I always get a kick when IBOs talk about how they get bigger tax refunds because of their Amway business. To me, a bigger tax refund is most likely the result of suffering losses in Amway. If you did not have a job and taxes withheld from your paycheck, and your only revenue was from Amway, you could only break even at best with no tax return, unless Amway corporation was withholding taxes for you. Most IBOs have jobs and their bigger tax refund is very likely because they reduced their tax liability by losing money in their Amway business.
It might be a good idea for IBOs to consult with a tax professional because they are likely assuming that anything associated with their Amway business is a legitimate tax deduction. In the past, many IBOs who were audited by the IRS had tax deductions disallowed because the deductions claimed by the IBOs were not seen as legitimate deductions by the IRS. Look at functions for example. They can be seen as a social event rather than a business convention. Did your business grow as a result of that function? Did your sales increase? For many IBOs, the answer is "no" and that could mean that your deduction is not a legitimate one. When you hear a standing order about some guy who was down and out but never quit and later went diamond. A nice and touching story, but did your sales increase as a result of that cd? If not, it may not be a legitimate deduction. The IRS is not in the business of handing out deductions because the expense was related to your Amway business. More than likely, you need to show that your expenses somehow helped to increase your business. As I said, it is probably wise for IBOs to seek tax advice from a tax professional rather than blindly following your upline's advice.
But IBOs, please do not try to fool everyone into thinking that you have a profitable Amway business if you are reconciling your taxes at the end of the year and then getting a larger tax refund as a result of your Amway business profits. You are more than likely gaining a bigger tax refund because your lost money running your Amway business and the business losses reduces your tax liability from the income you earned from your job. If you were making some money in Amway, after subtracting expenses, you would have to pay more taxes, at least in the US. The more you make, the more Uncle Sam takes. All too often I have seen IBOs brag about their profits from their Amway business and in the same breath, they talk about getting a bigger tax refund. It doesn't add up.
if it does, i'm sure that awesome anon from canada has proof!
ReplyDelete(not holding my breath)
Amway teaches nothing about actually owning and profitably running a business.
ReplyDeleteMost people have no idea that a tax 'refund' is a loss to the tax payer.
Why would you let the goverment keep your money all year and invest it (like smart business investors would). It's better to take claim just enough allowances to break even.
If you are getting money back, that is poor money management.
A tax write-off is not a dollar-for-dollar transaction.
If you grossed 50,000 w/no deductions at a tax rate of, say, 35%, you will pay $17,500 in taxes.
If you grossed 50,000 w/5,000 of amway expenses/ deductions, you now pay $15,750 in taxes: you kept $1750. But it cost you 3,250.00!!!!!
Exactly when did that become a good thing?
Of course, a business person should always track his expenses; but let's be real here.
Staying the hell away from amway would keep $3,250.00 in your pocket.
The minute you show IBOs the actual numbers, they change the dance to, "I'm not just in it for the money."
Oh, really?
Then why bother going to any of the meetings or major functions; b/c that's all they talk about they work tirelessly to get you dissatisfied with your life and coveting mansions.
Seriously, if IBOs are getting bigger tax refunds because of their Amway business, it's because they are losing money. There's no other conclusion I can make.
ReplyDeleteI say there's a 99.999% chance that we will see no logical answer from any of the Ambots.
ReplyDelete***Former WWDB Lemming***
Yes and no i believe if you put forth the effort and time to build your business it will become very profitable i have my own and am very profitable as for taxes you just need to ask for help on them not to hard.
ReplyDeleteand i assume your business isn't amway?
ReplyDeleteWhy would you post about something which you gave no knowledge of? A tax write off is nothing to do with the profitability of your business. An amway IBO can write off internet and gas and food from trips, etc. just the same as somebody who owns a vacuum cleaner store. There is no difference whatsoever. And just as with any other business, if you claim all sorts of expenses 3 years in a row with no real income gains, you will get audited, whether you own an amway business or a traditional one. Silly people who don't know what they are talking about.
ReplyDeleteAn IBO can write off legitimate business expenses. The problem is that many expenses claimed by IBOs are not legitimate. The business expenses should result in more business, not some slick way to cheat the government to reduce tax liability from the taxes collected by your job.
DeleteAt Anon 3:24.
ReplyDelete"There is no difference whatsoever".
Actually there is. And to be clear, Joecool's post refers to refunds not write offs.
A refund happens after the end of the tax year if the final assessment suggests the individual has paid more taxes than he or she should have.
If an individual has a job and have taxes subtracted from salary during the course of the year, and he has a business run after hours that is not registered as a seperate entity for taxes, one of two things can happen in the final assessment if the individual declares his activities: The authorities will want additional taxes (if the business turned a profit), or the individual will get a refund (if the business was run at a loss).If the business itself did not pay any taxes before, a refund can only come from the salary's prior deducted taxes, which means it can only mean the business part of the individual's income ran at a loss. It is not a good thing, especially not for a run from home business with no rent and no equipment that is advertised
as having low startup costs.
Tha vacuum cleaner business likely would have paid it's own taxes as an entity before. If such a business gets a refund it is because it has overpaid in the past.
Write-offs are business expenses engaged by an individual on behalf of a business and for that reason reduces total tax liability. If the business activity has not otherwise paid over it's own taxes, one would certainly hope the write offs don't lead to a refund, because that would mean the business activity made a loss.