Understanding tax deductions can significantly increase your business's profitability. In this post, we explore a few unique methods to maximize deductions and reduce your taxable income. This is not tax advise. It is written to broaden your awareness of strategies available. Meet with your licensed tax professional to implement proper strategy.
1. GIF Leaseback Technique
This deduction strategy allows you to deduct your assets twice. Here's how it works:
- Gift your asset, such as a car, to someone.
- Lease it back from them.
- Claim the lease expense as a deduction, reducing your taxable income.
The leasing party receives the income while you benefit from the deduction.
2. The Blueprint Magic Trick
For home business owners, understanding this loophole can enhance your deductions:
- Secure the blueprints of your home.
- Remove any common areas such as hallways and throughways from your calculations.
This simple adjustment can increase your deductions by up to 25% without additional effort.
3. The Augusta Rule
This rule allows you to rent your residence up to 14 times a year without reporting the rental income on tax returns. Here's how to take advantage:
- Your business can rent your house for meetings.
- Pay yourself a reasonable rent from your business.
- Deduct the rent payment from your business tax return.
This technique allows you to enjoy tax-free rental income and reduce your business tax liability.
By strategically using these deductions, you can minimize your tax burden and invest more back into your business's growth. Always consult with a tax professional to ensure these methods are applicable to your individual situation.
Full Transcript
The first deduction is called the GIF leaseback technique and allows you to deduct your assets twice. For example, you give them your car and lease it back. You get the right off for the lease expense, reducing the amount of taxes you pay, and they get the income. The second deduction is for anyone who runs their business from their home. What most at home business owners don't know is a little loophole I like to call the blueprint magic trick. So first, you want to find the blueprints and then eliminate any common areas in your house like hallways or throughways. You just increase your deductions by 25% without lifting a finger. The Augusta Rule. It allows you to rent your house up to 14 times per year without needing to report rental income on your tax returns. Under the Augusta Rule, your business can pay you a reasonable amount to rent your house to conduct your monthly meetings. You are then able to deduct the rent payment from your business tax return and you won't have to report it as income on your personal taxes.
