Taxes are tricky! Having a firm that specializes in bookkeeping and taxes is probably the best bet for your small business. KYB has the five top tax breaks for the self-employed. And, if you think taxes can be tricky, tax evasion can cost a lot!
If your looking to make the most out of being self-employed (and frankly who isn't) deduct for these 5 items:
- Home Office: This is based on what percentage of your home the office takes up or the actual square footage of the space.
- Itemized Office Costs: You can deduct part of your utilities if they are utilized for your work. Itemize your actual expenses (i.e.what it takes to run the office) such as electricity, internet, water etc.
- Travel Expenses: You can deduct unreimbursed travel expenses in your Schedule C such as airfare, lodging, taxi fares, meals, baggage fees, dry cleaning etc.
- Health Insurance Premiums: Any medical, dental or long term care premiums you pay for yourself, your spouse, or dependents are tax deductible.
- Personal Retirement Plan: The Solo 401(k) lets you save potentially the most money. Self-employment retirement plans treat you both as the employee and employer.
Tax Evasion: Tax evasion is mostly limited to a brave or not too smart elect few. Usually, this group tends to have plenty of money with the legal and financial resources to exploit any loopholes.
According to the journal of economic perspectives, about 8% of household financial wealth is hidden in offshore tax havens. So what! Well, this amounts to about $7 trillion "hidden" dollars. Yep, that's a lot of money! As one might imagine, tax evasion creates a substantial loss in tax revenue for the U.S. government.
To put this into perspective the government actually collects about $3 trillion in taxes, but that is also roughly the amount that is spent on Pell grants for low income college students. So there is a loss.
Evading taxes is no easy feat (nor do we endorse it); you can't just open a bank account in Hong Kong or Switzerland, you have to ensure your money can't be traced and that in and of itself is expesneive. For more information on the slippery slope of tax evasion read the entire article.
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