125
What is a "tax write off"?
(lemmy.world)
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
this post was submitted on 11 Feb 2024
125 points (95.6% liked)
No Stupid Questions
35685 readers
1855 users here now
No such thing. Ask away!
!nostupidquestions is a community dedicated to being helpful and answering each others' questions on various topics.
The rules for posting and commenting, besides the rules defined here for lemmy.world, are as follows:
Rules (interactive)
Rule 1- All posts must be legitimate questions. All post titles must include a question.
All posts must be legitimate questions, and all post titles must include a question. Questions that are joke or trolling questions, memes, song lyrics as title, etc. are not allowed here. See Rule 6 for all exceptions.
Rule 2- Your question subject cannot be illegal or NSFW material.
Your question subject cannot be illegal or NSFW material. You will be warned first, banned second.
Rule 3- Do not seek mental, medical and professional help here.
Do not seek mental, medical and professional help here. Breaking this rule will not get you or your post removed, but it will put you at risk, and possibly in danger.
Rule 4- No self promotion or upvote-farming of any kind.
That's it.
Rule 5- No baiting or sealioning or promoting an agenda.
Questions which, instead of being of an innocuous nature, are specifically intended (based on reports and in the opinion of our crack moderation team) to bait users into ideological wars on charged political topics will be removed and the authors warned - or banned - depending on severity.
Rule 6- Regarding META posts and joke questions.
Provided it is about the community itself, you may post non-question posts using the [META] tag on your post title.
On fridays, you are allowed to post meme and troll questions, on the condition that it's in text format only, and conforms with our other rules. These posts MUST include the [NSQ Friday] tag in their title.
If you post a serious question on friday and are looking only for legitimate answers, then please include the [Serious] tag on your post. Irrelevant replies will then be removed by moderators.
Rule 7- You can't intentionally annoy, mock, or harass other members.
If you intentionally annoy, mock, harass, or discriminate against any individual member, you will be removed.
Likewise, if you are a member, sympathiser or a resemblant of a movement that is known to largely hate, mock, discriminate against, and/or want to take lives of a group of people, and you were provably vocal about your hate, then you will be banned on sight.
Rule 8- All comments should try to stay relevant to their parent content.
Rule 9- Reposts from other platforms are not allowed.
Let everyone have their own content.
Rule 10- Majority of bots aren't allowed to participate here.
Credits
Our breathtaking icon was bestowed upon us by @Cevilia!
The greatest banner of all time: by @TheOneWithTheHair!
founded 1 year ago
MODERATORS
I'm seeing a lot of complicated explanations so I'm gonna go with a simpler one.
Say you build a fence for somebody and they pay you $1000. You have to report that income to the IRS. Let's say the tax rate is 40% so they say "Well you owe us $400." But instead you provide them with receipts saying you bought $500 of supplies in the form of lumber, screws and such. You have "written off" your expenses and shown the IRS you really only made $500 so you only owe $200 in taxes.
What I have trouble wrapping my head around is what else can you write off? How far can this go? I'm thinking of making an LLC for example to hold real estate, cars, buy stuff using its credit card. Can I do whatever I want and try to call it a company expense?
In the case of your fence can you write off the truck, gas, computers you used to do research, house you used to plan out the project?
You're supposed to include an approximate percentage of personal vs business use. Generally this isn't really policed, but if it's clearly 100% personal and you say it's 100% business, that's a disaster waiting to happen.
Also using stuff like this while making less than a million a year is going to bump you up several notches on the "people to be audited" list.
“Tax evasion”.
The answer is basically yes, until you get audited. Then you'll have to defend it
Write offs are a scam because of this big gray area. The rules get complicated fast and it quickly becomes less clear whether you can or not, and they’re difficult to automatically check. So …. You can write off any expense, up until you get caught. Remember this next time you see a politician wanting to reduce funds for IRS audits.
For all the dread people fear at the word “audit”, remember who really has the most to fear, and it’s not you
FYI - my own experience with the dreaded IRS enforcement was …. Receiving mail that something was wrong on my tax form and if I agreed, they calculated how that would change what I owe. I took a look, and “yep, my bad”, and paid the correct amount. No fees, no penalties, minimal paperwork, no threats, no bullying. Just facts. Ooooh, nightmares
Yes write off rules get complicated fast. People generally agree with the very simple example I've given but all you have to do is ask "What if you bought a drill while building the fence?" and you're gonna trigger a whole host of opinions.
But I think sometimes people only see the complicated examples and think "write offs are a scam got it" so I think it's important to provide an example where most people would generally agree it's not. It helps people realize there's some nuance to the discussion.
That being said: Tax the fucking rich already.
Sell things on eBay, you have to pay taxes on any profit, but you can claim milage as an expense at 65.5 cents per mile. There's no UPS dropoff near me, but there's one near my work, so I claim the mileage to go to the UPS store and back. I just happen to go to work in between those two things.
You can also claim travel if you buy an item somewhere. Maybe you went somewhere to buy something and just happened to have a good time with your family while you were there.