Are IBOs Tax Cheats?

 One of the sure telltale signs that some Amway IBOs expose about their business is a big lie about making profits from Amway and all the while getting a huge tax refund, thus making their tool purchases "free". First of all, IBOs do not get a dollar for dollar write off on business expenses. They get to subtract business expenses from their taxable income. Usually that taxable income is an IBO's job income, because most IBOs earn very little from Amway. If you receive a nice tax refund because of Amway related expenses, it is likely that your Amway business suffered a nice loss, thus you are simply getting a refund on the income tax that was withheld from your job income.

IBOs also seem misunderstand what a legitimate tax write-off is. For example, a standing order of a diamond rally might not be an IRS allowed tax deduction if it teaches you nothing about selling Amway products or increasing business volume. A function where it is mostly socializing and hearing motivational speeches may not be a legitimate tax write-off for the same reason. In fact, if you belong to a group that teaches the "buy from yourself" philosophy, you may not have any legitimate tax deductions, just as you wouldn't be able to write off your expenses for taking a trip to Costco. Tax deductions are allowed for business owners who have legitimate business expenses to increase their sales. For example, a function where you are taught how to display and sell products would likely be an allowable deduction. But one where you are taught to buy from yourself and to never quit, might not be allowable.

I do not believe all Amway IBOs are purposely cheating on taxes, but I believe they are misled about what legitimate deductions are. I would advise an IBO to check with the IRS or to consult a CPS or tax specialist. In the past, I have read about IBOs who were denied tax deductions on Amway business related expenses because their Amway business was run like a hobby or like a social club. Expenses are allowed when you are able to increase sales as a result of your expenditure. Imagine how devastating it would be to get audited by the IRS and to have your deductions disallowed? Seems cruel but it has happened to IBOs and you can find legitimate articles about this very subject online.  Hey, even me, Joecool and my blog was mentioned on a Forbes article because I wrote an article about tax deductions and the Amway business.

As I said, I don't think IBOs do this purposely, but as an IBO, my upline basically told us that as business owners, all of our expenses were deductible, period. There was no mention of the intent to profit and increase sales. I suppose it is possible that millions or billions of deductions were allowed or unnoticed by the IRS over the years and taxpayers also footed the bill for materials that some uplines profited from. I only decided to write this article so that current IBOs and information seekers can seek guidance and advice from credible sources who know the tax laws and can give an IBO sound advice before they can get into hot water with the IRS.