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Misconceptions, misunderstandings and just apparent “untruths” are floating about income taxes. Believing them could be costing thousands of tax dollars!

Myth: A Professional Tax Preparer cognizes all there is to cognize about taxes so you don't have got to cognize anything them.

Truth: Tax Preparer's/CPA's/Accountants are not uniformly informed about ALL tax laws. Most are able to register a personal income tax and cognize all the laws and how to apply them to personal income tax.

There are thousands of excellent, hard-working accountants doing a great job. And if you utilize a tax professional, maybe they have got done everything possible to reduce your taxes. But many professional tax preparers are just tax preparers.

They may cognize how to set up a tax tax return in their sleep. They cognize what numbers travel on which form. But that's about all they know.

A good tax preparer is not trained in tax reduction strategies.

The lone manner you are assured to get the tax tax deductions you are entitled to, as a Home-Based Business Owner, is to go informed yourself.

Myth: You must "itemize" in order to take Home-Based Business expenses.

Truth: Many people misunderstand the terminology here.

When you "itemize" your income tax you register Form A&B and take such as things as medical, home mortgage interest etc. You will only "itemize" if the sum of Form A is over the criterion tax deduction (for 2003 taxes…$4,700 single, $9,500 married)

Some people name this filing "long form."

All taxpayers have got the chance to enumerate if it is to their advantage.

Whether you "itemize" or not have NO bearing on your Business.

Myth: You're not making a net income so there is no advantage to filing business income taxes.

Truth: This is so not true! There's many tax advantages to filing a Home-Business tax tax return and especially so if you are not making a profit. If you also work a job, be it part-time or full time, in improver to your Home-Based business it is especially good to you to register a business tax return.

Expenses incurred in your business can be taken against your occupation income thus reducing your taxable dollar, which diminishes your tax liability.

Myth: Because you work a full-time occupation your Internet Marketing Business is just a hobby.

Truth: Only another Internet Marketer can truly understand the hours and money spent on what person else would name a "hobby"!

The regulations clearly state you have got a business if you ran into 8 rules. Four of the most of import regulations to ran into are:

1. Expertness of the taxpayer or his/her advisors. That would intend your expertness in Internet Marketing or those who counsel you. If you're learning and actively applying what you learn to your Internet Marketing activities and have got a good "handle" on this…you qualify.

2. Time and Attempt the Taxpayer sets into ‘running the business’. They just desire to do certain you're running a existent business, not just piquant in a hobby. How much “time and effort” is enough? The United States Federal Soldier Tax Court have ruled that “45 proceedings a day, 4 to 5 years a week” qualifies.

I can't see anyone who is in Internet Marketing with a net income motivation not qualifying here!

3. The Manner in Which the Taxpayer Carries On the Business Activity. This 1 is common sense. Bash you carry on your business mostly on the telephone, over the Internet and in-home presentations (these are good), or mostly at the golf game course, during luncheons and at the public house (not so good). Just handle your business like a business.

4. Are the Primary Purpose of your activity to ‘Produce A Profit,” Oregon to ‘Produce Tax Write-offs’? The best manner to Pass the profit-motive test, is to have got a Business Plan, and That Business Plan should include a tabular array of Income and Expense projections, clearly showing profitableness at some point in the future. Note that you are not required to actually bring forth a net income in order to measure up for home-business tax tax deductions -- just to demo that you have got the purpose to bring forth a profit.

If you are doing all this then there is no ground for your business to be considered a "hobby".

Myth: You must do a net income within 5 old age to be considered a "business" and register Home-Business taxes.

Truth: That's a generalization. Yes, the authorities would wish to see you do a net income within 5 old age but you are not penalized for not doing so. If you are following the above 4 regulations and conducting yourself as a business you have got nil to worry about. You are a business and some businesses are not profitable for a number of years.

Myth: Learning how to reduce you taxes is hard and complicated.

Truth: Average Small Business Owners have got plenty of tax reduction strategies at their disposal. You just have got to cognize what they are and how to utilize them.

Once you learn what tax deductions are allowed you will cognize what calculates your Tax Preparer/Accountant needs and you can configure your accounting accordingly.

Myth: Accounting and tax certification for the Home-Business is not for the do-it-yourselfer.

Truth: All Small Business Owners can easily maintain their ain books using any number of software programs. It is not necessary to have got got an accountant.

No, you will not have to learn accounting. You volition just need to be able to "categorize" and record disbursals and sales.

Documentation for the authorities is very easy if you utilize a pocket calendar and maintain your receipts.

In just 5-10 proceedings a twenty-four hours you can have got records that will defy any authorities scrutiny.