Tax Loophole Alert! How to deduct your vacation!

This could be worth $1,000s every year.

***Thread***
Other, than in 2020, many of us go on vacation every year.

Vacations are not cheap (usually).

Some vacations might have airfare, lodging, and food costs in the $1,000s or more.

When I'm on vacation, I like to be on vacation, but I know how most of us on Money Twitter are...
You are going to spend a couple hours per day working, even while on vacation.

Even more, at the resort bar or the pool, you are going to be naturally networking and making connections. Talking shop.

You might even be there looking at property to buy and rent out.
If your primary purpose is business, the trip is deductible.

The hurdle for primary purpose is generally that you work at least half of every business day = at least 4 hours/day. You don't have to work on travel days.

Do that and you should be able to deduct your vacation.
Ideal Scenario

You meet your friends at a resort in Florida.

Airfare - $600
All-Inclusive Resort - $2,100
Other - $300
Total - $3,000

You work 4 hours per day because you can't leave it alone, but still have a great time the other 20 hours per day!

Take a $3,000 deduction!!!
FAQs

Q: What is considered working?

A: Profit motivated activities.

Q: Can I deduct my family's expenses if they come, too?

A: Are they working on the business fours hours per day, too? If so, you should. If not, you generally would only deduct your own expenses.
Q: If have heard the rules are more strict if traveling outside of the US. Is this true?

A: If you are gone more than a week outside of the US or more than 25% of your time is personal, you may only be able to deduct some of your expenses.
Q: Do I need to document?

A: Yes, thoroughly. Keep all your receipts and make a daily log of what you did and for how long. Give to your tax preparer.

If this thread was valuable to you, be kind to your friends and RT so they can get value, too!
This thread above is the type of ideas you want from your tax advisor.

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More from @AskForTaxAdvice

22 Jan
If you have REAL ESTATE investments, you are likely MISSING this tax savings.

ELEVATE YOUR CAP RATE via this tax loophole!

Everyone likes the tax benefits of real estate, but few talk about this huge one that is more relevant NOW than EVER.

***Thread***
1) For tax purposes, real estate costs are deducted over the useful life of the property.

All that means is if you buy a $1M property, you don’t get a $1M deduction the year you buy. You take it over 27.5 or 39 years depending on property type.
2) If you think about in terms of net present value, you will eventually deduct the full $1M, but it’s spread out for decades, significantly diminishing the tax benefit.
Read 9 tweets
22 Jan
Tax Loophole Alert!

Here's how to pay ZERO tax on your real estate flips!

This is a great one!

Are you handy? Do you like interior design? Have you considered flipping residential real estate?

***Thread***
2) Buy your house to flip.

Move in. Literally.

Make repairs and upgrades. Do whatever you do when you flip a house.

Stay exactly two years (or more).

Sell for a huge gain.

Pay $0 tax on the gain!

Repeat every two years.

It's called the home sale exclusion.
3) If your sole income is from flipping residential real estate, you could have a 0% tax rate (US).

Insane!

Q: How many times can I do this?

A: Once every two years. No lifetime limit.
Read 5 tweets
21 Jan
How to make your child a $5 millionaire,

with NO TAX to them,

deductions for YOU,

on an amount less than a nice bar tab...

***Thread***
2) You need to be some type of business owner..

You need to employ your child so they can contribute to a ROTH IRA.

There are a few things you can employ your child to do.

On easy example is being a "model" in your business marketing materials (e.g. pics for advertising).
3) Create an employment contract with your child (for marketing materials, etc).

Pay your child up to $6,000/year (must be a market rate of pay). This is deductible to your business so net a couple $100/month.

Contribute this money to a ROTH IRA in your child's name.
Read 5 tweets
21 Jan
Tax Loophole Alert!

Save up to $500 of tax!!

Did you work from home in 2020?

So many of us did.

Did you have a business that you worked from home for?

Here's how to deduct expenses related to your HOME OFFICE.

***Thread***
1) You do not need a business entity (LLC, Corp, etc) to take deductions for your home office. You just have to be engaged in a profit seeking activity.

If you have a business - even a small side hustle - you just need to meet the following two requirements:
2) Space in your home should be used as:

- The principal place of your business.

- Used regularly and exclusively for your business.
Read 14 tweets
21 Jan
Tax Loophole Alert!!!

How to save $500 to $1,500 of tax per year by

DEDUCTING YOUR MILEAGE!

***Thread***
1) If you drove your personal car for your business in 2020, you can deduct $0.575/mile. Similar in 2021.

That is more than it sounds.

For example, if you drive 100 miles per weekend sourcing product from a few Walmarts, that 5,000 miles per year is a $2,875 tax deduction!
2) In lieu of mileage, you can track your actual expenses like gas, oil changes, repairs, depreciation, and allocate based on personal use.

This is a headache and the $0.575/mile might be more than you are actually spending, depending on the cost and fuel economy of your car.
Read 5 tweets
21 Jan
Are you feeling the NAGGING pain of getting ready for tax time?

I'm going to show you how to GET CAUGHT UP IN TWO HOURS to save you PAIN.

Did you start a business in 2020? Did you keep any books/records?

If your answer is "no," you aren't alone.

***Thread***
1) Your Business Income

Open a spreadsheet.

List all the platforms you sold on in 2020.

Have a link to the login page for each.

Pull your 2020 sales report and drop this number in.

Manually add any cash sales or platforms that don’t give you a report.
2) Your Business Expenses

Gather all receipts from major purchases.

Pull 2020 reports on every account you spend money on for your business (ideally you don’t mix business on personal on the same account. Ha!)

Quickly scan and mark anything you think is business.
Read 9 tweets

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