How To Save Money on Taxes
The deadline is quickly approaching for those of us in the United States. In preparing my taxes this year, I realized a curious little truth. There are two sets of tax rules in this country. One for the educated and another totally different set for the uneducated.
This has nothing to do with one’s actual level of schooling. It has everything to do with one’s actual understanding of the tax codes themselves. They are arcane at times, stupefying at others, but those who take the time to understand them stand to make a solid bounty every year.
This is not about trying to get out of paying one’s dues and evading fees. It is simply about being smart and not overpaying where you don’t need to.
Let me give you a personal example. I am happily employed with a great career as a Product Planning Manager at a large software company. As part of this job I incur a large tax burden – as would anyone in a professional career. I made donations to charity and have a few deductions – but nothing too extreme. However, I also pursue a passion outside of my day-job, in the form of yoga. Last year I took the step forward and actually started teaching.
As part of my journey to start teaching yoga, I applies for a business license (very easy to do) and this year I filed my taxes not only for my day-job, but also for my yoga business.
Since I am now in the business of yoga, that opens a number of doors in terms of tax savings. I am able to write-off all the yoga trainings I attend (many thousands of dollars worth in the past year), my yoga clothing, travel and meals related to my training and other books and supplies for this business. I can even write-off auto mileage incurred while traveling to teach or attend workshops and classes.
The simple fact that I took the step forward and turned what was a serious hobby into a real business with the intent to make a profit (I do get paid for teaching!) opened the doors to a huge bounty of write-offs – saving me many thousands of dollars in taxes.
You might be thinking that I probably didn’t enough from teaching yoga to exceed all those expenses. Here is where it gets interesting. You see, even though my expenses were far more than what I made as a yoga teacher this year, I am able to write off those expenses from the income from my day job! This is a really big deal – and something I would guess that most of the American public is completely unaware of.
The same could hold true if you choose to become a “professional” blogger, writer, teacher, fitness instructor, etc…..with a business license and an intent to earn a profit – you open the door to a host of tax savings by offsetting income you make through another career.
If you haven’t taken the time to study the tax code – it is well worth it: www.irs.gov.