vivian gas farm are you concerned about your taxes too either as make you feel like you're breaking into a cold sweat when you just think about the word taxes get you wondering what you should do in a day to day basis or paycheck to paycheck i studies class and helping my mother whether taxes you're helping a mother with your taxes yeah i mean just in social security social studies we learned about taxes and my mother was a waitress and was able to use some of the lower income things  like an earned income tax credit which is a phenomenal device for kind of the working poor so that they're able to to survive and live because they're out there earning an income and by doing that you know they're being productive in society so the government gives them benefits so you mention  it's not that i don't care and you should actually kind of care that the new tax law people think you're going to be able to do things on a postcard and that just isn't so for all the people who decide that they need to make a little extra cash maybe some things on e bay or even on craigslist or what about the person just making some few extra dollars you know dollars sitting baby sitting just little tiny ways to make money should they report that to the i r s i think they get so nervous that they'll be having additional tax burden on them or is it more beneficial to them if they should actually filed of all requires you to file for and report gross income from whatever source derived so any time you have an appreciation of wealth or saw something on a personal nature you do are supposed to report that for the benefit of it is if you're doing something like an activity you can actually deduct your expenses and offset your income with the expenses and in some cases like a lot of my clients their expenses exceed their income so that produces a tax benefit that they can use to offset their other income and essentially reduce their taxes by having being well claim not only just over the income you're actually also supports both the claim all related business deductions all right so let's say an individual they have a salary job but they're sitting at home saying listen i need some extra dollars there's so many people just looking around their house and if i'm home and selling a few things whether it's e bay craigslist i bring this up because i think there's millions of people out there doing this right yet and so what kind of tax breaks or what should they look to deduct and they're not even considering themselves a business or running a business so if they're doing this and that's if they're only making a few hundred dollars a year just very minor does it worth it for them to take a portion of their your mortgage to write off even calling the home office if they're doing this as they're living who tiny room yeah i mean a home office is it is a great adoption for businesses the key is actually the filing and reporting if you do a business on your ten forty and don't have a separate business entity you file what's called a schedule c and that not only being the most expensive tax return a form from the government because if you have net income you have to pay fifteen percent self employment a full security correct they thought you didn't need a home office so he went to the supreme court and this guy lost his home office deduction we not only i personally could argue the case before the supreme court with three simple questions the first being is a tax on income or services and it's obviously a tax based on income second is you know if you don't send your patients any money you know that it's on your bills and you know if you're in a medical field you don't know even if you send the bill they might not send you money and the third thing is you know if the anesthesiologist is handing out invoices  bills in a hospital he's not going to have very many patients so ultimately they overturned things and allowed the home office deduction in this particular case but if you had no separate business entity doing it then it the red flags aren't there so it's easier just to  here your house is rent so if someone is doing this is side business is obviously you know the vast majority of people are doing this and is just a little source of income to something extra right and if an average person is doing it does it behoove them to have their own little silver prior ship to make it more legitimatize to have that deduction i wouldn't go the sole proprietorship direction i would actually form a business entity and it's typically either a partnership or an s corporation and that's where they had to do all yes absolutely first of  all when you lose money on a sole proprietorship the government really looks at that there ought to not form whereas if you lose money out of business i'm not really wanting it or looking at it and the audit risk out of business is actually about it can't schedule so useful proprietorship and that's when they want to do it if you're a sole proprietorship it's one person so you end up being a big fish in a small pond whereas if you take the same business and turn into a partnership it now becomes like a copy in an ocean of all the other partnerships that exist typically actually recommend usually using  and i'll say but again there's no real tax law analyses so you really need a professional to help you a guy doing things like that so if someone who's just thinking side business side income rather instead of having that they would feel like it's not a big business actually soured person but you don't want to get caught i mean we all know that having an iris on it it turns into a huge scary nightmare so the way to avoid that would be what you said is to create an l c or an escort and you need a tax professional or interning to do that or could you do that on your own and you know if you're doing it on your own you're just forming with the state you're not necessarily using all all the tax benefits current business owners they're usually the structure is actually the the worst thing that they've done and you want to make sure they're doing a proper structure so that's why i always recommend for individuals to have typically a partnership l l c but escorts also work them good so that they stand they know the safest way to do it you know get them the least amount of red flags and potential issues with the ira yes correct that's the way i always stress structure thank i know what the i r s is looking for the typical issue with the i r s is they have income that you have reported on your return so they're looking for something so i make sure that it gets reported there and then taken out and put in this if possible way but what about when your home itself can drive income for you so for all the people out there who don't consider themselves to be big real estate investors but they b specifically for rental income but when you do that there's a lot of hurdles you have to get over and if your income is too high the government disallows your deduction so that's that's very big information so when someone has a multifamily dwelling even if are complying if that's how they should handle it correct they should generally if you have real estate could because the government distinguishes between active income and passive income so you can deduct your mortgage interest and real estate taxes when it's a business you can also deduct insurance repairs and stuff like that which you can't do if it's personal that's that's really think information because everyone's going to have some level of repairs on their home and have the ability to deduct that when you could have otherwise then that's a very valuable to and with that valuable information stay tuned and come back and watch us so we can learn more about how to save taxes by starting your own business three point four million children are investigated by child protective services annually of the kids in foster homes seventy five percent were neglected seventeen percent physically abused and over three hundred thousand sexually molested and i decided to dedicate my practice to helping people parents who've lost their children attorney then stevens has brought thousands of families back together and he will fight for yours welcome back stop by christmas i'm here with kendo ludden and he's teaching us on how to save money on our taxes by starting our own business even if we're not looking to run a big business kendo how do we save money well as we discussed earlier with ordinary necessary expenses anything that is business related cannot be deducted to offset your income line or even if they rent what do you recommend you do you recommend they just find a few things to sell on craigslist and then they can create a legitimate real business earning and that would help them legitimately deduct some expenses around their home or some usefulness that nature had to tell the business that well well yeah i mean here is you do actually have to have a business purpose but to me just preserving family wealth can be a business purpose so just your home can be a business typically like to have some sort of revenue or income for for it so you can get creative and try and get ideas on how to produce revenue but once you do you can deduct all the ordinary necessary business expenses and even offset your wages and other other type of income so for millions of people who are watching and thinking well i'm an average person i need to make some more money or maybe if i can some tax breaks isn't going to idea and the some just turn reach a little bit if they rent out a space in their room is that legitimate to now declare that some income so if they rent out a room or maybe a piece an area of their garage to store or something for somebody else like if somebody has an e t car sort of like air b n b is actually a business there actually is a great exclusion if you're think your home for less than fourteen days i call it actually the masters exemption does that mean so if you write property for less than fourteen days that is an exclusion but again you're really looking to form a business i wouldn't necessarily want somebody in my house but yes the idea as you did suggest to do work of finding a way to you know if you are totally separate area or a basement or something like that that can certainly i mean nothing looking to make a ton of money with it perhaps or a lot but there's so many millions of people out there who are struggling and if they can find a way that they can save some money so for example do dos that doesn't sound these interesting that you don't have another human being in your house you not rest renting out a whole year your whole room or house like not having a boarder but if throughout the course of the year  i heard that it pays between thirty five and forty dollars something of that nature and nice to have someone have their dog or cat you're home while they go on vacation now if you do that sporadically throughout the course here with that qualifier yeah absolutely and the great thing is now you're going to have the thirty or forty dollars cash that you have but for tax purposes you can offset all your other expenses that you're some of your burden been paying so as a result you can lose money in your business and then use that business last off that your other income i mean there's so many ideas i wasn't trying to come up with a few that might not seem very overwhelming and shoes are for people you keep mentioning but also we all want to get right on the taxes i rest legitimately completely understood but we really what is a write off well what a write off is it's just an ordinary and necessary business expense it is is dame's for that type of profession as to what you can deduct so for instance you had suggested with the with the dog sitting you may actually go pick up the dog and soft so you have your car to drive there your contacting them on your phone so now you can deduct your cell phone so these expenses that you have anyway now becomes adoptable to offset that income and actually even produce potentially a loss that used to offset your other wage income or w two income so when someone somehow they have a loss that's a good thing you're saying it in the tax room and the tax around that is yes because a loss ends up being a deduction that you can use offset your other income anything that's a salary job you can now deduct from that income so if somebody makes a salary of forty thousand dollars a year or thirty thousand dollars a year they can now reduce that to say you're paying taxes unless of an income yes that is correct absolutely so the key with that is that you know you can also offset other income interest dividends any type of income so income all gets added together two to one number and the lower that number is the lower your taxes are so if you have a loss you can offset your other income with that business loss so many people do you think are on it's correct i mean what happens with the business it is it just comes through it's like one separate number one it's a separate business so there's no correlation with the i asked you to this one number whereas if you do the business on a schedule say on your personal return that's we have all the numbers on there and  look at that statistic so by doing a separate business you essentially become two separate tax payers how are you two so for taxpayers that sounds a little confusing to me and i'm definitely not an expert well the business is its own separate return if it's an l l c what a partnership so all of the income and expenses go on there and similar to getting a w two you get a k one from that business which is typically come through your now mentioning some iras terms and i'm not familiar with what is a k want based luke a one is a business has a list of income and expenses and then that number of whatever income flows out typically it's ordinary income but a business can also have interest and dividends and a business consulting so there's actually like twenty different items on a k one that can potentially float to an individual return if it's active business it's usually just one number so you're letting your personal tax returns and wave average people can save some money and the q one is that used for wage earners know w k one is the k one comes through from the business so they can one is really like a w two from your business that's really that clears up a lot for me to stay tuned and come back and so we can learn more from mr london on how the security to give you benefits and i know you've earned the income if you have a business and you get to ninety nine miscellaneous they know you are in the income so what i do what individuals are going to tell ninety nine in their own small security number is you have to report that on their return if you don't they will give you  notice and that type of income will be assassin approximately a forty percent tax bracket because what happens is they're going to be at the maximum tax bracket and on average that's about twenty to twenty five percent for people when they tack on a self employment or so security tax of another fift percent and because you can claim the income they don't allow you to claim any business adoptions i don't just give them to you that's the really big problem and somehow that somebody just legitimately forgets they have the ability to amend their own tax return to reflect this yes absolutely there's plenty of times that i get notices that people haven't reported all their income and the government's not always right they're usually not so in which case if you're agreeing that your return is not correct but they are not then you actually do have to amend your return so a lot of times and a government notice comes in they actually do consider that an audit when their computer sends out a letter and they make adjustments so by doing now you imagine your return and just get things correct so just because you get i r s notice it doesn't necessarily mean it's right and that's why it's crucial to go t the tax where we did your returns or if you do your terms of certified personally suggest you find somebody to do it and then they're able to make sure that all your income is reported so many people they think just forget the stress of life so you're saying there is a and but the iran is they do give a little leeway with that and that is yes that's what leeway what would happen is if you make more than six hundred dollars for a summary during the year they're supposed to issue it to ninety nine but you have up to six hundred dollars for not owners who do get it and i mean i and i have their own business i report the income on a schedule c when the government expects it and the expenses exactly offset the income and i say less the amount reported on a ten sixty five so that there's a trail there and ten sixty five reports the income you're able to claim all the expenses and just bring back the one lower number so many people have mentioned to me that they are looking to form insurance to protect them you know from creditors or from you know protect their assets how do you feel about a child's trust is a one to well device because you now longer only asset but you are able to control the asset if you have any liability purposes and somebody sue is you if you want your house they can take your house is it a legitimate method or is that potentially an i r s red flag when someone has their own personal home and a trust have in your home and a trust is not a red flag it produces the benefits of you can't if it's your own personal trust you can only still claim the same the doctrines you would have which would be the mortgage interest and real estate taxes you can't claim any additional tax benefits but it's not a red flag you're able when you do that you're able to control your house but not own your house so it does offer a significant creditor or asset protection then still a lot and has a share in some great tax tips and how to protect your assets come back after this break and learn some more on what the top three i rez issues could be that you would  e help people start their businesses or fine tune their businesses and i upgraded this business to one that i have fun and  welcome back to start my chris is i'm here with kendall ludden and he's here to tell us the top three personal iris issues that come up that you could face kendall the i rest is not really dealing with taxes they look at it is just a science it's in the computer or as expert professional do you help people learn that it's really an art form and how they can deal with the ira successfully a lot of people think that you know i r s is all math and it's a science and it should be really really easy but when you hire a professional it's really an art form of going through and question them and finally finding the best tax deductions for instance money magazine used to give a typical taxpayer to fifty different accountants and have them come up with their tax liability not only did none of the fifty individuals ever come up with the correct answer every individual came up with a different answer and none of those answers are bright red flags for audience now it's just taking a little circumstance and using it differently so you know if you ask any question answer is it depends so with just one little fact there can dramatically change an answer and that's where the art form comes in as opposed to a science knowing what the answer is or how you can change it to benefit people is that why and then no one can ever do you completely uniform taxes because every single person's life is completely unique to them yes i mean absolutely and that's why i just hire a professional i typically save people many times over of what my fear is so it's i just add value to to what they have and if you try to do it yourself on a little postcard you're just not going to know you know all about saving devices the i rest i r s when they send a professional if somebody is on your tax returns for you they should represent you because they understand the material but if they don't have it to yourself you should definitely hire a professional because they know the ins and outs and how the procedure is going if you go to the iris by yourself you could say something percent a month up to twenty five percent so they did slam you if you haven't filed if you owe money they all they will work with you in the interest and penalties this last that you have filed and there is a possibility for an installment agreement where you can pay it over time so they're willing to work with you if you owe them money but you have to meet those filing requirements in a filing date and you you know one month is a five percent penalty if it's a failure to file and what dollar amount does that penalty represent if you didn't file and you don't know what you owe how do they were to counseling that penalty percent per month for late filing penalty so after five months of not filing you owe twenty five percent more that is a big eye opener for of so many people watching thank you for that what is a better tax and accounting service and how does applying to small business owners well my business actually call better tax and accounting and what i do is i've been in business for thirty years so when somebody comes to me with their tax return i can very easily mimic and do exactly what their prior accounting is done if he has done things i wouldn't have done what i know of doing if i take that and add that as an arrow to what i can use for later clients so i've been doing this for thirty years and see all the various disbursed things when you give me your tax return i'm going to do exactly what your accounting is done and if you miss things or deductions or things i just add to it so in that way i can say that i'm better than basically any accountant because you're going to give me what they did and i'm going to add my personal knowledge to it wow kendall thank you so much for coming to educate is because as uncomfortable as a conversation is the reality is far more uncomfortable listen to this valuable advice and stop your crisis because unfortunately it is