Donna Bordeaux walks through three legal tax cuts: mileage deductions, home office write-offs, and medical reimbursement plans for spouses. The key is stacking them together. She breaks down the IRS rates and methods you can actually use.
Questions this video answers
She references the current rate of about $0.56/mile and suggests rounding to $0.50/mile for illustration.
She recommends MileIQ and states it costs about $59–$69 per year.
If you use less than 300 square feet, you can deduct $5 per square foot (simplified method).
Example: If rent is $1,000/month and the home-office is 10% of the home's square footage, that's a $100/month deduction under actual expenses.
Medical expenses paid out of pocket must be reimbursed and the reimbursement check must be cashed by December 31 of the tax year to qualify.
Chapters
You want to know how to pay zero taxes legally, not go to jail for it? Well, I'm going to tell you, I'm Donna Bordeaux with calculated moves. There are many opportunities in the tax system and if you're like most people, you're not taking advantage of all of them. It is hard work to take advantage of all of them. But there is a payoff. If you want to get to that point where you pay zero taxes, you've got to take advantage of multiple strategies, Alex Hormozi said, and I'm not sure if he was the first to say this, but I'm going to quote it as him because that's where there's not one silver bullet, but there are hundreds of golden BBs. So we want you to take advantage of those strategies. So I'm going to give you my top three right now. So get a pen and paper and write this stuff down. Number one, mileage. If you own your vehicle and your business does not, you're entitled to be reimbursed by your business for the business mileage. Even if you don't write out a check to yourself, you can deduct the standard mileage allowance or actual if it's better. Each year that rate changes a bit. I think our current rate is about 56 cents a mile. Let's round it off and call it 50. So for every 100 miles you drive for business purposes, you're going to get $50 in write off of your business. Now again, if you figure that taxes you're going to save about 30 to 45% of that. That's a pretty big chunk for 100 miles. And you drive way more than 100 miles in most cases. Remember that mileage includes going anywhere for business purpose. So going to the bank, going to get your mail at the post office, going to ship a package, going to an event where you're going to learn things or meet new people who could be future customers. Those are all business expenses. So keep a log. You must keep a log contemporaneously. The IRS says that's fancy for write it down right now, not when we ask you three years from now. So mileage is a big one. Keep track of that mileage. Use MileIQ. It's a great app. I am not getting any kickbacks from them, but it's a great app. It costs you about 59, 69 a year, something like that. Keep it on your phone, it'll run for you all the time and you can do some tinder swiping to say whether that was personal or business travel makes it nice and easy. So number one, mileage. Number two, home office. Nowadays most people are working from home. So here have a fixed location outside your home. You're probably entitled to deduct the home office expense. Home office can be complicated, but it doesn't have to be. There's a simplified method. If you use less than 300 square feet in your home, you can automatically deduct $5 per square foot for your home office deduction. Even if it's more than that or if the expense is more to be able to use the actual, you'll take a percentage of your home square footage, multiply that times all of the operations costs of operating your home, whether you rent or own. So if you rent $1,000 a month for rent and you use 10% space, that's a $100 deduction per month for actual expenses. Keep in mind that the home office must be a legitimate home office. It can't be shared space. It must be exclusively used space. So not your kitchen table or your dining room or your couch in your living room. So if you have an area squared off, measure that square footage and make sure you take advantage of the home office deduction. Number three, a lesser known secret on how to deduct your medical expense. Now, this is a specific case scenario. If you're taxed as a sole proprietor, filing on a schedule C on your tax return and you are married, your spouse can be reimbursed for their work in your business. Instead of a salary and running it through payroll, they can be reimbursed for medical expenses. A medical expense reimbursement plan. They must do a little documentation and homework on this one and you must reimburse those expenses. Expenses that were paid out of pocket before December 31st of the year. To qualify as a deduction, make sure that check is cashed by December 31st. So things like your dental appointments, your eye doctor, your glasses, your contact lens solution, over the counter medications, anything that qualifies for the medical expense on the tax return that is not already pre taxed can be deducted through a medical expense reimbursement plan. Another term for this, if you're doing a little Internet searching, is a section 105 plan and it's often abbreviated MERP M, E R P Medical expense reimbursement plan. So check those things out. And my final answer for you. Yes, you can pay zero taxes. However, I want you to aim higher. I want you to aim to pay a boatload of taxes. Donna, you're crazy, right? No. If you're paying a boatload of taxes, it's because you're making an even bigger boatload of money and profit in your business. So aim to pay taxes, people. If you need help making sure that you're paying as little as possible for the most income as possible, I'm your girl. I'm Donna Bordeaux at Calculated Moves.
