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Mountains of cash from your P.O. Box
Ok, mountains of savings may be more like it. But the end result is the same. If you have a day job, and particularly if you commute a long way to that job, pay attention. You are about to discover how to save a LOT of money in taxes each year. You must have a business in addition to your day job. Not just any business. Make sure it's one that involved people. People are everywhere, and therefore, so is your business. When you drive to work and back, because it's a W-2 employee job, the expense of traveling to and from work is considered non-deductible commuting. It's a pretty lame rule, but that's the law. If you are already at work, and the boss sends you out, that is NOT commuting, and therefore, when the boss reimburses you, the company gets to deduct it. You then drive home, and get nothing off your taxes for all that expense. Let's shake things up and turn that situation on it's head, ok? You are not allowed to deduct expenses from your personal business to your job. We'll call that Job No. 1. If you travel from Job No. 1 to Job No. 2, that is no longer commuting and you ARE allowed. So, why don't you just change Job No. 1? How, you ask? Simple. Get a P.O. Box for your home business. Make THAT your first stop (ideally really close to home). All mileage after that, including that long, tiresome trip to your day job, is now deductible. If you want to be really safe and make sure you never suffer an adjustment on audit, do these two things: 1. Keep a log of your travels, where you stopped, who you visited with, including your regular job. 2. Stop and see someone for your business on the way home (nearer to home is better) before showing up for dinner. Even a stop at the gas station, or office supply store. Anything that can be attributed to your business. Again, if it's a people business, your local coffee shop is sufficient. Just be sure to log it in your journal. This technique renders almost 100% of your automobile expenses deductible against your home-based business income. I call it a "conversion" - the most efficient form of tax savings - because you are already spending the money. You simply "convert" it into a business expense. It's powerful. It's totally legal. And, if you document it properly, it will stand up to any IRS examination.
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