Recently, I stumbled across a concept that could change your financial life. You can call it a paradigm shift, or a new perspective, or just a different way to look at things. This single concept can save you tens of thousands of dollars in taxes each year. It's so powerful and yet completely under-utilized.
Learning This Simple Technique Can Dramatically Impact Your Financial Picture
The way it came about was simple, but had a dynamic effect on my way-of-thinking. I was speaking about tax savings at a seminar recently, and there was a spontaneous outburst of questions. Can I deduct my health insurance? How about my new truck? I'm taking horseback riding lessons. Are they deductible? What about my vacation?
As we worked through people's lists of concerns, it dawned on me. You've been trained to ask the wrong question! Let's suppose you call up your C.P.A. and ask, “Hey Lenny, Can I deduct a pizza? What do you suppose Lenny's response would be? He'd probably think you had gone mad: “Are you crazy, he'd say, you can't deduct a pizza!”
However, I realized that if you called me and asked the same question, you'd get a different response altogether. I'd probably pause for a moment and respond “well, that depends.” You see: if you and I went to an Italian restaurant and ordered Pizza and a couple of beers, the meal would be deductible(at the rate of 50%) so long as we discussed business (and it was documented properly).
Same thing with your vacation as long as you conducted your annual meeting while you traveled. The equestrian lessons are deductible as education, and the new truck is deductible to the degree that you use it for business.
Which Brings Up A Key Point: It's not the item, it's the circumstances.
Most business people and their advisors wrongly focus on the item (the truck, the lessons, and the trip). The trick is to make your circumstances open the door to the tax deductions.
So, instead of asking "Is This Deductible", you should start asking "HOW is this deductible?" Then, all you have to do is create the circumstances that allow for the tax deduction!
What is the Smartest Way to Pay for My Fun?
In his best selling book, "Rich Dad, Poor Dad", Robert Kiyosaki warns people against the dangers of buying what he calls "doodads" - you know, junk, spur of the moment items. Those things that you didn't know existed until you read about them in an in-flight shopping catalogue and now that you know about them: you just can't live with out one.
The Average American Gives Up 42% to 55% in Taxes
In order to accelerate your movement along the wealth building curve, you absolutely MUST have your own business. I don't care if its real estate investing, a sales company or a service business. But you must own it yourself or with a partner. Why, because the tax laws are tilted in favor of people who are in business for themselves. Let's take a closer look. If you are not in business for yourself, you are earning your money as a W-2 employee. Unfortunately, this is the highest tax form of income that there is.
Keep it Simple and Strategic
There Are Several Keys To Handling Your Business Record Keeping... * The first is keeping complete and accurate records. * The second is separating the business from your personal finances. Let's start with this part first..
