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Old 11-28-2011, 04:37 PM
81charduck's Avatar
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Default "Tax Break" Scam

For everyone posting about the BIG home business tax break... I consulted a tax expert, and here is his response:

"Simply put – there is no one-time $5,000 special tax deduction that expires on 12/31/11. However, the start-up expeditures for a new business was increased from $5,000 to $10,000 in 2010, but requires a dollar-for-dollar reduction of that amount if start-up costs exceed $60,000. They are just selling you a seminar."
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Old 11-28-2011, 05:26 PM
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Default "Tax Break" Scam

Thanks Julie for the information
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Old 11-28-2011, 05:29 PM
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Thank you for that update. I had searched and had not found any info that was from the federal goverment to use that deduction. We definately needed something official before trying to use that deduction on taxes.
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Old 12-01-2011, 09:26 PM
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Yes,

This would have been huge but after trying to get more info on this and not coming up with anything
to validate this claim.
and talking to several others about this I agree this is bogus.

The old "if it sounds to good to be true, it usually is"

Last edited by Mike McClurg; 12-02-2011 at 08:25 AM.
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Old 12-02-2011, 07:03 AM
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Thanks Julie! This is such great information!

Last edited by Phyllis J. Smith; 12-02-2011 at 07:37 AM.
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Old 12-05-2011, 12:30 PM
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Default Tax Break??

Is this what you guys are referring to? So, this is not correct?

Sorry the formatting is messed up, I had to copy and paste it.

Thanks
Candi



Claiming Tax Deductions for START-UP COSTS for a New Business

“Costs incurred during the START-UP PHASE of a business are generally deductible over a 15 year period” (i.e., each
$1,500 in start-up costs would be deducted at a rate of $100 per year for 15 years). [ IRC Sec 195(c)(1)(A) ]

WHAT IS THE “SPECIAL DEDUCTION” FOR 2011?
Any taxpayer who begins operation of a new business in 2011, may deduct ALL start-up costs (up to $5,000 maximum)
on their 2011 tax returns -- no need to spread the deduction over a 15 year period. [ IRC Sec 195(b) ]
EX: $5,000 in Start-Up Cost deductions, for a person in a 28% tax bracket, would generate a $1,400 tax Refund.
If Start-Up Cost deductions exceed the amount of money earned this year in the home-based business itself, most or all
of the additional deductions may be applied against any other source of income such as a W-2 job, which could possibly
even drop the taxpayer into a lower tax bracket.
This one-time write-off provision in the tax law is valid only during 2011, and therefore will set to expire permanently at
midnight, December 31, 2011. Even IF Congress reinstates this provision in 2012, a business begun after Jan. 1, 2012
will not be able to claim those deductions until April 2013 – when 2012 Tax Returns are filed.
Not activating a new home-based business by December 31, 2011, will delay tax-deductions for Start-Up Costs by at least 15 months.

WHAT ARE “START-UP COSTS?”
The term includes business related costs you incur prior to actually beginning to offer goods or services for sale ▬ i.e.,
the costs of getting ready to open your business. They are generally the same types of expenses that will be called “business operating costs” once you are actually operating a business. [ IRC Sec 195(c)(1)(B) ]

Q: When does the start-up period begin?
A: When you begin thinking about starting a business.

Q: What are some examples of tax-deductible “start-up costs?” [ IRC Sec 195(c)(1)(A) ]
A: Seminars, Workshops, Courses and Books on how to run the business
Investigating or Researching one or more business opportunities
Travel for meetings, conventions or interviews or to obtain education from experts
Telephone and cellular phone costs related to new business start-up
Office supplies and some business tools (briefcase, iPad, business cards, etc.)
DOES NOT INCLUDE vehicles, furniture, computers and other depreciable assets [ IRC Sec 167(a) ]

Caveat: Money spent qualifying to begin a certain type of business, general are not deductible. This includes getting a degree, obtaining a license to practice (doctors, real estate…), etc.

The IRS “default setting” for start-up expenses is to deem that the taxpayer made a decision to amortize the amounts over a 15 year period. [ Reg Sec 1.195-1T(b) ] To keep that from happening, and claim your seductions immediately, you should
take 2 actions: [ Reg Sec 1.195-1T(b) ]

1. Claim your Start-Up Expenses on IRS Form 4562 (“Depreciation and Amortization”)
2. Attach an “election statement” to your tax return, stating specifically that you wish to claim all (or the first $5,000) of your Start-Up Expenses in 2011, “the year in which your business became active.”

By the way, since Start-Up Expenses are deductible in the year in which the business begins active operation, if the business you are investigating never gets off the ground, you will not get any deductions. [ IRC Sec. 165 ]

THE ABOVE INFORMATION, PROVIDED BY HOME BUSINESS TAX SAVINGS, INC., IS FOR ILLUSTRATION PURPOSES ONLY, AND SHOULD NOT BE TAKEN AS TAX
ADVICE. ALWAYS CONSULT WITH A TAX ADVISOR WITH EXPERTISE IN HOME BUSINESS TAX LAW PRIOR TO USING THIS, OR ANY, TAX DEDUCTION INFORMATION.

FOR MORE INFORMATION ABOUT SPECIAL HOME-BUSINESS TAX DEDUCTIONS, SEE Home
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Old 12-05-2011, 01:16 PM
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No, Candi, this isn't the same one. The one that I know is a scam claims there is a huge tax deduction for home business owners that will expired on Dec 31st.

I've seen this one as well, and I'd guess it too is a scam. However, I haven't had an opportunity to research it.
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Old 12-05-2011, 01:23 PM
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For tax information consult your tax professional. As for recruiting using the "benefits of a home based business and potential deductions" that may not be a good idea as someone might consider your giving tax advice.
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Old 12-05-2011, 01:48 PM
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Great advice Cornelius!
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