Posted on: 21-03-09 21:32:14
I have heard from quite a few folks that they run their small home business along with their jobs and get good tax returns by showing deficits in business. I was wondering of opening a home business of providing food on demand to selected customers, The magnitude of the business wont be as huge and will be operated from my own rental apartment.
Sole purpose would be to help me get better tax refunds at the end of the year as at the moment due to my job i am falling in a higher category income bracket and am being hammered hard by the tax man.
Would opening a business of the type that i mentioned even be a good idea, or would it be waste of time, would any one think that by doing so i would be able to score some better refunds next year ?
Quote:
Originally posted by Cougar
I have heard from quite a few folks that they run their small home business along with their jobs and get good tax returns by showing deficits in business. I was wondering of opening a home business of providing food on demand to selected customers, The magnitude of the business wont be as huge and will be operated from my own rental apartment.
Sole purpose would be to help me get better tax refunds at the end of the year as at the moment due to my job i am falling in a higher category income bracket and am being hammered hard by the tax man.
Would opening a business of the type that i mentioned even be a good idea, or would it be waste of time, would any one think that by doing so i would be able to score some better refunds next year ?
THERE is a catch here .You can get tax break only if there is a loss in business. Tax code does not allow to deduct loss for a business which continuously run in deficit/loss. Here, unlike India, tax system is faith based and one can get a refund for loss based on the tax return filed.
However, if you are really making a loss in business, it does not make sense to carry on such business just to claim loss and if you are faking loss, you are likely to be caught in the net sooner or later and will have to return tax break. One can get away with small refund for a couple of years as tax department accepts your return at face value. However, one is more than likely to be flagged for false return and bear consequences.
Quote:
Originally posted by Nightmare
Quote:
Originally posted by Cougar
I have heard from quite a few folks that they run their small home business along with their jobs and get good tax returns by showing deficits in business. I was wondering of opening a home business of providing food on demand to selected customers, The magnitude of the business wont be as huge and will be operated from my own rental apartment.
Sole purpose would be to help me get better tax refunds at the end of the year as at the moment due to my job i am falling in a higher category income bracket and am being hammered hard by the tax man.
Would opening a business of the type that i mentioned even be a good idea, or would it be waste of time, would any one think that by doing so i would be able to score some better refunds next year ?
THERE is a catch here .You can get tax break only if there is a loss in business. Tax code does not allow to deduct loss for a business which continuously run in deficit/loss. Here, unlike India, tax system is faith based and one can get a refund for loss based on the tax return filed.
However, if you are really making a loss in business, it does not make sense to carry on such business just to claim loss and if you are faking loss, you are likely to be caught in the net sooner or later and will have to return tax break. One can get away with small refund for a couple of years as tax department accepts your return at face value. However, one is more than likely to be flagged for false return and bear consequences.
This is great information. Thank you for the insight as i wasnt aware about business being in loss to be able to claim taxes. Much appreciated. I think i would not really cheat the govt. at this point as you suggest as well, and will find alternative ways to get a better tax refund
thanks again.
