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Chapter 5: Claim Your Health Insurance
Synopsis
Tax breaks for home businesses can also be gotten when filing on health insurance. This is not commonly practiced as most people are not aware that they can get deduction and relief for this sort of expenses. This is especially designed to help that smaller start up businesses and this often provides a lot of relief for those applying under this criteria.
Health Costs
Tax claims for relief can be done on health insurance and also on certain medical expenses incurred by the home business owner as an added help for the individual.
Filing for such claims can only be done if there are no other bodies paying out towards the medical claim submitted for the tax relief.
Claims also cannot be made if there is a possibility of the same claim being made in a compensatory form from other parties. This could in some cases be termed as fraud as payments for the same claim is being sought from different sources.
Other areas that the home based business owner may have difficulty is seeking tax relief would be for routine medical and dental care which are not life threatening in nature.
Claims can be made on prevention, diagnosis, alleviation or treatment of several different platforms or sections provided for within the medial perspective.
These include an ailment, an injury, an infirmity, a defect or a disability. It is not necessary to prove that these claims made were directly connective to the individual simply because he or she was operating a home based business.
Other areas where claims can be made would be such as doctors’ and consultants’ fees, diagnostic procedures which are often deemed to be carried out on the advice of the medical personnel taking the case, drug and medications prescribed by a doctor, dentist or medical consultant, and any physiotherapy or similar treatment that may be needed to right a medical problem.
Chapter 6: Track Mileage
Synopsis
Mileage can also be another avenue where tax exemptions can be made to the benefit of the home business owner. As a good percentage of the business may require the individual to travel to meet clients or customers this form of relief can prove to be quite beneficial and rather substantial if claims are made and exploited to the maximum.
Mileage
The current tax system does make allowances for expenses charged for traveling and this comes in the form of mileage allowance payments.
Under this system the claims made on a per mile basis are not subject to income that is taxable if they are paid below the rate set by the governing body at the time.
Even if the vehicle used at the time is also for personal transportation use the tax relief calculated on the trips which were solely done for business reasons can be significant tax saving.
Adding to this there is also the overall further tax relief which can be gained through any mileage allowance payments made. The individual would have to calculate the total sum set aside in the tax year for such payments which will then be deducted from total earnings along with other expenses that attract the exemption possibility to create the total tax liability for the year.
Also to be noted is that the calculations are done on the total mileage allowance which has been set aside for the purpose of travelling for business purposes and not on the actual mileage used.
Therefore the tax relief enjoyed can be more even when the entire planned expense is not fully utilized.
For a more itemized directional help, it would be better to research available material on the subject to ensure that all possible angles are explored for the optimum saving possible from the tax on mileage incurred.
Chapter 7: Use Retirement Accounts
Synopsis
In the quest to explore various ways to exploit the tax relief systems in place the individual should spend some time exploring the area of retirement accounts. This retirement account possibility presents some interesting and applicable points that encourage the individual to save towards it because of the incentives given through the tax relief system.
Putting Money Aside
To reduce taxable income the home based business owner can make contributions towards a traditional individual retirement account otherwise referred to as IRA. These contributions can then be used to file for some tax relief. The contributions can be made as late as the first due date of a tax return. This can also be used as a retroactive contribution to the previous tax year.
There are two types of retirement fund possibilities to choose from which are the traditional IRA and the Roth IRA or in some cases both may be used, this all depends on the individual’s aspirations during the retirement phase in life. As this foresight for the well being of the individual is also encouraged by any governing body the assistance given in the form of tax relief is meant to instill this important thought for the future.
Most people are eligible for such an allowance based on earned income and the IRA certainly encourages this as it also extends this facility to self employed individuals.
However there is an age limit which is anyone below the age of 70-5 years unlike the Roth IRA which does not have any such stipulations. In order to facilitate claims made there is no need to have extensive and itemized reports attached to the claims. Simply using the designated forms for the relevant purposes will suffice and facilitate the claims process. There are various levels of deductions which include full deductions, partial deductions and entire deductions and these are based on a variety of different factors.
Chapter 8: Hire Family Members
Synopsis
Surprising but good to know is the fact that hiring the family to work in the home based business entity in not only a good idea but is also supported by the governing body of the time. This is clearly evident in the tax exemptions put in place to encourage and facilitate such undertakings.
Final Tips
Besides the obvious positive impacts it can have when the family is encouraged to work together as seen in the past, there is also the advantage of getting valuable tax relief.
Family members can be an excellent source to tap into if there is a certain amount of respect and compensation in place to acknowledge these contributions. They can be trustworthy, dedicated, inexpensive and other positive contributing characteristics to the business entity.
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