MORE WEALTH WITHOUT RISK by CHARLES J. GIVENS
Author:CHARLES J. GIVENS
Language: eng
Format: epub
Publisher: POCKET BOOKS
Published: 1995-07-15T00:00:00+00:00
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Strategy #199
USE YOUR W-4 FORM TO INCREASE YOUR TAKE-HOME PAY WHEN YOU HAVE SMALL-BUSINESS LOSSES.
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As discussed in Chapter 25, “Getting Down to Business,” during the first couple of years of starting a part-time small business, you may generate and deduct significant “paper losses” created by tax deductions for items and assets that you already owned or bought. The business-use percentage becomes an immediate tax deduction as an expense or through depreciation.
You can use your W-4 form to turn these deductions into an immediate increase in your monthly cash flow. “Losses” from any unincorporated business are transferred from line 31 on Schedule C to line 12 of your 1040 form and become a dollar-for-dollar tax deduction with no limitations. You will automatically owe less in total taxes because of your business loss. Each $2,450 in net business loss equates to one extra allowance on your W-4 form (see Strategy #195), which at the 28% tax bracket will put an extra $57 per month or $680 per year in your take-home pay.
If you already started or plan to start a small business on the basis of my recommendations in Chapter 25, pencil in your estimated income and deductions on tax Schedule C. Divide any estimated losses from the business and any new deduction strategies by $2,450 and add that number of allowances to your W-4 form at work. Get those tax savings now!
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