Posted by: Dahni | April 10, 2008

How Taxing

© 04/10/08

 By Dahni

Uncle Sam

   Whew, just finished our stuff for 2007 year ending. How taxing!    🙂

   The point of this blog is to like the picture of Uncle Sam saying, “I want you to save money.” I want to share a couple of ways that everyone can do this.

   Sometimes it is not a matter of how much we make that’s most important, but HOW MUCH WE KEEP!

    If you are expecting a refund, this is due to the fact that you ‘overpaid’ your taxes last year. I’m all for paying our fair share and against cheating, fudging or not even filing a return. But why should we overpay our taxes, give the government basically an interest-free loan on our money? We start in January and end December 31 of the tax year. If you are really fast and get your W2’s back early, you could have your refund back in March or April so this is around 15-16 months the government gets to play with our money. Can’t we find better things to do with our money?

   All we need to do is change the allowances we file. You can have as many as you want, but most people just claim themselves and think this is the only way to get a refund. Wrong! Just go to your employer and ask them. Make the changes and you can legally start getting a bigger paycheck as early as the following week. We need to pay our taxes not under or overpay them.

    The next way to save money is starting your own home based business. I will not say how much I made last year, but my expenses were almost $10,000.00. Maybe that seems like not much or a lot to you but, what if that amount was on groceries. We eat the food and it’s gone. No one generally expects to get a deduction for that. But if you are not running, considering or thinking about starting a home based business, you are literally throwing away money, like I would have tossed $10,000.00 into the wind, if I did not have a business.

    This may really shock you, but what if the government would pay you for your gas? They will if you have a business.

   Let us say gasoline is $4.00 a gallon and your vehicle gets around 20 miles per gallon (mpg). Four dollars divided into 20 mpg = $.20  So, it costs about twenty cents to drive one mile. If you had your own business, in 2007 the government allows $.45 per mile that can be deducted from your taxes. Can you imagine the U.S. government paying for your gas (.20) and giving you an extra (.25) for every mile you drive? That’s almost like making a profit on what you burn up. I know, the extra is supposed to be used for ‘wear and tear’, but if you did not have any, I guess you could just put the rest into your pocket. It’s still better than throwing it away!

   Running a home based business is not as hard as one might think. There are really only three things we need to understand.

  1. Know the rules or have a professional that does
  2. Keep good records
  3. Intend to make a profit

    Seriously, intend to make a profit? Well of course, why would one run a business for any other reason? We are not talking about a hobby or what many think is ‘the hobby rule’ where you have only around three years to make deductions before you have to show a profit. This is a legitimate business and these deductions can be taken as long as they are being offered, but we need to have a business that ‘intends to make a profit.’

    Uncle Sam wants us to save money. Why throw it away. That would be to me, more taxing than going through all the receipts at tax time.

    Oh by the way, I think in 2008, the mileage allowance is .48 per mile. Money for burning money? Cool!

 Just Imagine,

 Dahni


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