Home Based Business Tax Deduction Scams – Don’t Believe The Hype

aprilie 5, 2018 | Autor: | Posted in Fără categorie

The Internal Revenue Service (IRS) reports, home based business tax deduction scams have increased in popularity in recent years. Notably, in a consumer alert, the IRS warned that regardless of how convincing claims made by unscrupulous marketers of bogus home based business schemes may appear, nondeductible personal living expenses cannot be magically transformed into home business tax deductions. This means that envelope stuffing at a kitchen table does NOT qualify for a deduction for a home office, travel or entertainment.

Be Aware: Creating or being a party to a bogus home based business or other scheme puts YOU, the taxpayer on a slippery slope that will result in you paying interest and penalties on top of the taxes you will owe as well. This will also increase the likelihood of an audit. You can’t cheat for long and if the IRS feels there was fraud in claiming unqualified home business tax deductions, they have FOREVER to attack your return and you!

The IRS also reported that many personal expenses that do not qualify for home business tax deductions are wrongly claimed as business expenses in home based business schemes. These are some of the most frequent:

Claiming a home based business tax deduction for the cost and operation of a personal residence(your home) is a no no.

Deducting excessive car and truck expenses when the vehicle has been used for both business and personal use. (That $1800 Blaupunkt Stereo System you put in the family van is not a legitimate home business tax deduction);

Paying children a salary for services, such as answering telephones, washing your cars, or other tasks and then claiming these costs as home based business tax deductions;

Claiming a home business tax deduction for education expenses from the salary you wrongfully paid to your children by calling them an employee (double whammy);

Deducting personal furniture, home entertainment equipment, children’s toys, and other household items (That 62″ plasma HDTV is not a home business tax deduction);

The deduction of personal travel, meals, and entertainment under the guise that „everyone is a potential client.” Many Multi Level Marketing (MLM) promoters will tell you EVERYTHING is a deduction because EVERYONE is a prospect. NOT. That won’t fly with the IRS.

You will find many home business tax deductions schemes that claim you can convert a personal expense into a business expense and that the IRS will allow it, just by calling it home business expense. Now I have to ask how this makes any sense at all. If you’re „in business,” you can take a home based business tax deduction. To be in business you have to have what is called a „profit objective” that you can substantiate. This is not rocket science.

Do you have a DBA?

Do you have a business address?

Do you have a business phone number?

Do you have a business checking account?

Do you even have a business card?

You have to really be „in business” from your home.

Investigate and research anyone that is promoting a home business to you, period. If in doubt, consult a tax professional and save yourself from the expensive headaches that will surely come from the IRS if you choose to become involved in a fraudulent home business. Make sure that any claims of home based business tax deductions you take are legal.



Source by Ronn Espy

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