That’s the OP argument! You can’t say, employee taxes aren’t unfair, just be an employer. It’s ridiculous! You have only restated the OP’s claim: businesses can deduct virtually everything and employees can deduct virtually nothing.
Forget about all of your W2 earnings for a moment. Forget about the 8.5 hours a day you spend working for someone else. Forget about your bi-weekly paycheck. None of that stuff matters here, or to the IRS.
Forget all of that, hold an annual garage sale.
Now, you’re a business. You get to deduct the poster board you purchase advertising your sale. You get to deduct the balloons and price stickers.
You also get to deduct that part of your rent or mortgage that you spend on the garage where you keep your inventory. That is now your “warehouse”, which is part of your (non-employment) business. How about your attic? The attic is part of your home. You pay mortgage/rent/taxes on that part of your home right along with every other part. I doubt you use it for anything but storage anyway. Put the crap in your attic on your lawn with a price tag once a year, and you get to deduct the part of your housing payment that goes toward your attic.
You get to deduct the cost of acquiring your inventory. That is also a business expense.
Spend an afternoon in a lawnchair while your neighbors look through your junkinventory, and you get to claim thousands of dollars in business expenses.
If you’re worried the IRS might take issue with you if you only do this once a year, you can put up an ebay, etsy, craigslist, or marketplace listing, and it becomes a year-round operation. You are now an online retailer, and your annual garage sale is just a clearance sale for that business. If you’re still not sure, you can file paperwork with the state to be able to collect sales tax (and deduct the filing fee as a business expense).
You can’t say, employee taxes aren’t unfair, just be an employer. It’s ridiculous!
I absolutely can, and it’s not ridiculous at all. The problem you’re having here is that you think you need to be Walmart in order to call yourself a business. You don’t. You think you need to generate a profit to be a business. You don’t. (You do need to try to generate a profit. But, very few businesses are actually able to successfully generate a profit, and yours doesn’t need to be successful either. “Trying” is enough.) I am quite confident that many of the things you do in your day-to-day life can already be categorized as “business”, or could be considered a business with slight tweaks. You are legally entitled to count expenditures on those activities as deductible business expenses.
You keep trying to change the argument from the lack of fairness in tax policy to a discussion of how you can dodge taxes by becoming a business.
Yes by becoming a business you can dodge taxes like other businesses. That’s not the argument.
OP: “rent is high”
YOU: “no its not, just buy a house”
OP: “that’s not what I said”
YOU: “You’re not listening, here are tips to buy a house cheaply.”
You buying a house cheap doesn’t change that the OP said rent is high.
Becoming a business doesn’t change the tax policy allows deductions for businesses that employees don’t get.
And your “garage sale tip” is bullshit of the highest order. If you’ve done it, you are lucky you haven’t been audited. You can’t deduct on a loss every year without being classified as a hobby. If you are holding a garage sale, you aren’t earning a profit- that’s why its not taxable. You selling a 20 year old $10 beanie baby for 25 cents is a loss and you don’t have to pay taxes on that 25 cents.
And your “garage sale tip” is bullshit of the highest order.
I completely agree. It is bullshit of the highest order. There is a special IRS term for “bullshit of the highest order”. That term is “business”.
If you’ve done it, you are lucky you haven’t been audited.
If I had done that, and I was audited, and the IRS had a problem with it. I’d owe what I would have owed anyway. Maybe with a small penalty.
You can’t deduct on a loss every year without being classified as a hobby.
How many companies do you need me to name, and how many years do they need to show losses? You certainly can show several consecutive years of losses. You’d be hard pressed to find a company that hasn’t shown many consecutive years of losses. Lack of profit doesn’t mean a business is unsuccessful. It means they paid out their vendors and workers and creditors a bit more than they brought in.
And why do you assume you will always show losses? Why do you assume you won’t find a profitable niche in the process? The only requirement the IRS needs to classify you as a business is the fact that you don’t make an assumption like that. That assumption is what makes it a hobby. Don’t make it, and you’re a business.
Small penalty is when you make a mistake. Gigantic deductions with no income would have them charging you with tax fraud. The lawyer fees to defend yourself would be worse than the penalties.
Lack of profit doesn’t mean a business is unsuccessful
Companies like Amazon showed losses a decade because they had income from investors. So they had income, it was only that
the “business” side of the business was unprofitable.
You can’t get away with deducting your mortgage as a business express from a unprofitable garage sale. Certainly not year after year.
Why do you assume you won’t find a profitable niche in the process?
So we are back to, “just buy a house if you can’t afford rent.”
Gigantic deductions with no income would have them charging you with tax fraud.
Tax fraud would be claiming deductions for expenses that were never incurred. The expense of “rent” was incurred. The expense of “posterboard” was incurred. The expense of “balloons” was incurred. Using your attic for something other than storing items you retail in your online store and garage sale would turn your claim into fraud, but I never suggested you should do anything like that. That you attempted to sell everything in your attic indicates it was not used for personal use. They may not allow you to claim it as a business expense, but they can’t argue fraud unless you used it for personal use despite claiming business. So don’t do that. Don’t use it for personal use when you claim it as a business use.
You can’t get away with deducting your mortgage as a business express from a unprofitable garage sale.
I didn’t say deduct your entire mortgage. You can’t do that, unless you use the entire home exclusively for business. But you certainly can deduct a part of your mortgage, a part proportional to the amount of your house you use exclusively for business.
So we are back to, “just buy a house if you can’t afford rent.”
What are you talking about? That doesn’t make any sense whatsoever, and it certainly doesn’t arise from my arguments.
Look, you’re entering into this from the assumption that I’m suggesting you defraud the government. That is completely untrue. What I am saying is that “business” is a much broader category than you seem to think. A garage sale can certainly be a business activity. Re-selling merchandise online can certainly be a business activity. There is no explicitly defined line on how many business activities you need to perform, nor a explicit time period in which you need to perform them in order to consider yourself a business. As long as you approach it with the intention of (eventually) becoming profitable - even if you can’t figure out how to do that right now - it is a business, and you are entitled to claim it as such.
It is the epitome of foolishness to conduct business activities without declaring them to be “business”.
That’s the OP argument! You can’t say, employee taxes aren’t unfair, just be an employer. It’s ridiculous! You have only restated the OP’s claim: businesses can deduct virtually everything and employees can deduct virtually nothing.
Sigh.
Forget about all of your W2 earnings for a moment. Forget about the 8.5 hours a day you spend working for someone else. Forget about your bi-weekly paycheck. None of that stuff matters here, or to the IRS.
Forget all of that, hold an annual garage sale.
Now, you’re a business. You get to deduct the poster board you purchase advertising your sale. You get to deduct the balloons and price stickers.
You also get to deduct that part of your rent or mortgage that you spend on the garage where you keep your inventory. That is now your “warehouse”, which is part of your (non-employment) business. How about your attic? The attic is part of your home. You pay mortgage/rent/taxes on that part of your home right along with every other part. I doubt you use it for anything but storage anyway. Put the crap in your attic on your lawn with a price tag once a year, and you get to deduct the part of your housing payment that goes toward your attic.
You get to deduct the cost of acquiring your inventory. That is also a business expense.
Spend an afternoon in a lawnchair while your neighbors look through your
junkinventory, and you get to claim thousands of dollars in business expenses.If you’re worried the IRS might take issue with you if you only do this once a year, you can put up an ebay, etsy, craigslist, or marketplace listing, and it becomes a year-round operation. You are now an online retailer, and your annual garage sale is just a clearance sale for that business. If you’re still not sure, you can file paperwork with the state to be able to collect sales tax (and deduct the filing fee as a business expense).
I absolutely can, and it’s not ridiculous at all. The problem you’re having here is that you think you need to be Walmart in order to call yourself a business. You don’t. You think you need to generate a profit to be a business. You don’t. (You do need to try to generate a profit. But, very few businesses are actually able to successfully generate a profit, and yours doesn’t need to be successful either. “Trying” is enough.) I am quite confident that many of the things you do in your day-to-day life can already be categorized as “business”, or could be considered a business with slight tweaks. You are legally entitled to count expenditures on those activities as deductible business expenses.
You keep trying to change the argument from the lack of fairness in tax policy to a discussion of how you can dodge taxes by becoming a business.
Yes by becoming a business you can dodge taxes like other businesses. That’s not the argument.
OP: “rent is high” YOU: “no its not, just buy a house” OP: “that’s not what I said” YOU: “You’re not listening, here are tips to buy a house cheaply.”
You buying a house cheap doesn’t change that the OP said rent is high. Becoming a business doesn’t change the tax policy allows deductions for businesses that employees don’t get.
And your “garage sale tip” is bullshit of the highest order. If you’ve done it, you are lucky you haven’t been audited. You can’t deduct on a loss every year without being classified as a hobby. If you are holding a garage sale, you aren’t earning a profit- that’s why its not taxable. You selling a 20 year old $10 beanie baby for 25 cents is a loss and you don’t have to pay taxes on that 25 cents.
I completely agree. It is bullshit of the highest order. There is a special IRS term for “bullshit of the highest order”. That term is “business”.
If I had done that, and I was audited, and the IRS had a problem with it. I’d owe what I would have owed anyway. Maybe with a small penalty.
How many companies do you need me to name, and how many years do they need to show losses? You certainly can show several consecutive years of losses. You’d be hard pressed to find a company that hasn’t shown many consecutive years of losses. Lack of profit doesn’t mean a business is unsuccessful. It means they paid out their vendors and workers and creditors a bit more than they brought in.
And why do you assume you will always show losses? Why do you assume you won’t find a profitable niche in the process? The only requirement the IRS needs to classify you as a business is the fact that you don’t make an assumption like that. That assumption is what makes it a hobby. Don’t make it, and you’re a business.
Small penalty is when you make a mistake. Gigantic deductions with no income would have them charging you with tax fraud. The lawyer fees to defend yourself would be worse than the penalties.
Companies like Amazon showed losses a decade because they had income from investors. So they had income, it was only that the “business” side of the business was unprofitable.
You can’t get away with deducting your mortgage as a business express from a unprofitable garage sale. Certainly not year after year.
So we are back to, “just buy a house if you can’t afford rent.”
Tax avoidance schemes isn’t the argument.
Tax fraud would be claiming deductions for expenses that were never incurred. The expense of “rent” was incurred. The expense of “posterboard” was incurred. The expense of “balloons” was incurred. Using your attic for something other than storing items you retail in your online store and garage sale would turn your claim into fraud, but I never suggested you should do anything like that. That you attempted to sell everything in your attic indicates it was not used for personal use. They may not allow you to claim it as a business expense, but they can’t argue fraud unless you used it for personal use despite claiming business. So don’t do that. Don’t use it for personal use when you claim it as a business use.
I didn’t say deduct your entire mortgage. You can’t do that, unless you use the entire home exclusively for business. But you certainly can deduct a part of your mortgage, a part proportional to the amount of your house you use exclusively for business.
What are you talking about? That doesn’t make any sense whatsoever, and it certainly doesn’t arise from my arguments.
Look, you’re entering into this from the assumption that I’m suggesting you defraud the government. That is completely untrue. What I am saying is that “business” is a much broader category than you seem to think. A garage sale can certainly be a business activity. Re-selling merchandise online can certainly be a business activity. There is no explicitly defined line on how many business activities you need to perform, nor a explicit time period in which you need to perform them in order to consider yourself a business. As long as you approach it with the intention of (eventually) becoming profitable - even if you can’t figure out how to do that right now - it is a business, and you are entitled to claim it as such.
It is the epitome of foolishness to conduct business activities without declaring them to be “business”.