Sandy Botkins CPA, Tax Attorney is the #1 Tax Trainer in North America, best selling author of Lower Your Taxes Big Time, and has been featured tax expert at Donald Trump & Tony Robbins Seminars. Sandy has also been a guest on Fox, CNN, ABC, and other news outlets for tax experts. Sandy joined us on the dash to discuss lowering your taxes, and his mobile application TaxBot.
theDash: You say home business is one of the few legal tax shelters left. What does that mean?
Sandy: First of all, understand something: We have two tax systems in this country. [Many] times people think there’s one for rich and one for poor. That is a huge myth. What the systems are is one for employees-people who don’t know the rules, which are designed to take your wealth-and one for self-employed people, [the rules of] which are designed to create economic growth. The reason for that is, small business generates over 70 percent of the jobs in this country. So Congress passes good tax laws. And there are good tax laws-let me emphasize this-for small business.
theDash: What other deductions do people not typically know about?
Sandy: As an employee, you have to pay [taxes on everything]. As a self-employed person, you don’t pay tax until all your deductions are over. So [if you're an employee making] $60,000 a year, you’ve got to pay Social Security on 15.3 percent of $60,000. You’ve got to pay income tax on $60,000, regardless of your employee business expenses. [But] if you’re self-employed-let’s say you have $40,000 of expenses on that $60,000, you only pay tax on $20,000. You pay tax on your net. See the difference?
theDash: What if your home business is profitable? How can you still save on your taxes?
Sandy: By having a profitable homebased business, you can set up a host of fringe benefits, many of which I include in my book. You can set up a self-insured medical reimbursement plan and write off all your deductibles, eyeglasses, co-insurance, pre-existing conditions. Usually that stuff has to exceed a certain threshold [7.5 percent of your adjusted gross income] to deduct anything. With a self-insured medical reimbursement plan, you get a deduction regardless. It’s dollar for dollar.
Dawn Wright-de Brantes (a.k.a.Olivares) is the Dash's Writer, Chief Editor, Broadcaster, and Co-Creator. Dawn has dedicated over 25 years to both corporate and field leadership in the MLM Industry and has broken industry records earning her the title of #1 Direct Sales Leader in the world as rated by her peers through BusinessforHome.org. This coupled with over a decade of personal & leadership development training has given Dawn an intimate knowledge of the inner workings of the home based business industry. Dawn has been working from home since 1996. You can find her on Google+