OT:Be careful what you wish for… 28% Capital Gains Tax Proposal

[utcsox]

$500k a year will make you comfortable within 1% in the United States ($388,905).

http://money.cnn.com/2014/04/04/pf/taxes/top-1-taxes/

Even in San Diego ($428,000), you are well ahead of 1%er.

http://gis.mtc.ca.gov/home/images/motm/motm212.pdf

Just since when is top 1% income “ain’t that rich”?

[SK in CV]

[quote=AN]Poorgradstudent, I’m talking about legal deduction, not fraudulent activities. As for home office, W2 Warner can’t deduct home office, so what’s your point?[/quote]

The rules for a business owner (sole proprietorship) deducting a home office are almost identical to a wage earner. If we’re talking about the home office of a wealthy business owner (that will almost always be incorporated, and therefore the income will come out as wages) the rules are identical.

[bobby]

[quote=utcsox]$500k a year will make you comfortable within 1% in the United States ($388,905).

http://money.cnn.com/2014/04/04/pf/taxes/top-1-taxes/

Even in San Diego ($428,000), you are well ahead of 1%er.

http://gis.mtc.ca.gov/home/images/motm/motm212.pdf

Just since when is top 1% income “ain’t that rich”?[/quote]

$388,905 is adjusted income. Before deductions, I’m guessing $500,000. Also this is likely stats for all filers, singles and family.

I remember reading somewhere to make 1% in Coastal CA areas, a family need to have pretax income of $750,000+

[SK in CV]

[quote=AN]W2 earner can’t write off any of that. I have a home office that I use for work. Can’t write that off. I have a car that I use to take myself to work and back. Can’t write that off. Biz owner can have the company pay for the car and maintain the car, so it’s not a piece of the cost, it’s the entire cost + maintenance. Biz owner can have their company own the cellphone contract. I don’t know about you but having your computer, cellphone, car, etc. paid for does improve their life style. Especially if it allow you to have extra money to spend on other stuff.

Let me put it another way. Lets say a W2 earner and a biz owner both making $200k (based on their taxable income). The W2 earner would have to pay for the stuff I listed and more with their after tax income. The biz owner can have a lot of those stuff paid for through their biz. So the $200k can be use purely for their enjoyment to enhance their life style.

BTW, I thought you said it’s fantasy and does not exist?[/quote]

In order:

As I said, w-2 wage earners can deduct home office expenses under almost identical rules as business owners.

Business owners are required to pay income tax on personal use of business owned cars. Driving to and from work is personal. Irrespective of whether you own the business or not. Exactly the same as for you.

If you use your cell phone for business, the rules for you to deduct those costs are identical to a business owner. If the business owns and pays for it, personal use is a taxable fringe benefit.

Do people cheat on their taxes? Absolutely. But the law is not significantly different for you than it is for very small business owners. For slightly larger businesses that are incorporated, the rules for some of the deductions are exactly the same for you as for them.

Your fantasy does not exist. Except for those that cheat on their taxes. If you approve of that, go for it. You own rental property? Claim all those deductions on your rental schedule.

[Author]

Posts