February 2007 Archives
I wrote about loan payment accelerator. Now
this is about how to make extra payment money.
If you know some restaurant ower, they may have nice car. Some people say they can buy because it is tax write off (business expense).
It might be true, but not all true.
You don't need to be restaurant owener to have tax advantage of small business.
It can be sole proprietor or network business. You don't need to have LLC, S corp or C corp.
Right drawing shows tax in California. If you have about $50k income. Federal income tax is about 30%. California income tax is about 15%. So total tax is about 45%.
1 year 12 month of 45% is about 5 month. But the 45% of tax is originaly your money.
If you have business you will have some control.
If you have started business and $10k of business loss. It
will be like next drawing.
I know you don't want to have loss in business. But more likely you may have loss in the begining.
If it has business purpose, your personal expense can be business expense. You may have cellphone, computer, car, business travel, business meal & entertainment.
For detail it's better to ask your CPA or tax attorney.
When you file tax, W2 income goes to 1040. 1099 business income goes to Schedule C. But I explain in simple combined.
Last drawing shows just total. You had -$10k.
So total income shows as $40K. Tax bracket may be change,
but let's calcurate as 45% for now.
Then tax is $18k. It was $22.5k originally. So $4.5k (about 9% of W2 income was saved).
These are just basic idea. You need to have "intention to profitable business" and record.
But you can learn quickly.
You can do any kind of business. But I'd suggest you to have a network marketing business. Because the products & service is for all. So your potential customer is everywhere.
My parents & sisters are in glyconutrients business with me. So I call to Japan or visit, it it tax write off.
If you're interested in tax advantage but not sure what kind business you want to do, please contact me.
I show you why I choosed glyconutrients business and think it is happiness business.
Tax Diary: http://tax.hada.us
-Naoki
This is one of my favorit topic.
If you have $100,000 loan with 30 year fix rate as 7.0%, your montly payment is $665.30.
If you pay $665.30 every month, how long will it take to pay off?
360 month (30 years). You pay total $23,9510.98.
No surprise, right? We have these contract with loan company.
If you pay $100 (about 15%) extra every month, how long will it take to pay off?
247 month (about 21 years). You pay total $189002.73.
Surprise? I was. It is about $50K less and pays off 9 year early.
It is the magic of compound interest. If you see above graph carefully, you'll find less than $100 is paid for pricipal in the begining.
That's why it takes long time. Many people say mortage interest has tax advantage. Yes it is true. But the condition is that if you pay $3, you get back $1. You can choose not pay $3.
But I'm paying just minimum mortage and I cannot pay extra 15%!!!
Yes I know. But if you have side business or home based business, you'll have tax advantage.
It will be next topic.
BTW, if you'd like to play with graph calcurator, here it is:
-Naoki
I've read Mr. Seikan Kobayashi's book recently. It explained about enlightment taught by Buddha.
It is easy 4 steps. So let's do it.
- Suffering
Life is full of suffering. As you know, there're many thing you cannot control. ex) disease, death - Obsession
Above suffering is happened by our obsession. - Eliminate
We can eliminated the obsession and can be free from suffering. - Exercise
Let's do the 1-3 steps in our daily life
Well Japanese people say people have 108 earthy passions. So it takes some time.
-Naoki
I've read Mr. Seikan Kobayashi's book recently. It explained about enlightment taught by Buddha.
It is easy 4 steps. So let's do it.
- Suffering
Life is full of suffering. As you know, there're many thing you cannot control. ex) disease, death - Obsession
Above suffering is happened by our obsession. - Eliminate
We can eliminated the obsession and can be free from suffering. - Exercise
Let's do the 1-3 steps in our daily life
Well Japanese people say people have 108 earthy passions. So it takes some time.
-Naoki
Until yesterday, I did not know Google released Google map on phone.
I used to use KMap on Java. But now it works as native program on Palm or Windows Mobile. That's much better.
Thank you Google.
http://www.google.com/gmm/index.html
-Naoki
