Rapid Tax

The secret is to simply set yourself up as a small business and take tax deductions for related expenses! This is very easy and inexpensive to do. You can then turn many personal expenses into business one that you can deduct!

It doesn't matter if you are retired (in fact this is a perfect time) or just getting started in life. You can start doing a business in virtually any niche or subject that you love or have a passion about.

For example, if you are passionate about photography, there are multiple ways to offer a product or service to others for a fee, commission or whatever. I have a retired client that loves to travel to Italy. In fact they are on their way there as I write this for an extended trip.

Wouldn't it be nice if the IRS would make virtually all of their travel expenses deductible?

There are multiple ways they could accomplish this in return for a little effort. They could write a travel guide to the particular region they will be staying in with reviews on restaurants, museums, stores, things that are a "must" see or do and other things that are worth skipping and why.

It could be just published as a $19.95 e-book. Don't want to write anything? What about organizing a trip for others with you as their "guide". Simply organize a trip with friends from church, old schoolmates, etc.

You can either become a travel agent or work with one to put together a trip making a profit on the difference between the costs the airlines and hotel charge and the "package" that you offer it for.

If you love horses, you might be able to offer rides for a fee at birthday parties or church events.

I could go on and on with potential ideas of taking something that you love to do and making it into a business to enable you to save thousands of dollars on your taxes. But let's discuss how this works in general terms of taking your "expenses" and deducting them from your tax return.

But first you have to set up your business. Yes, you can incorporate (or set up an LLC) and I would highly encourage you to do so.

In some states you have to go to the court house and fill out a form known as a "DBA". That's for "Doing Business As". So you could say... Jane Doe (your name) doing business as Tax Saver and Associates.

Your business does NOT have to make a profit in order to legally take those deductions.... but it does need to have a "profit motive"! Under the IRS rules, a profit motive is presumed if you earn ANY net income during any 3 out of 5 tax years.

In fact, your business need NEVER actually be profitable to keep your business deductions going as long as you can keep proving a profit motive. Did you know that Amazon.com has yet to show a profit after all these years and billions of dollars in sales? But nobody could successfully argue that they don't have a profit objective.

There are a number of tests or standards that would indicate that there is the goal to be profitable which nclude the manner in which you conduct your business, the effort and time that you can prove that your devout to uour business, your expertise in that field. Do you have business cards and letterhead? Are you keeping accurate records, have an outline of a business plan written down?

Then, you will be able to deduct most or all of your expenses directly related to your business or "hobby for profit". If you have a home office, you'll have a number of other partial potential tax deductions such as: office furniture and equipment, deprecation, homeowner's insurance, utilities and more.

Like to travel? How would you like for the IRS to help you pay for some or all of your travel expenses? On ANY type of business or niche there are many conventions, conferences, functions or similar businesses that you can meet and learn from -- all over the WORLD - that you can go to.

On any given day there are literally hundreds of seminars and such on going on. If you are a little bit creative, you can "justify" why your business made the decision to invest the money to attend to learn and network with others in your field.

If you follow the IRS rules, you can deduct all or much of your travel expenses to get there, your hotel, your food, cab fare and so on. Where and when do you want to go? Just look for something going on that might make sense for your business and let the IRS help you pay for it!

Start a business and slash your taxes today!!

Since 1997, Mark J. Orr, a Certified Financial Planner, has helped hundreds plan for more financial success through powerful strategies and advice. To get 101 FREE Financial Planning Tips and to Register for his complementary e-newsletter, simply go to: http://www.SmartFinancialTips.com

Since federal income taxes are such a large part of most peoples life or expenditures, I thought that you might like a summary or reference sheet for some of the important figures for 2007.

Many people believe that if someone is in the 28% tax bracket, they pay all taxes due at the rate of 28% of taxable income. This is not correct. A couple having a taxable income of $125,000 does not pay 25% federal income tax on ALL of the taxable income... but only on everything over $63,700. The first $15,650 is only taxed at 10%, the taxable income from $15,560-$63,700 would be taxed at 15% and so on. The figures below is taxable income (after deductions and exemptions).

I'll start out with the tax brackets for the 2007 tax year. The figures below show the various "steps" on how the marginal income brackets are progressively taxed higher.

Married, Filing Jointly:

$zero - $15,650 is taxed at 10% $15,650 - $63,700 is taxed at 15% $63,700 - $128,500 is taxed at 25% $128,500 - $195,850 is taxed at 28% $195,850 - $349,700 is taxed at 33% over $349,700 is taxed at 35%

Married, Filing Separately:

Note: Often times it make more sense for a married couple to file taxes separately for either tax reduction strategies or for non-tax reasons. Your tax advisor should help you decide if there are important reasons for YOU to take advantage of this filing status.

Tax brackets for Married Filing Separately: Simply cut the above taxable figures in half for those six tax brackets

Single:

$zero - $7,825 is taxed at 10% $7,825 - $31,850 is taxed at 15% $31,850 - $77,100 is taxed at 25% $77,100 - $160,850 is taxed at 28% $160,850 - $349,700 is taxed at 33% over $349,700 is taxed at 35%

Single, Head of Household:

$zero - $11,200 is taxed at 10% $11,200 - $42,650 is taxed at 15% $42,650 - $110,100 is taxed at 25% $110,100 - $178,350 is taxed at 28% $178,350 - $349,700 is taxed at 33% over $349,700 is taxed at 35%

Standard Deduction:

Standard Deduction is ONLY for those who do NOT itemize expenses like mortgage interest, charitable contributions, etc.

Married, Filing Jointly: $10,700 Married, Filing Separately: $ 5,350 Single: $ 5,350 Single, Head of Household: $ 7,850

Those who are blind or over age 65 can ADD $1,050 (if married) or $1,300 (if single or head of household) to the above Standard Deductions

Personal Exemptions:

Personal Exemptions are set at $3,400 per allowed person subject to Phaseouts (which are reductions in the Exemptions) based on taxable income. This is not an issue unless your taxable income is at least $117,300 (depending on filing status).

Maximum taxable EARNED income subject to FICA tax: $97,500

The Social Security and Medicare combined tax rate is 15.3% on income up to that figure. W-2 employees pay half of the 15.3% and employers pay the other half. Self-employed pay the whole amount.

Long-term Capital Gains and Qualified Dividend Rates: For those in the 10% and 15% Income tax brackets only: 5% For taxpayers in the higher tax backets: 15% Capital gains on collectibles (coins, stamps, etc.) 28%

One of the important functions of a financial advisor is to help reduce taxes to your legal minimum due by using all appropriate deductions, methods and strategies. A good tax advisor is worth their weight in gold! So go find a pro-active tax advisor, not someone who just files tax returns.

And now, hopefully you will have a better idea of what that person is talking about.

Since 1997, Mark J. Orr, a Certified Financial Planner, has helped hundreds plan for more financial success through powerful strategies and advice. To get 101 FREE Financial Planning Tips and to Register for his complementary e-newsletter, simply go to: http://www.SmartFinancialTips.com