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Show Page 12 THE OGDEN VALLEY NEWS Volume IX Issue VII January 15, 2004 Tax Deductions for Home-Based Businesses Adjustable Insurance— A lifelong solution to your financial needs A good life insurance plan should protect you and your family from the four major risks to financial security: dying too soon, living too long, obtaining a major disability or injury, and providing for emergencies. But the policy that met your needs when you were single may not provide enough protection when you’re married, have small children, and a large mortgage. And the policy you add to protect your young family may not be practical or affordable once those kids are in college. As your life changes, so do your financial goals and the need for life insurance protection. So it’s important to revisit and adjust your insurance needs throughout your lifetime, and have the built-in flexibility in the coverage you’ve purchased to make those adjustments. Since it can be complex and time consuming to keep adding term or whole life policies to meet your needs, it’s a good idea to seek out “adjustable” insurance to keep up with your changing circumstances. What is adjustable life insurance? Adjustable life insurance has two elements: Insurance protection that meets your family’s needs in case you die, and The accumulation of dollars that you can use for future needs as you get older. Essentially you’re combining the benefits of term and whole life, and throwing in the significant benefits of flexibility into a single policy. Why adjustable life may be a better longterm solution for you Most insurance policies force you to choose the type of insurance (whole life or term), then lock you into premiums you’ll pay for the life of the policy. But buying and maintaining several insurance policies can be cumbersome, confusing, and expensive. A single adjustable-type policy is a more effective “lifetime” solution because it allows you to change your protection and your premiums as needed to protect you and your family. An adjustable policy allows you to determine—usually within certain limits—the amount of protection you require and the level of premium that you can afford. Then the type of insurance you’ve selected adjusts to meet your needs. The higher the amount of premium you put into your policy, the better the guaranteed portion of your policy becomes. Likewise, the higher the premium is when you purchase it, the more choices you’ll have for adjusting it down the road. As your needs change, you can adjust your coverage The fact is, you’re likely to outgrow any life insurance plan that doesn’t allow you the flexibility to increase or decrease your protection or your premiums when you experience life changes such as: Getting married. Having children. Buying a home. Sending your kids to college. Changing jobs. Starting a business. Getting a promotion. Planning for your retirement. As your life circumstances change, your insurance protection also needs to change. To get the most flexibility for your premium dollars, it’s a good idea to look for an adjustable life insurance policy that meets your evolving needs through a variety of additional features (only a handful of quality companies offer these) that allow you to: Increase your protection without proof of good health with an “inflation guard” benefit. Increase your protection at any time with proof of good health. Make an unscheduled premium contribution at any time to take advantage of taxdeferred accumulation. Adjust your “type of insurance” from a protection emphasis to an accumulation emphasis and back again as your requirements change. Adjustable insurance can be a lifelong solution to your financial needs All life insurance is designed to help you address one or more of the four basic financial problems you face. Adjustable life insurance gives you the power to solve all of these problems with just one lifetime policy. Note: This information has been provided to you courtesy of Chris Wright, Registered Representative, Securian Financial Services, Inc., member NASDA/SIPC2001-1126-850034 DOFU 1201 Nobody likes tax time, but owning a home-based business can literally save you thousands of dollars a year in taxes by allowing you to turn personal expenses into legitimate, allowable deductions. The more tax deductions your business can legitimately take, the lower its taxable profit will be. For example, if you earn $100,000 per year from your job and homebased business, combined, but have $15,000 in allowable business deductions from your business, you would only pay taxes of your net income of $85,000. At a 30% tax rate, that could save you $4,500 in federal taxes! We recommend you talk to your accountant about allowable tax deductions, but here are some tax strategies to keep in mind: Auto Expenses You can either keep track of and deduct all your actual business-related expenses, or simply deduct 32.5 cents (2000) for each business mile driven. You must keep track of mileage and how the vehicle is used. Education/Training Expenses Costs of training meetings, training programs and manuals, books, online training subscriptions, (i.e. NMOnline.net) etc. Legal and Professional Fees, Fees you pay lawyers, tax professionals or consultants. Business Entertaining You may deduct 50% of the cost for entertaining existing or prospective customers, if it is either “directly related” to the business, and business is discussed, or “associated with” the business, and the entertainment takes place immediately before or after a business discussion. Keep notes of the people involved and the business purpose. Travel When you travel for business, you can deduct many expenses, including the cost of plane fare, costs of operating your car, rental cars, taxis, lodging, meals, shipping business materials, dry cleaning, telephone calls, faxes and tips. It’s OK to combine business and pleasure as long as business is the primary purpose of the trip. But if you take your family along, you can deduct only your expenses, just as if you had traveled alone. Interest Interest and carrying charges on credit cards and business loans are fully taxdeductible. Computers and Software You can now write off a whole computer system in the year that it was purchased if the total cost is less than $20,000, and if it is used exclusively for business purposes. (IRC Sec. 179) In most instances, software bought for business use must be depreciated over a 36-month period, unless you can demonstrate that it has a useful life of less than one year. Charitable Contributions are deductible Rules vary on charitable contiabuations that you can deduct, depending on whether you are an LLC, partnership, S corporation, or regular (C) corporation. Advertising All expenses involved in advertising or promoting your business are deductible, i.e., business cards, classified ads, yellow pages, brochures and flyers, etc. Household Expenses This can be one of your most valuable deductions. To qualify, a percentage of your home must be used “exclusively and on a regular basis” for your business. It doesn’t have to be an entire room. Hints: Have your address on your business cards and stationery, have a photo of you in your office, holding a newspaper to validate the date, and keep a log of what you’re doing in your office. Often Overlooked Expenses Business related long distance services and bills, not including cost of basic service for your home phone, unless you have a second line. If you own your home, you can depreciate a percentage of all acquisition costs of your house and home improvements over a period of 39 years. You can depreciate 100% of expenditures and improvement costs to your office space. A percentage of all household expenses, including property taxes, mortgage interest, homeowner’s insurance, utilities, property maintenance, alarm systems, snow removal, grass cutting, etc. Office furniture and equipment; have you bought any desks, chairs, computers, files, lamps? Up to $20,000 in business furniture and equipment can be deducted in one year. You can also deduct homeowner’s insurance, utilities and related expenses based on the percentage of their use in the home office. Household maintenance; repairs to your home office are fully deductible. Repairs to the whole house would be deducted on a percentage basis. Snow removal and lawn maintenance. NOTE: If there is any possibility you will sell your house within the next several years, talk to your accountant about the tax ramifications. “Unless 100 percent of your home qualifies as a principal residence for at least two of the five years preceding the sale, you’ll be forced to pay capital gains tax on the business portion of your home.” Don’t Miss These Miscellaneous Deductible Items: All sales aids, i.e., audio and videotapes related to business skills Bank service charges Business association dues Business gifts Business-related magazines and books Casual labor and tips Casualty and theft losses Coffee and beverage service Office supplies Online computer services related to business Parking and meters Photocopies Postage Stationery Seminars and trade show fees Taxi and bus fare Telephone calls away from the business NOTE: Even without receipts for every miscellaneous expense, you can deduct them if you keep track of every one of these items. This information should only be used as a general guide. For professional and individualized advise, contact your personal accountant, attorney, or tax advisor. Visit www.irs.ustreas.gov for more information. Donations Needed for Ogden Rescue Mission Womens/Childrens Shelter New Items: - Fabric Remnants (to make pajama bottoms & blankets) - Socks (any size) - Diapers - Baby Shampoo, Lotion, Powder - Tooth Brushes Used Items: - Women’s Clothing - Women’s Coats - Children’s Clothing - Children’s Coats - Blankets For volunteers or more information, call Kari at 745-2573. |