Tyler and Mimi Ford – ViSalus Home Business MLM

Claiming Tax Deductions for HOME BASED BUSINESS START-UP COSTS

“Costs incurred during the START-UP PHASE of a business are generally deductible over a 15 year period” (i.e., each $1,500 in start-up costs would be deducted at a rate of $100 per year for 15 years). [IRC Sec 195(c)(1)(A) ]

WHAT IS THE “SPECIAL DEDUCTION” FOR 2011?

Any taxpayer, who begins operation of a new business in 2011, may deduct ALL start-up costs (up to $5,000 maximum) on their 2011 tax returns — no need to spread the deduction over a 15 year period. [IRC Sec 195(b)]

EX: $5,000 in Start-Up Cost deductions, for a person in a 28% tax bracket, would generate a $1,400 tax Refund.

If Start-Up Cost deductions exceed the amount of money earned this year in the home-based business itself, most or all of the additional deductions may be applied against any other source of income such as a W-2 job, which could possibly even drop the taxpayer into a lower tax bracket. This one-time write-off provision in the tax law is valid only during 2011, and therefore will set to expire permanently at midnight, December 31, 2011. Even IF Congress reinstates this provision in 2012, a business begun after Jan. 1, 2012 will not be able to claim those deductions until April 2013 – when 2012 Tax Returns are filed. Not activating a new home-based business by December 31, 2011, will delay tax-deductions for Start-Up Costs by at least 15 months.

WHAT ARE “START-UP COSTS?”

The term includes business related costs you incur prior to actually beginning to offer goods or services for sale# i.e., the costs of getting ready to open your business. They are generally the same types of expenses that will be called “business operating costs” once you are actually operating a business. [ IRC Sec 195(c)(1)(B) ]

Q: When does the start-up period begin?

A: When you begin thinking about starting a business.

Q: What are some examples of tax-deductible “start-up costs?” [IRC Sec 195(c)(1)(A) ]

A: Seminars, Workshops, Courses and Books on how to run the business, investigating or researching one or more business opportunities, travel for meetings, conventions or interviews or to obtain education from experts, telephone and cellular phone costs related to new business start-up, office supplies and some business tools(briefcase, iPad, business cards, etc.)

In regards to ViSalus examples of deductable items would include (sure there are many more):

1. Executive Success System (ESS)
2. Business Cards
3. Banners
4. Clothing
5. Taster Packs
6. ViSalus Events – book and pay for your Vi events for 2012 before 2011 ends
7. Marketing Materials
8. Vi-Net

DOES NOT INCLUDE vehicles, furniture, computers and other depreciable assets [IRC Sec 167(a)] Caveat:

The IRS “default setting” for start-up expenses is to deem that the taxpayer made a decision to amortize the amounts over a 15 year period. [Reg Sec 1.195-1T (b) ] To keep that from happening, and claim your deductions immediately, you should take 2 actions: [Reg Sec1.195-1T (b)]

1. Claim your Start-Up Expenses on IRS Form 4562 (“Depreciation and Amortization”)

2. Attach an “election statement” to your tax return, stating specifically that you wish to claim all (or the first $5,000) of your Start-Up Expenses in 2011, “the year in which your business became active.” By the way, since Start-Up Expenses are deductible in the year in which the business begins active operation, if the business you are investigating never gets off the ground, you will not get any deductions. [IRC Sec. 165]

PS: Your AUTO DELIVER and Vi-Net are A TAX DEDUCTION! CLICK HERE TO FIND OUT HOW.

PSS: OH Ya - almost forgot most of us get our monthly product for FREE!

THE ABOVE INFORMATION IS FOR ILLUSTRATION PURPOSES ONLY, AND SHOULD NOT BE TAKEN AS TAX ADVICE. ALWAYS CONSULT A TAX ADVISOR WITH EXPERTISE IN HOME BUSINESS TAX LAW PRIOR TO USING THIS, OR ANY, TAX DEDUCTION INFORMATION.

How To Deduct Almost Everything On Your Taxes! Play Now | Play in Popup | Download

Click above to listen to an interview podcast with Glen Polycn.

The tax benefits of network marketing are hugely undersold. If more people understood the tax benefits of a home based business more people would get involved for the tax advantages alone.

Todays post was written by a guest, Glen E. Polcyn, who is a Certified Financial Planner and Vemma Elite member. Glen has just written a book called How To Deduct Almost Everything!… And Have Uncle Sam Pay You! which is a great little read for those who want Uncle Sam to pay for your fun.

Did you know that you can deduct the majority of your hobby expenses such as cycling, golf, bowling, etc. as legitimate deductible business expenses?

Here’s how. Whatever your hobby is, as long as you are conducting it with the intent of promoting your Vemma business, your expenses are deductible!

Using Golf as an example, let’s say that you spend the following:

• Golf shirt with embroidered Verve emblem (advertising) $75
• Embroidered athletic socks (advertising) $20
• Golf shoes adorned with Verve Logo (advertising) $200
• Golf Clubs wrapped with Vemma, Verve or Thirst logos (advertising) $800
• Golf bag with Verve logo em-blazed on the side (advertising) $200
• Thirst bottle with Thirst inside (advertising) $20
• Product samples on the course (promotion) $100
• Green fees to prospect and promote Vemma products $100

Add it all up <$1,515.00> in business expense deductions x 30% average combined federal and state tax brackets = $454.50 in tax savings. This is a direct reduction or actual savings in your golf expenses!

Now if your golf country club membership is $5,000.00 per year, that would be another $1,500.00 saved in taxes. ($5,000 x 30%). How would you like to receive a 30% discount on your annual country club membership fees?

NOTE: Be careful not to get tripped up on the 50% allowable entertainment expense deduction. If you are purchasing green fees, food or beverages, etc. for a prospect, the IRS classifies this as an entertainment expense and you are only allowed to deduct 50% of your prospects expenses. And you must discuss Vemma, the product or opportunity, before, during or after your outing.

For an explanation of how this works see pages 9-11 in my book, “How To Deduct Almost Everything.!”

Network marketing is really the perfect home based business, especially from a tax standpoint. (See pages 6 -7.) It is your  independent contractor status that makes all of these business expense deductions possible. You receive your income via a 1099 VS an employee who receives a W-2. (See page 42 for an explanation.)

As always, be sure that you review this tax saving strategy with your competent tax preparer.

How do I know if my tax preparer knows this? Pages 37 – 40 will answer this!

And remember, as long as you are conducting your business in a businesslike manner, Uncle Sam will pay you to build your business!

How? Through the tax savings!

Glen E. Polcyn, CFP – www.howtodeductalmosteverything.com