Did my taxes today. I gotta convince the Wife we need more deductions.

[P&R Fan]

I just got the taxes to the accountant. My Wife retired from a pretty good job in 2009 and started an Ebay business selling Women's clothes. (Send me a PM if you want her address). Now we're both self-employed. If you've never experienced that you have no idea how frustrating that can be at tax time. In addition to that my oldest daughter is now married, so she's no longer a deduction. My son is now 18, although he still lives at home. Just got one more after him, my youngest daughter is 14. I think we need some more deductions. Missus P&R Fan will be 52 in October. I'm only 47. Yeah, that's the plan......I'm hoping for triplets.
Should be no problem, right?
Jim

 

[sourdough44]

Or you can go to China. The problem with dependent deductions is they cost more than the deduction is worth. I know, they're worth it though.

 

[LoboGunLeather]

How's this for a tax deduction?

As a holster maker I buy another gun, then make a holster for that gun and sell the holster, declaring the income from that transaction. The new gun is a tax deductible business expense!

Wife raises her eyebrows over the cost of a new gun? Easy, it's a business expense!

It just doesn't get much better than that.

 

[blujax01]

... I think we need some more deductions. Missus P&R Fan will be 52 in October. I'm only 47. Yeah, that's the plan......I'm hoping for triplets.
Should be no problem, right?
Jim

Let's see, if you start 9 months from now when the trips are 16, you will be 64 and the Missus 69, right?

You really want to deal with teenagers at that age?

No thanks!

 

[JcMack]

Get divorced and file separately.

 

[Faulkner]

I get a big deduction for tithing.

 

[gregintenn]

How's this for a tax deduction?

As a holster maker I buy another gun, then make a holster for that gun and sell the holster, declaring the income from that transaction. The new gun is a tax deductible business expense!

Wife raises her eyebrows over the cost of a new gun? Easy, it's a business expense!

It just doesn't get much better than that.

This is the route I went.

 

[35Rem]

At least its fun trying!

 

[P&R Fan]

I get a big deduction for tithing.

Yeah, so do I. That was actually one of my bigger ones.
I've got Malachi 3:10 memorized.
Jim

 

[P&R Fan]

How's this for a tax deduction?

As a holster maker I buy another gun, then make a holster for that gun and sell the holster, declaring the income from that transaction. The new gun is a tax deductible business expense!

Wife raises her eyebrows over the cost of a new gun? Easy, it's a business expense!

It just doesn't get much better than that.

I understand, Ray. I own a Private Security company and am a Private Investigator. I am licensed to be armed in both. I write off most of my guns, all of my ammo (practice, 'ya know, is important) and my holsters. Even am gonna write off the IWB N-Frame holster I bought from you as I have worn it on surveillance assignments.
These are all legitimate deductions, as they are either used on duty in my business or are for training.
But I still need more deductions, dang it. I know how to make more of the kid kind. Missus P&R Fan just laughs.
If I remember my Bible, and I do, so did Sarah. (Missus Abraham).
Jim

 

[CigarGuy]

Hate to be a spoiler here, but you guys DO realise that a deduction means you spend a dollar to reduce you taxes by a quarter or whatever your tax bracket is BUT you are still out .75 cents, right? I'd rather pay the quarter and KEEP the .75.

 

[BuckeyeChuck]

I too am self-employed. My largest expense is my cell phone, and that's not large. Since I'm fortunate enough to do all my billing in my hometown, I have virtually no travel expenses.

I've also billed by traveling on the road four to five days per week. I traveled very cheaply and used the tax law to its fullest benefit, which resulted in some large deductions. But now that I have virtually no expenses, I pay a lot more tax. Which is better?

Answer: paying the tax after you can not find any more expenses without inflating the expenses. There seems to be this idea that tax deductibility makes something free, so you should load up on as many expenses as you can. This is arithmetic idiocy. Such an illustration is easily made by the improperly-revered mortgage deduction.

Suppose you pay $1000/month and are in the 25% income tax bracket. That means the $1000 you pay every month moves from your post-tax pocket to your pre-tax pocket. The net "benefit" of the deduction is $250/month, meaning that you reduced your total interest to $750. Did that make the interest free? No, it only made it cheaper.

When I tell friends that I want to be 100% mortgage-free, they always ask "What about the mortgage deduction?" I say "What of it?" They say "Well, you'll pay more in taxes." This statement tells me only that my friends are hopelessly stupid when it comes to simple arithmetic. I often respond by saying "If you think that paying the bank a dollar in interest so you get 25 cents back from the goverment is a good deal, then I want to be your banker all day long."

So it is with self-employment. I take all the expenses I can legally take without artificially inflating my expenses: mileage, internet connectivity, cell phone, home office, computers and software, etc. But I'm pleased as a pig in poop to have virtually no expenses by billing in my hometown, because while I pay more tax, I have more money left over when all the taxes are paid than I would were I working out of town. This is not a gut feeling; it is simple, verifiable arithmetic. I hope next to be rid of my mortgage interest. My taxes will go up, but so will the total amount of money in my bank account.

If we want to pay less tax, we need to reduce taxation. It's that simple.

 

[BuckeyeChuck]

Hate to be a spoiler here, but you guys DO realise that a deduction means you spend a dollar to reduce you taxes by a quarter or whatever your tax bracket is BUT you are still out .75 cents, right? I'd rather pay the quarter and KEEP the .75.

After talking about business deductions with hundreds of people in the past eight years, I say that most people do not understand this. Most of them can never get past the fact that I buy my own health insurance on the open market and pay nearly $10k/year to do so. When I tell them my hourly rate, and that by quitting my job to become self-employed, I gladly accepted the $10k/year in health insurance premiums, they *still* don't get it.

They also lack the insight gained by paying their income taxes with checks that they must periodically write themselves, namely, that the amount of tax they pay is enormous unless they're in the privileged class of people under $50k/year income who no longer pay income tax (or very little) and in a significant number of cases, also receive their S.S. and FICA taxes back via the earned income tax credit. ("The earned income tax credit is neither earned, nor income, nor a credit. Discuss!" -- Linda Richman )

 

[CigarGuy]

After talking about business deductions with hundreds of people in the past eight years, I say that most people do not understand this. Most of them can never get past the fact that I buy my own health insurance on the open market and pay nearly $10k/year to do so. When I tell them my hourly rate, and that by quitting my job to become self-employed, I gladly accepted the $10k/year in health insurance premiums, they *still* don't get it.

They also lack the insight gained by paying their income taxes with checks that they must periodically write themselves, namely, that the amount of tax they pay is enormous unless they're in the privileged class of people under $50k/year income who no longer pay income tax (or very little) and in a significant number of cases, also receive their S.S. and FICA taxes back via the earned income tax credit. ("The earned income tax credit is neither earned, nor income, nor a credit. Discuss!" -- Linda Richman )

Don't get me started about the EIC!

 

[Iggy]

I think I'd rather pay the taxes than have more kids. Probably cheaper in the long run.
They don't call me the Grinch for no reason.

 

[DCWilson]

How's this for a tax deduction?

As a holster maker I buy another gun, then make a holster for that gun and sell the holster, declaring the income from that transaction. The new gun is a tax deductible business expense!

Wife raises her eyebrows over the cost of a new gun? Easy, it's a business expense!

It just doesn't get much better than that.

Depreciate the gun. Expense the ammunition.

 

[DCWilson]

Hate to be a spoiler here, but you guys DO realise that a deduction means you spend a dollar to reduce you taxes by a quarter or whatever your tax bracket is BUT you are still out .75 cents, right? I'd rather pay the quarter and KEEP the .75.

Exactly. Where's the advantage in spending five dollars on some item you don't have to in order to save one dollar in total taxation? I hear friends who are otherwise smart say to me at tax time "I've got to find some business losses to lower my taxes." Huh? What's wrong with finding a business policy that focuses on earnings retention?

I also don't get the people who think that Schedule A filers are getting some kind of unfair break because they can get more deductions to income than somebody who takes the standard deduction. Huh? People, if you don't have enough deductions to itemize and in consequence take the standard deduction, you are being given credit for thousands of dollars of itemizable deductions even if you don't have any deductible expenses!

 

[forresth]

2 of you self employed, and you can't think up more creative deductions????
use you car for business? lease it to your corporation. I've been deducting cell phones for about a decade now. The missus keep "product" all over the living room? add that sq footage to the home office. Etc.... Only those lacking in creativity pay taxes

 

[feralmerril]

Years back I had a close friend that chided me for paying lots of taxs. He was rideing high. He had started out with a sandwich shop, ended up with 3 or 4 and then had the finest resturant in a large town. He bragged to me he hadnt paid any taxs in quite a few years always showing loss`s. Then he got caught up with and lost everything. The last time I seen him he was manageing a gas station/ small conveniance store that he didnt own.
Way back I had a pair of friends. One got caught up in that movement that refused to pay taxs on some misconstrued inturpitation of law.
He got by a couple years and then they wiped him out. Our mutual friend made the mistake of driveing him to a meeting and although he didnt join, evidently a IRS agent probley took down his license plate in the lot as he got audited after that for many years!
I went through a bad divorice. We werent married all that long, but the job I had paid well and unlimited OT always seemed available. I bought a house and lived at work a average of 65 to 70 hours and sometimes more a week. Then the ex left. I was hit with outrageous supports etc due to haveing made big money the few years we were married. Then I couldnt eat on 40 hours and had to work more than the 65 hours that I had been doing. That was a self flameing fire that now made me pay even more taxs. Almost 15 years more of no life. Thank God the guard work wasnt too physical as I couldnt have done it if it was roofing or similar. No wonder some people run! I am okay now.

 

[LVSteve]

This post is another great example of why the US will never have a simple tax code. You guys ENJOY this "getting one over on the man" bit far too much. Does it not occur to you how much range time and wear on your ticker you are racking up chasing this BS? Get a simple flat tax code and it all goes away. Yes, I know industry will never allow it and there would be wails of anguish from the CPA industry and the IRS union as thousands of them got laid off, but it's still a nice ideal.