John chow writes an excellent post on his blog about the advantages of being able to use his blog’s income to deduct expenses such as his love for fine dining.

Here is an extract from the post:

“Because the blog is treated like a business, you can deduct from the blog income many business related expenses that are required to run the blog. Stuff like web hosting, design work, programming, cost of domain renewal are all deductible. There are many other deductions one can take to bring his income down. There are no set rules. The tax man’s only rule is the expense must be reasonable and used for the purpose of getting business.

The keyword here is reasonable. It’s an undefined term. What maybe reasonable to me maybe completely unreasonable to Uncle Sam. My rule when dealing with deductions is to claim everything because the worst thing that can happen is the deduction is disallowed. If they disallow it, then fine. However, if they accept it, then I’ve saved yourself some money. Here are some of the more creative deductions one can use when trying to reduce blog income taxes.”

John goes on to say that it is possible to coincide vacations with trade fairs and shows to get a break that is deductible from your income tax. One of the great things about owning your own businesses, is the tax benefits and flexibility you get.

Today’s post is aimed at our American readers. With tax season coming up we thought we would share some tax saving tips, so you can get the biggest tax refund possible.

1. Investment and tax expenses. Investment and tax planning expenses are deductible as miscellaneous  expenses from your tax return so far asthat they exceed 2% of your AGI. Other things like safe deposit box rentals, brokers fees, IRA custodial fees, investment publications, long distance calls to your broker can all be deducted.

2. Child care credit. Do you work and pay a child career or a nursery to look after yours kids? If you do then you might qualify for a tax credit. This is true even if you claim your childcare-related expenses through a tax-favored reimbursement account at work. The reason for this is that such accounts are capped at $5,000 while expenses up to $6,000 can qualify for the credit.

3. Moving expenses to start your first job. While job hunting expense for searching for your first job are not deductible, your moving expenses are, even if they are notitemised. If you move more than 50 miles, you can deduct expense related to getting yourself and your stuff to your new location (including mileage).

4. Non-cash charitable contributions. You can claim tax deductions by clearing out your house and donating all of that extra stuff to charity. Just be sure to get an itemized receipt, and if any individual item is worth more than $500, get it appraised. Note that, if you drive your car for charity work, you can also take a mileage deductions. Not only is this good for your pocket but its also good for the environment.

5. Student higher education expenses. If your AGI is less than $65k ($130k on a joint return), you can deduct as much as $4,000 for higher education expenses.  Like self-employed health insurance premiums and education expenses, you do not have to itemize each item to take advantage. It should also be noted that you should  check to see if you qualify for the Hope and/or Lifetime Learning credit, as these can end up being more valuable than the deduction.

Our thanks goes to 5 cent nickel for these tips.

The Guardian newspaper has revealed that the UK economy looses out £13bn each year to the Super Rich who engage in numerous tax avoidance strategies. They go on to say that the money that the government looses each year would be enough to increase the state pension by 20%.

The study was commissioned by the TUC estimates the Treasury annually looses out on £3.8bn through the non-domicile tax laws, which lets those with overseas homes to escape tax on their income. This ‘income shifting’ by the super rich, which includes placing wealth in the name of a spouse or using other technical schemes costs the UK £3.2bn. Tax planning and other loopholes account for the remaining £6bn.

I think the real issue however, is how much do the Super Rich contribute to the economy and what is the net result. What do you think, does their overall contribution help or hinder the economies that they live in?

Have you had enough of the rat race, and are thinking of retiring soon? The times this week revealed the top 5 places to retire to based on eight key financial categories – income tax, inheritance tax, property tax, property costs, ease of gaining residency, healthcare, climate and culture.

1. Cyprus

Cyprus tops the list of exotic destinations mainly because it has an income-tax rate of only 5% on all pensions for retired residents, as well as low property prices and no inheritance tax. It is also favored for its hot, dry summers, warm winters as well as its English speaking population. You can purchase property in Cyprus from around £77,000 – though the island’s property market is quickly catching up with prices in more established retirement hotspots such as France and Spain. Though this could be considered a benefit as a good investment opportunity considering the state of the housing market in the rest of the world. Now that southern Cyprus has joined the European Union, pensioners from other EU countries are entitled to use the public health system.

2. Panama

Panama’s main attraction, (not including its year-round 30 Deg Celsius temperature), is the fact that English is widely spoken among the population, you have worked hard enough through your life, you don’t really want to be learning a new language when you retire! There are numerous other benefits including a lower cost of living compare to Cyprus and other countries listed, a minimal crime rate and, for retirees, its “pensio-nado” scheme – which offers numerous discounts on services including as healthcare, leisure activities and public transport. Another advantage is that Income from capital outside of Panama, whether they be your pension, bank deposits or your investment portfolio, is completely free from tax. Don’t presume you will escape tax altogether, however. There may be no inheritance tax as such, however, gifts of property attract rates from 4% to 33% depending on your relationship with the beneficiary, so make sure that you check before considering any such gifts. Anyone purchasing property may apply for permanent residence in Panama, one year after having applied for a residence visa, as long as the total value of the property and any bank deposits equals in excess of $200,000.

3. France

The country with the best quality of living on the list has to go to France. Despite the obvious language barrier, this will easily be made up for with the culture and cuisine this amazing country has to offer. If you are planning to retire with a large income, then France might not be the best option as the top rate of income tax in France is 49.8%, however retired couples with income of €70,000 or less would still be better off making the move because in France there are lower rates the lower your income. Housing prices have increased dramatically in recent years, but this increased cost will be made up for by one of the best health care systems in the whole world. Something you really might need to consider when you reach retirement.

4.Belize

As you can see from the photo, Belize has a tropical climate with temperatures ranging between a steady 24 and 27 degrees celcius, however people should be aware of Belize’s rainy season, which is likely to put some people off. Despite this, however, it has always been a popular destination for American retirees.

The income tax rate for citizens living in Belize is set at a low 1.75%, but income such as pensions is completely untaxed. On top of this there is no capital gains tax or inheritance tax for people looking into retiring to Belize. For those who can not wait until they are 65 there are advantages to early retirees also. Investors in the island can direct foreign business activities from the country, as long as they have an income of $2,000 a month and are at least 45 years old. They can also import a car, light aircraft, boat and any personal belongings duty free. Compared to other places in the Caribbean, Belize is quite resaonable for property prices, with a 3 bedroom, beachfront villa costing $350,000. Anyone who is aged 45 or over can apply for residency through a retirement programme set up by the Belize government.

5. SPAIN

Spain is similar to France in that it has a good number of British speaking communities dotted around the country and it is one of the most popular retirement destinations for English people. There are however a number of tax traps for those thinking of selling their property and moving to Spain which is why it has taken 5th place.

If you are resident of Spain (I.E. spend more than 183 days there a year) – you must pay tax at up to 40% on any income from your UK pension, bank accounts and investment portfolio. Capital gains tax may have been reduced last year from 35% to 18% however there is also a wealth tax of 0.2% to 0.5% of all citizens worldwide assets to consider. One final thing for expats to consider is that they are liable to pay Spanish inheritance tax, regardless of the country in which the inheritance is situated.

Spain is a wonderful, stable country, with an amazing culture but the above tax implications should be a big consideration for anyone thinking about retiring there. A Typical property will cost you around £137,000 and property costs amount to around 10%, which is higher than in many other countries.

Did you like this post? We are looking to exchange links with other Tax, Finance, Money related sites. Contact us on: info (at) taxfix.co.uk for more details.

Good Morning,

In an attempt to keep up with the fast moving pace of the Internet we have decided to start writing a blog on a semi regular basis.

This blog will keep you up to date with tax rebate tips, interesting business developments and some funny tax cartoons:

We would like to get a community of other blog owners, so if you have a tax, finance or business orientated blog feel free to link to us and we will do the same.

Please feel free to leave comments and leave suggestions.

We look forward to hearing from you.

The Tax Man