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  1. #1
    ABW Ambassador Packy's Avatar
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    Hey All,

    I had the tax man come over today to go over where I am at right now and to try to get an idea of what I am going to earn and what I will have to pay. This year has been a pretty good year and I am looking at a pretty steep bill to pay if everything goes as it is right now - About $20,000 plus in taxes.

    The tax man came up with a few good ideas, like opening up a Savings acnt, something in the form of an IRA but not exactly that. It needs to be opened up by the end of this month which is Tuesday. I can open it up with almost any amnt and have until April 15th to put up to $8,000 dollars in it but it must be opened before Oct 1st.

    Another suggestion was to pay for any advertising before Jan 1st. An example would be if I use ppc advertising, to add in my ppc acnts as much as I can before the end of the year which would add the expenses to this year.

    Another suggestion is to set the minimum payment before a check is sent to the maximum with the companies we deal with. Unfortunately I looked at most of the bigger companies and the maximum isn't more than $1000,00 so that won't help alot

    ALso, the obvious write offs would be a new computer, a laptop and other equipment. I'm not sure if a digital camera would count towards a write off or not although I would like to take some pictures to add to my pages. Of course all the normal write offs such as server fees, domain names, internet service and so on will be deducted along with a percentage of housing costs and so on.

    I don't normally talk about how much I earn but I am definately looking for anything else that anyone can think of between now and December 31st. Right now the way it stands with the tax tables is that for every 1000 dollars I make I will have to pay 400 in taxes.

    On a good note I suppose, for every 1000 I spend, I will save 400 in taxes.

    So anyways, I figure, this is the time of the year to start thinking about this and seeing what ideas might be out there. Not that I am trying to avoid paying my fair share but... Thanks

    Merchant Coincidences, One of the Wonders of the World

    Coincidence Me baby!


    [This message was edited by DaPackster on September 27, 2003 at 01:02 AM.]

    [This message was edited by DaPackster on September 27, 2003 at 01:04 AM.]

  2. #2
    ABW Ambassador flamingoworld's Avatar
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    I had that kind of tax bill my first year.
    Since then, I travel alot, I go to all the affiliate conferences I can. Great writeoffs and I make a lot of great connections and learn alot.

    So when you think you can't afford to go on those trips, think again. You can't afford not to if you have those big tax bills.

    Connie Berg
    http://www.flamingoworld.com


  3. #3
    ABW Ambassador Packy's Avatar
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    Connie,

    That was one of the first things we talked about and thanks for bringing that up. The biggest problem with the affiliate conferences is that I am scared sheetless to fly I would of loved to gone to CJ's and the cruise one and so on. It has always been that flight to get there that has stopped me from doing it. I have flown once though and, well, ummm, I'm such a coward when it comes to flying.

    I am considering seriously though hitting the one in November. I was looking for the info on that one. Do you have a link to it. I figure my nerves can hold up for about 1 1/2 hours on a plane.

    I really would love to meet all the people that we deal with and have the opprtunity to learn much more than I think I already know.

    Merchant Coincidences, One of the Wonders of the World

    Coincidence Me baby!

  4. #4
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    I wish I was in your tax bracket and had those kind of problems!

    Anyways, if you have to pay your own health insurance, you can deduct that with those new Health Savings Accounts.

    Another option are the various IRA's that are available - allows you to deduct up to like 7500 dollars from your income. You wouldn't qualify for the special IRA that allows you to get tax credits as you seem to make way too much!

    A digital camera, if you post pics on your site, should definitely be deductible. Mine was. You might not be able to deduct the full amount, but certainly should be able to deduct at least half it's value.

    Also don't forget about things like mileage if you travel for your sites like I do. And then there are the conferences like Connie mentioned.

    Jim

  5. #5
    ABW Ambassador Packy's Avatar
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    Jim,

    Another good deduction that we talked about today. Thanks. The health insurance I think I was told is 100% deductable because we are self employed if I am not mistaken. Right now I have no coverage but will before the year is over which will help quite a bit for next year.

    As for being in my bracket, I was pretty fortunate this year. I had an injury in construction which kind of steered me into afiliate marketing and this was the year that it worked out good for me. The tax bracket is high, but this year I was able to catch up on pretty much all the bills I had. Umm, it even left me a savings that should be just enough to pay the taxes For as much whining I do here at ABW, I really can't complain.

    Give it time Jim and you'll be paying a sheetload in taxes too soon. Umm, thats still not a good thing though

    Merchant Coincidences, One of the Wonders of the World

    Coincidence Me baby!

  6. #6
    ABW Ambassador flamingoworld's Avatar
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    Packster, you are talking to a person who swore they would never ever ever fly! After a few times it is actually quite enjoyable. That is the only time I ever get to actually read a good book!

    Here is the link to the conference, come on out and party with me and Haiko!
    http://www.affiliatesummit.com/agenda.shtml

    Connie Berg
    http://www.flamingoworld.com


  7. #7
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    There's always the train! Amtrak is a great way to travel, particularly on their western routes where there is ample leg room and such. Rates are great too.

    Just remember Jim's golden rule of train travel : One night on the train is just right, two nights is one too many.



    Jim

  8. #8
    ABW Founder Haiko de Poel, Jr.'s Avatar
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    Packy,

    Hop on the Amtrack and your in the city in 6-7 hours, 10 minute stop off in Albany to smoke (if you do)... Connie and I'll be waiting to with you. We can make fun of Schwegman and his parasite friends, I'll bring the tomatoes

    <font size="2" face="Verdana">Haiko


    The secret of success is constancy of purpose. ~ Disraeli
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  9. #9
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    As for health insurance, I too don't have any coverage. But have looked into this.

    The way things are now is that you set up a Health Savings Account. All money paid into it is self-deductible. Part of this involves getting a high-deductible insurance policy that pretty much covers anything above a certain threshold.

    The amount you put into the savings account is fully deductible, as is your insurance premiums. You then withdraw money from the savings account as you need it (like for your initial medical bills that fall under the deductible limit).

    If you don't use all the money in your savings account in one year, you can still add in another 2K the following year, building up this "savings account". You don't lose the money that you put into it.

    Just beware, Congress is redoing the entire thing this fall (the program officially ends on January 1st). A new plan is likely to be spewing out of Congress this fall that may change things around quite a bit, although preliminary research makes it seem like it will only be better for us than before (more options, that sort of thing).

    Do a google search for Health Savings Accounts for more information about it. Blue Cross/Blue Shield also has info. on their site about it, too.

    Jim

  10. #10
    ABW Ambassador Packy's Avatar
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    Jim, I love taking the train. The only problem is for some reason I have a tendancy to be a little buzzed when I get off of it I don't know if I could handle a couple of days though on the train but it always was fun

    Connie, I'll check it out and I would love to meet you, Haiko and all the others and party with ya's. I know it would be an awesome time

    Haiko, if I do go I don't think I would have too much of a problem flying for just over an hour. The only time I ever flew was a direct trip to Vegas which was about 6 hours in the sky Wayyy too long in my opinion for engines to be running trying to carry all that steel across the sky

    Merchant Coincidences, One of the Wonders of the World

    Coincidence Me baby!

  11. #11
    ABW Ambassador flamingoworld's Avatar
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    Haiko, I may be coming in on Saturday, one extra day to eat Popeyes and party!

    Connie Berg
    http://www.flamingoworld.com


  12. #12
    ABW Ambassador Packy's Avatar
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    Jim,

    Thanks for that info on the health insurance savings. I'll check it out and bring it up with the Tax Man. Sounds like something good that he might not know about.

    Hmmm, whats a Popeyes???

    Merchant Coincidences, One of the Wonders of the World

    Coincidence Me baby!

  13. #13
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    Probably one of the best way to lower your tax bill is to buy a house/condo (if you haven;t already) and write off the interest but it may be to late to do that this year. Other than that dumping the $8k into the retirement acount and dumping the rest into advertising is probably your best bet. As long as you will be able to make money off the advertising in the next year. Just keep doing this at the end of every year.

  14. #14
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    Besides the lovely interest break when you buy a house just mentioned - did your tax guy talk about forming an S corp for next year?

    While it adds the complexity of paying yourself as an employee and having to do payroll tax, you can also take some of your pay as an officer for the company in the form of a dividend, which is a captial gain - which gets taxed much, much, much, much less than wages. And thanks to Bush's tax changes, add a bunch more much's to that last statement.

    If you bring this up with him and he scoffs, or if he never even talked about it - look for a new accountant. You can't take all of your pay as capital gains, but you can take a decent percentage without raising any red flags.

    And once you have your company, the company pays for everything, remember that. Everything that can possibly be paid by the company should. Digital camera? of course. Do you sell cds? Then you music collection. Sell video games? Golf clubs? You are getting 1/3 off each purchase compared to being paid, then paying for something out of pocket. Testing the products you sell, or buying them for review is a normal cost of business.

    Chet

  15. #15
    ABW Ambassador Packy's Avatar
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    Blazester,

    I see we have the same last name "ster" Thanks for the feedback. I have been floating the idea about buying a house but probably can't quite swing it right now because I would like to be able to put about 50% down on one to keep the payments at a minimum just in case things change abruptly for me. I do have a goal to purchase a house next year if possible and the tax man did mention it would be a good idea. As for the advertising, right now I do use a little ppc advertising and some adwords but this year I only spent about 1/3 of what I did in 2002. When I did the numbers yesterday I was really surprised how little I spent

    Chet, thanks for the suggestion. Although he didn't bring up forming a S Corp, which I am assuming is something to do with incorporating, I'll be sure to mention it too him. He is pretty good on keeping up with new laws and so on but I am sure there are a few things he might not think of. Kind of why I decided to start this thread to help get some info and ideas for myself and others who could use some ideas. One of the reasons I do like him is he is pretty honest on how his clients go about filing taxes. That could be a good thing or a bad thing I guess One thing is it's nice to kinow that if I was ever to be audited I shouldn't have anything to worry about. Thanks again and I'll be sure to check it out.

    Merchant Coincidences, One of the Wonders of the World

    Coincidence Me baby!

  16. #16
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    Hello ;-)

    Another idea is to prepay your estimated "state" taxes for next year. I saved myself about $300 last year and will prob save myself about a grand next year on prepaying.

    Of course this might be just for those that live in Minnesota, you will have to look at your states prepayment options.

    Another way to go is to set up that savings account you mentioned. Make sure you get an account that offers atleast 2% for a reg savings account. I use ing and they offer a simple plan with no minimuns and pay around 1.8% - 2.25% intrest.

    Each month I put away about 51% of what I earn ... of course some months I am a bit behind and others a bit ahead but I really try to stay a bit above 50% of my net take home pay... after expenses and all.

    That way at the end of the year your ready for what you need to pay into the gov.

    Another option at the end of the year is to open up a sep retirement account. Last year I put about 5 grand into my retirement account and this year will put a very nice neat egg away for myself.

    A sep plan is similar to a 401 k.

    Good luck ... I am also a bit worried about the end of the year. My hard work really paid off this year and I did very well ;-) But I am still a bit worried about "the tax man".

    Cheers,

    Brian Johnson
    Seek and you shall find

  17. #17
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    Pak,

    Another way to save if you are making that much is to open a SEP-IRA. You can put 25% of your earnings into it (up to $40,000) with a deduction. Please consult your accountant for more specific information. The rules may be slightly different where you are.

    Also, contribute to your local church or cause. It most likely will be deductible. Again, consult your accoutant.

    IamJaloppy

  18. #18
    ABW Ambassador flamingoworld's Avatar
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    You could always just send some money to me and write it off as a business expense.

    With my $20,000 hospital bill this year, I am projected to have a loss carryover this next tax season so it wouldn't hurt me tax wise to get money from you.

    Sucked not having insurance. Luckily we are in the process of getting some now.

    Connie Berg
    http://www.flamingoworld.com

  19. #19
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    DaPackster, you shouldn't be afraid to fly.

    The most dangerous part of a trip is driving to the airport.

    I've been flying for over 30 years without so much as a bad incident, except having my checked-in luggage delayed (so travel light, just pack a carry-on).

    I've long lost count of the flights I've taken. I'm sure it's well into hundreds and approaching a thousand. One year I logged over a quarter million miles.

    It's peacful at 35,000 feet. You can rest. The phones don't ring. You can sort out your thoughts.

    Look at it this way ... at any time there are thousands of airliners in the air. Maybe once or twice a year one crashes. Lightning can strike you dead as often. And don't be afraid because of 9/11. If you're afraid of terrorist, don't get on a bus, don't get on a train, don't go into the city and don't live near civilization. Don't eat, don't drink and don't breath too often.

    As for taxes, pay the tax man and be happy you made enough for that to be a problem and count your blessings that you live in a society where you can earn a decent living.

  20. #20
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    I've been on plenty of long airplane trips, back and forth between Germany and here in the states and i still hate flying. Had a couple of bad experiences, door flying open just before taking off, landing in a hail storm in Orlando that messed up a lot of peoples cars, plus the fact i'm not a big fan of heights I don't even like being in a car with other people driving, i like to drive myself, don't trust other people's driving. But overall airplanes are safe

  21. #21
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    A tax bill means you made money. Easy way to not have a tax bill is to not make money.

    Besides if you don't add to the coffers , how will the schools , roads , weapons of mass destruction be built ?

    Seriously though , for a small tax bill like this , think of "splitting" the revenue among your children etc. who have a lower tax bracket. Pay them to do some of the work , thus shifting the income a bit.

    When your tax bill starts to exceed $250,000 a year , I can guide you on ways to legally enjoy a 90% tax CREDIT.

    Toledo Swords - Collectible Heirloom Armory
    http://www.toledoswords.com

  22. #22
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    I think you can still get a fat tax break by having your business buy one of those giant gas-guzzling SUV's. Depreciation, licensing, insurance, gas, parking, repairs etc. can all be compliments of your less fortunate countrymen's tax bill.

    I live in an affluent neighborhood and you can always tell who the business owners are because their wives pull out of their driveway in a giant SUV, to chauffer the household groceries and certainly to conduct some business purpose as well, like maybe a marketing survey at the local mall.

  23. #23
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    If you want to go to CJU and put a big dent in your tax owings for the year, lease a personal jet and fly to SBCA on that. A lot nicer than herding into cattle class, and you can give all the local affiliates a lift over and make some new friends.

    Jimmy James Inc. fan club membership # 3312

  24. #24
    ABW Ambassador Packy's Avatar
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR> I don't even like being in a car with other people driving, i like to drive myself, don't trust other people's driving <HR></BLOCKQUOTE>
    I'm the same way Trust. For some reason I think the person I am driving with doesn't see the stuff I am seeing I like to drive myself.

    As for flying the one time I did. The take off was cool and so was the landing. It was the time inbetween that felt like I was on a amall boat in a storm that had me a little worried

    I stayed up all night thinking I would be able to sleep on the plane. Dumb move on my part. As soon as we started hitting the bumps after about a half hour in the sky, there went any hopes of sleeping my way to Vegas. I think I was the only one pounding a beer down at 7:30 in the morning on the plane I only had one so that didn't work.

    I would close my eyes and try to sleep, but then I would here the ding, ding, ding which meant to fasten the seat belt. Ummmm, which meant there was a reason coming upon us to fasten the seatbelt Man, how I hated the ding, ding which probably wnet off about 7-8 times both there and back. The worse part was if the bell to fasten our seat belts would go off and then 10-20 minutes would go by with nothing and here I am just waiting which seemed like a day and a half for the turbulence I think they were just playing with the chicken boys head and laughing the whole time.

    But, but what really got me was one of the most afraid times of my life and I couldn't have a smoke That was the longest I think I ever went without a cig and probably one of the times that I could of used one the most. I will say though that the scenery was awesome and when it was calm, the feeling of just gliding through the air was truly amazing for someone that has never flown before.

    Whisnot, your a much braver man than me. Jeeeze, thats alot of flying

    Connie, did the check come today. I hope it didn't get lost in the mail

    IamJaloppy, Drewbert, Cinst, Brian and all! Thanks for theideas and keep them coming. I'm going to print this thread out when the time comes to meet the tax man again and see what we can come up with. I wonder if he will go for the Private Jet one???

    Merchant Coincidences, One of the Wonders of the World

    Coincidence Me baby!

  25. #25
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    Oh yeah, the bumps. Just strap yourself in. You know the plane is gonna bump a little when it hits a cloud. No big deal. Just don't spill your drink. And it's gonna shake you up real good if you fly though a thunderstorm but still no big deal. The plane can take it ... so can you. Seems they avoid the really bad stuff these days, thanks, I suppose, to doppler radar.

    But the commuter prop planes are always a white-knuckle ride. Those I hate. Can't get a prop plane up above the weather.

    Best solution to fear of flying ... take a newspaper onboard. Read the newspaper and you won't even notice the take off and landing. And you probably won't even notice the bumps if you find an interesting article to read.

    Oh, and always be on the alert for someone who looks scared. Help calm their fears and yours will go away.

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