My whole life I thought it was better to own than lease. And that it was better to pay off your credit cards in one big chunk instead of making payments. I believed all those financial people on TV who would say these things.
But I think they're wrong. Especially for people who operate a business.
Now, the following probably won't apply to anyone who works for another company since you can't deduct your expenses from your annual income.
I just got my IRS tax bill. I owe more in 2005 than I made in 2004. It's THAT bad. The problem is, that I just don't have enough deductions. I searched everywhere, I deducted mileage, and part of my home that is dedicated to business use, and so on. Advertising, entertaining clients, printing, postage, signs, office equipment, websites, and on and on and on. Property taxes, mortgage interest, anything I could think of.
But then I was told by my accountant that if I lease a vehicle, I could deduct those monthly payments. And that if I pay interest on credit cards, that I could write off that interest. She said that those deductions end up being the BIG ones for most people.
So I'm being penalized for owning my cars and paying my credit cards on time? I guess I am and I don't really have a problem with that. It's not going to make me go out and buy a car that I can't afford, or to start making minimum payments on my credit cards just to get hit with $100s in interest.
But now it makes sense why people leased cars and paid only part of their credit card balances, even those people that are extremely wealthy.
I may have to change the way I think about finances. Esepcially since I don't enjoy writing huge checks for the IRS.
1 comment:
Interesting. Being part of the rat race -- I would have never known that. Either way, I hate taxes. I understand their purpose, but I hate them anyway. I feel like I'm getting robbed and the cops are helping the robber -- threatening to shoot me if I don't hand it over quick enough.
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