Tax Planning for Networkers - Part Two Continued
By Jeffrey Babener, © 2013
Computers, Automobiles, and Capital Assets
When it comes to these issues, you’re definitely going to need to talk to your tax advisor. You have some choices
to make about how to deduct the acquisition costs of computer equipment and automobiles that are used for your
network marketing business.
The IRS provides some very liberal limits on the amount that you can actually expense as a business deduction in
any one year. (Of course, you are limited in expenses to the income from your business.) The other option is
taking a depreciation write-off over a number of years for business equipment. Only your tax advisor knows for
sure which is most advantageous.
The costs of running your automobile for your network marketing business are deductible. You have a choice of
using the IRS’s standard cents-per-mile, or itemizing the automobile expenses, such as gasoline, repairs,
maintenance, insurance and depreciation. Obviously, you need to calculate what percentage of your overall car
use is devoted to your network marketing business and adjust the expenses to that percentage.
Record Keeping - The Name of the Game
If you talk to our friends at the IRS, they will tell you time and time again that the most important aspect of claiming
your expenses and deductions is keeping adequate records. The IRS will suggest that you keep a separate bank
account, make a record of all business transactions and retain all your records. Record keeping and
substantiation are particularly important for deductions for travel expenses, entertainment expenses and gift
expenses. And, the IRS will always tell you that a receipt is ordinarily the best evidence to prove the amount of
Is It All Worth It?
Should you take advantage of the expenses and deductions in the Internal Revenue Code? The IRS will tell you
that those expenses and deductions are there for you as long as you don’t abuse them. If you’re a serious network
marketer, the expenses and deductions can enrich your business and your personal lifestyle by putting hundreds
or thousands of dollars of after-tax savings in your bank account.
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