Tax Tips Reduce Your The Internal Revenue Service collects only on your taxable income. So an easy way Tax Bill to cut your tax bill is to REDUCE your taxable income. You do that by claiming deductions when you file. But the exact way you take these deductions depends on your personal circumstances. The best way to reduce your taxable income is to have a home-based business (HBB) where you claim deductions due to your business. The Tax Laws benefit the business owners not employees!!!! Definition: A Home-Based Business (HBB) is any business or service that you are offering and Home-Based you use your home as your main office to operate your business. Business What is A Network is an interconnected or interrelated chain, group, or system. Network Marketing is to expose for sale in a market. Marketing? Note: The most successful people create networks (television network, radio network, computer network, etc.) Tahitian NONI As a TNI Network Marketing distributor you are building a network of people Inc. Network distributing Tahitian Noni Juice and/or products. You'll be entitled to tax breaks, Marketing which will enable you to reclaim a substantial portion of your tax dollar, dollars Distributor normally taken by the IRS. Tax laws that allow Network Marketers to garner substantial tax breaks are the same laws that benefit GM and IBM. The only difference between most Network Marketing businesses and these Fortune 500 entities in the eyes of the IRS is their size, and the fact that Network Marketers can also deduct many expenses from their homes and daily lives. If these expenses contribute to the success of their Network Marketing home-based business, then they are fully tax deductible! Benefits Benefits of having a Home Based Business(HBB) in Network Marketing: 1. Reduce your Taxes 2. Claim all deductions even if you did not make any money with your business (The income you are earning can be from your job) 3. Option of getting a lot more money back just from the taxes taken from your paycheck at your job (this would still be your taxable income) 4. Get your money NOW instead of later. 5. A percentage back from your expense column (more tax refund) Continued on next page Tax Tips, Continued How to Get a 1. Increase the number of your dependents (deductions) so you will be taxed on Raise on your a lower income Job by having a 2. Lower taxable income means you pay less in taxes at the end of the year then HBB in once you file your taxes be sure your deductions from your HBB exceeds Network your income from your deductions claimed. Marketing 3. Get more money back and get more money on your paycheck NOW. Get your Notice that as an Employee: an employee taxes are your first expense!!!! money FIRST This means before YOU even get your check on your job the government already gets its cut out of it! So, when you get a raise on your job the government gets a raise which again is taken out before you get your money! Notice as a Business Owner: a business owner taxes is your last expense!!! This means that after you have done all of our spending for your business, the government then comes and taxes what is left after that. As you can see this makes a big difference!!!!! Scenarios: As you will see from the two scenarios below the way to reduce your taxable income is by having a home-based business. Job w/o HBB For each scenario there are two incomes to show the difference when Vs. making this amount of money. Job w/HBB These charts deals with averages and all depends on your activity in the business. Compare the taxable income and the amount that would be paid out in taxes. This shows how much we are saving in the amount of taxes that we do not have to pay at the end of the year. Continued on next page Tax Tips, Continued JOB WITHOUT HOME-BASED BUSINESS INCOME DEDUCTIONS TAXABLE INC PAYMENTS $30,000 $4,200 $25,800 $7,740 $100,000 $14,000 $86,000 $20,000 JOB WITH HOME-BASED BUSINESS INCOME EXPENSES DEDUCTIONS TAXABLE INC PAYMENTS (LIFESTYLE) $30,000 $9,500 $14,400 $6,100 $864 $100,000 $67,000 $15,600 $17,400 $5,248 Example of Personal Expenses 1040/1040A Employee $40,000 TAXES $8,000 (FED) - $12,000 $4,000 (STATE/FICA) HOUSING $1,000/Month - $12,000 UTILITIES Cable, Phone, Gas, -$4,800 Water, Electric, Internet TRANS $400/Mo (car note) -$6,000 $100/Mo (Insurance) FOOD $20/Day x 365 -$7,300 Yearly Total of $42,100 Expenses Example of Business Expenses Schedule C TNI IPC $40,000 MILES $20,000 Miles @ 48.5 -$9,700 (IRS Publication 463) cents/mile HOME OFFICE 25% of Mort./Rent -$3,000 (IRS Publication 587) UTILITIES Cell Phone, Internet, -$1,600 (IRS Publication 587) Home Phone, etc KIDS Age 7-18 -$5,150 (IRS Publication 15) MEALS/ENTERNMENT $75 w/o Receipt -$8,300 (IRS Publication 463) Yearly Total of $27,750 Expenses Expenses One thing that you want to take notice of is that with having a HBB is that your expenses to maintain your lifestyle takes away from our taxable income. Here is a list of expenses that you can claim: Car/Truck, repairs, Mileage, etc. Interest, Mortgages, Rent, household bills Office expenses (like flooring & carpeting) or Supplies Rent/Lease of equipment, cars, etc Travel, meals, entertainment, etc. Services such as legal issues, repairs, ads, etc. “Other” expenses such as telephone (i.e. Cell phone!), shipping, food, professional cleaning, materials, and hair/nail maintenance!!! List goes on and on………. Explanation for What's deductible in your ordinary lifestyle expenses when you own a Network Deductions Marketing business? If you legitimately work your business engaged in the following actions, here's what's deductible. Check out the math and examples: Meals: when you discuss business at lunch or dinner with co-workers and friends, your meal is 50 percent tax deductible. Meals: $500: Lunch with co-workers is deductible (Hey, they're prospects!). $4/day times 250 work days = $1,000 x 50 percent deductible = $500 Continued on next page Tax Tips, Continued Explanation for Entertainment: theater and sports event tickets, and other expenses relating Deductions to entertainment focused on building relationships with prospects, retail (continued) customers and down-line or up-line distributors. (Remember, by definition, everyone is a potential prospect or customer of your Network Marketing business!) Automobile mileage: is deductible between your home-based business office and a meeting where business is discussed, such as the meals mentioned above, or an opportunity meeting, or even a golf outing with friends who are prospects! Automobile mileages from your home office to day job or other places where you actively encounter prospects and actively discuss the product. (20 miles round trip to work x 250 days x 30 cents/mile). Health insurance for family (Spouse is an employee of your home-based business, who chooses to include you and kids on the plan. That's $16,000 Total tax-deductible expenses x 35% combined Federal and State tax rate = $5,600 cash refund from IRS on April 15th) Travel: is deductible -- be it to an industrial center or an island resort if the purpose is to hold an opportunity meeting, to discuss business with other travelers, or to attend a seminar. Spouse Travel: Your spouse's travel can even be deductible if their presence is helpful in closing the sale. Travel expenses for you and spouse to vacationland if you hold opportunity meetings (could be to the friends you are visiting) and your spouse participates. Children Wages: You can also deduct wages paid to your children for help in the business, and if those children are under 14 and have no other sources of income, all wages under $4,000 per year are tax free. It's a great way to help save for college with Uncle Sam's help! Tax free wages for two kids without other jobs who assist you in your Home-Based Business (2 kids x $4,000 per year paid to their savings accounts for college/weddings, etc.) Equipment: Home computers, fax machines, telephones, office supplies, and office furniture are also fully tax deductible. Home office deduction ($150/month) can be used for use of spare room in house out of which you operate your home-based business. NOTE: Requirement-- The IRS's only requirement is that you legitimately treat your Network Marketing business as a business not a hobby. That means regularly working your business. What counts as "regularly working" your business? Just taking the actions you are telling your down-line to take: attend weekly meetings, call prospects regularly, use the product, tell people about the product and, if successful, teach others to do the same. Continued on next page Tax Tips, Continued You must You must document everything! Documentation is the key! Document The IRS will recognize their right to their home-based business tax breaks Everything! Only if they properly document their activities and expenses! Documentation is a big word, but a simple process. It merely means writing down in your day planner all business-related activities, business- related expenses and any revenues you earn. Consistent record keeping will prove to the IRS (on the rare chance you have to) that you are truly running a business and not engaged in a hobby, whether or not it makes money. Example of What do these records look like? Documentation They're simple. Just writing down the persons you spoke with about the business, where you went in pursuit of your business, and what you spent in the ordinary course of conducting your business. If done in a regular and consistent manner, will provide you with proper documentation and a veritable sea of deductible business expenses! Sure, it takes time to write down your business-related activities every day; but for a maximum investment of five minutes a day, the time spent record keeping is worth a minimum of $5,000 in tax savings. That's $240/hour of tax savings for the time you spent keeping track of your activities and expenses. A pretty good wage for simple record keeping! Conclusion Success is fun and helping people achieve success is fun, but having the help of Uncle Sam is exhilarating. If the people you sponsor actively follow your guidance, they should make money; but even if they don't, they can still claim all the deductions. Remember, to deduct the above expenses, you must be actively working your business in the lunches, trips, visits, etc. mentioned above, and be keeping proper records. If you are an active Network Marketer, this is not only perfectly legitimate, it's good business, AND it's a great reason to show your prospects why they need to know in their own Networking business, too! I recommend that you consult your accountant and individual tax advisors in applying these concepts to your business.