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My wife and I are both employed. We are in the middle class family tax bracket, but we don't own a house thus making our tax very high. I want to start a business to work it after hours and divert some of that tax money towards the business. The idea is to use the tax money for the business, reducing the amount of money that I pay for taxes. In the long run, the business could become the main job. What book or source of information will be ideal for this type of transactions. |
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I think you're a little confused about taxes. First, I'm guessing that you feel your lack of home ownership makes your taxes higher. That might be true, or it might not. The main tax break you would get from home ownership is the mortgage interest deduction, and that is a fraction of what you're paying in interest. So, yeah, your tax bill is lower, but 3-4 times that amount is going out the door in interest. Plus, when you buy a property, you may have substantial taxes on that property that your landlord is paying now. Secondly, yes, you can deduct expenses on a business, but that only can be done without income for so long before the IRS begins disallowing your deductions. But if you're making money, the expenses come right off of your income. Third, owning a business means that you get the privilege of paying a self-employment tax, which is the same thing that your employer now pays into Social Security on your behalf. More taxes! So in short, owning and operating a business has the potential to be more rewarding than holding down a job -- and I recommend starting up a side business just to get another income stream going -- but the tax savings really aren't that appealing to do it just for those. |
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