Get PAID to go on VACATION using the tax code!!!

Two transactions at the same time: one generates a tax DEDUCTION and one generates TAX-FREE INCOME.

This might be my second favorite thread I’ve ever written!

Let’s bounce this ***THREAD**** to all of our friends via like/RT!!
1) First, the DEDUCTION:

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

In general, vacations are NOT deductible.

BUT!!!

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

At the resort bar or the pool, you are going to be naturally networking and making connections. Talking shop with others.

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

For tax, primary purpose generally means that you work at least half of every business day or 4 hours/day. You don't have to work on travel days.

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

You meet your friends at a resort in FL.

Air - $300
Room & Food - $1,400
Other - $100
Total - $1,800

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!
5) If you are single and own a business with $150k profit, you are paying up to 50% tax!

So that $1,800 deduction is worth $900 to you.

So we are net $900 cost at this point.

Now we have to find > $900 of TAX FREE income so you can get PAID to go on vacation.
6) The Tax Free Income!

Rent your home out whatever platform you like while on vacation.

You can get $1,000 a week in almost any market. Live near something cool = MORE!!!

But when you rent out your home, you are stuck with a HUGE rental income tax.

Here’s how to avoid that!
7) In general, renting your home creates taxable income.

In the US there is a 14-day per year exception:

Rent your home no more than 14 days in a tax year and you don't have to report the income. Go one day over that and ALL of it is taxed.

Let's go!
8) In this example, your vacation would cost $1,800. Save $900 of tax by deducting it.

You would rent your place for $1,846, but by using the 14-day rule you would not pay the $535 of rental income tax.

In the end, you would be up a total of $946 by going on your vacation!!
Work with your tax advisor.

Document your time worked on vacation/work done. Limit renting your house to 14 days per year. Restrictions can apply to vacations outside US.

...AND GET PAID TO BE ON VACATION!!!
If you liked this, let’s spread the first tweet with a like or RT!!!

Also, grab my course today before the price goes up for 60 more THREADS on similar topics!

gumroad.com/l/MbBbDf

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Patrick the Tax Advisor 🔥

Patrick the Tax Advisor 🔥 Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

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

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!