I hope this is useful to you.
Ron Sedlak is Director of the 'Shifting Paradigms' membership organization, specializing in success through self-education and home business. Please visit this website for more info! www.paradigmchanging.com


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