If you’re self-employed, the line between your work and home lives is probably invisible. That is also increasingly true for executives—many of whom fall in the category of professionals or consultants. The intertwining of life-at-work and life-after-work has one exciting financial implication: many of your most-prized technology products and services can become the means to slash your income tax liability.
You can buy a computer, TV and even an MP3 player and deduct the cost as a work-related expense. It’s like buying gizmos at a discount of up to 30%. Far from cheating on your taxes, this is a legitimate technique. You just have to know how to ask for it, pick your products carefully and justify the purchase.
The salaried are a little disadvantaged here. For them to claim technology purchases as business expense, their company has to agree to classify these products or service as fringe benefit and pay the specified tax on it.
But don’t just break into a shopping frenzy as yet. Before you buy, justify. Preferably, write out your plan—when you use the product for work—so that it will be easy to prove you really do use your gizmo for work. If you are caught on the wrong side of the law, you will not only have to pay up for the tax you saved, but also interest and penalities on it. MONEY TODAY presents a quick guide on how to take the finance minister’s help in mixing business with pleasure.
|TO KEEP TAXMEN AWAY|
Don't push the limit Don’t go for an expensive model just because you can deduct it from income.That can grab the taxman’s eye
| Decide your deduction If you’re unsure whether to deduct the total cost of purchase or depreciate it over a few years,a ssess how long the gadget will be of use and depreciate it over that many years|
|Document everything The burden of proof falls on the taxpayer, so store your receipts to prove what you paid|
|Don’t let the taxman bully you Deducting business expenses is legal and an account of expenses is all you need to prove that|
MOBILE AND CORDLESS PHONES You do have to make calls for work, right? So write off the price of your handset and cordless in this year’s tax returns. Even better,the government will help pay for the phone and call charges. But exclude personal calls.
INTERNET SERVICES Expenses incurred on an Internet connection and payment for the service are perfect for deducting from your income.While at it,wi-f i enable your home and write it off as a professional expense too.
CAMCORDERS AND DIGITAL CAMERAS If you document your work or add video to your presentations,claim your purchase as a business expense.Never mind if you make home videos on weekends. When you bill for prints or DVDs,just show a percentage as personal use.
MP3 PLAYERS All MP3 players double as storage devices where you supposedly store professional documents. Some even use recorders to record business deals.Your MP3 player may be music to your ears but is a business tool for the taxman.
TVS AND PROJECTORS If you work for an audio-visual production firm as a freelancer,a high-end TV or LCD projector at home can be claimed as deduction.The usage: viewing demo tapes and DVDs at home. But popcorn is not tax deductible!
SOFTWARE,ACCESSORIES, AND THE BAG Most software,except games are a business expense. Batteries, flash cards,cables also count for deductions. Even a Bluetooth receiver is a deductible expense. And yes—protect your gear with the right travel bag and save taxes on that too.
BURNERS, PORTABLE HARD DRIVES, BACKUP DEVICES Taxmen can’t argue against the need to keep your professional data safe and all you need is a CD or DVD burner to get the job done. Or buy a portable hard drive that can back up to 160 GB data. Once work’s over,y ou can use the device to burn a CD.
DIGITAL VIDEO RECORDERS Don’t ever miss another jobrelated TV show. Digitally record them with a personal video recorder and it becomes a business improvement gadget.You can claim a part of the cost and also watch last night’s episode of Desperate Housewives.
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