Only passed means test by $150.00

[debtmonster]

Actually DM I think you are the one creating controversy. Dh and I were over the median in January and guess what? We weren't doing well, well off nor could we afford to pay all our bills. And you know what? We filed BK with a LOT LESS debt than most of you. We managed our money very well but with the rising cost of gas, food and health insurance we just couldn't do it.

And we didn't have left over money to put into an MLM or home based business. We waited until April and we were then under the median AND 2 MONTHS behind on our mortgage. Things don't work out they way you think they do or should.

If people would stop replying to my posts as a debate, there would be no controversy.

If you're making money over the median, then you are making more money than most of the people. It would buying a house for more than you could afford. When I bought my house, they wouldn't let me finance over 3x our gross income. I don't know why people are sitting there buying $400,000 and $500,000+ homes. That's just nuts.

That's what homes here sell for. That would be almost 10x our gross income and is almost 10x the median income for our state. If banks would stop approving people who have no business buying these houses, inflation wouldn't be going out of hand. Too much false supply and demand.

[aces67]

Actually DM I think you are the one creating controversy. Dh and I were over the median in January and guess what? We weren't doing well, well off nor could we afford to pay all our bills. And you know what? We filed BK with a LOT LESS debt than most of you. We managed our money very well but with the rising cost of gas, food and health insurance we just couldn't do it.

And we didn't have left over money to put into an MLM or home based business. We waited until April and we were then under the median AND 2 MONTHS behind on our mortgage. Things don't work out they way you think they do or should.

[debtmonster]

I receive a w-2 and 1099's. I have the best of both worlds. You are too assumptive.

If your CPA shows you are in acceptable levels for business expenses and low on the audit scale I assume he's telling you that based on your actual expenses, not your contrived arbitrary ones.

Nothing is being contrived. Stop putting words in my mouth and changing around what I am writing.

You're creating controversy here all for nothing. Just stop debating my posts and be done with it.

[OhioFiler]

I receive a w-2 and 1099's. I have the best of both worlds. You are too assumptive.

If your CPA shows you are in acceptable levels for business expenses and low on the audit scale I assume he's telling you that based on your actual expenses, not your contrived arbitrary ones.

[debtmonster]

Well, based on your earlier post you seem to be pushing the limits of the IRS code and encouraging others to do the same. You may not be making up expenses out of whole cloth but you are using personal expenses as business deductions and claiming it is acceptable so long as you are not audited.

Here is a quote of yours. The bolded excerpt is patently illegal. If they were not deductible before you opened your MLM business, they remain non-deductible.

They were not deductible before because you did not use them for work.

I am not pushing the limits of the IRS code whatsoever. The CPA show me the little chart for the risk level of being audited. Everything was in the green. If you push the limits, it will tell you.

It sounds like you're being a W2 sheep and nothing more than jealous. Nobody is holding a gun to your head and forcing you to stay in the position that you're in. You're doing it all on your own. Don't sit here and criticize me for something that I am doing which is perfectly 100% legal. You have no business knocking running a home business. What I am doing is perfectly legitimate and there is absolutely nothing wrong with it. You have balls to sit here and try to talk people out of what I am doing. Stand up for once and be an entrepreneur and break this sheep mentality. You're scaring people and making bankruptcy much more difficult than it needs to be.

All this time I am NOT STRESSING and bankruptcy has been a walk in the park. It's this way for me because I am taking control of the situation and not sitting like some scared person. You people always have a way of looking at everything half empty instead of half full. Stop being so negative and scaring people away from the rights they have. Nobody should be listening to what YOU SAY. They should be listening to what their CPA SAYS and the CPA will say the same thing I am saying. I know, because I spoke with several of them and they all have told me the same thing. So you are the one who is wrong.

And stop turning my posts into debates just because the stuff I am doing is not something you thought about first. This jealousy crap is getting really old already.

[OhioFiler]

So, as long as you don't lie about what you include, then what's the problem? I only see a problem for people who are tax cheats and are making stuff up.

Well, based on your earlier post you seem to be pushing the limits of the IRS code and encouraging others to do the same. You may not be making up expenses out of whole cloth but you are using personal expenses as business deductions and claiming it is acceptable so long as you are not audited.

Here is a quote of yours. The bolded excerpt is patently illegal. If they were not deductible before you opened your MLM business, they remain non-deductible.

Now all of a sudden those miles you were putting on your car, your phones, dinners out and many other things you were doing which were not tax-deductible now all of a sudden become a TAX DEDUCTION! That right there throttles your income down.

[debtmonster]

You shouldn't have any problem. The thing is, you can use a lot of your existing bills. Like 12-13% of your house, your electric, home owner's association fees, water bill, etc... all can be a tax-deduction. I know lots of people in MLM's who are doing this and do no get audited. There are limits in certain areas that will red flag. The CPA doing your taxes has software which will warn you if there is a potential audit.

Next time somebody approaches you to join their MLM, don't turn them down. Pay for web hosting, signs, various advertising, etc, plus all of the write-off's from home and then you can substantially lower your "gross" income for a small amount... at least during the short duration. These companies will also send you a 1099, so the IRS will know it's legit because you truly are spending money to earn an income. Everyone in a legitimate business spends money to make money. That's the nature of the beast.

[justbroke]

So, as long as you don't lie about what you include, then what's the problem? I only see a problem for people who are tax cheats and are making stuff up.

I agree. People who have nothing to hide, have nothing to hide. However, there are parts of the tax code that not even CPAs understand. LOL As you write, only people who have potential issues that may expose them... should worry. However, I would rather not make me show up more on the radar than I am now, personally.

[debtmonster]

Exactly what I wrote. For "home office" deductions, they ask you to send in pictures.

So, as long as you don't lie about what you include, then what's the problem? I only see a problem for people who are tax cheats and are making stuff up.

[justbroke]

It doesn't mean that some IRS agent is going to come knocking on your door and ask to see every single receipt you have.

Exactly what I wrote. For "home office" deductions, they ask you to send in pictures.

[debtmonster]

Audits are no big deal. Just make sure you have receipts. It doesn't mean that some IRS agent is going to come knocking on your door and ask to see every single receipt you have. Just make sure that you don't lie about anything you include, that's all. If you have receipts for everything you write off, you should be in good shape. Don't sweat it. The IRS is only looking for cheaters. Just don't cheat and do everything by the law and MLM's or whatever you decide to join will be great.

The wonderful thing about MLM's is that they are very slow to make money in the very beginning and they payouts usually don't come until much later. The last thing you want to do is get into some MLM that you invest in and then have it start making you a ton of cash. That will make it only harder to qualify for a Chapter 7.

A friend of mine did some MLM over 10 years ago. All of his co-workers, family and friends ragged on him for doing it. After 4 years of doing it, he was bringing in $20,000 per month. He had to invest a lot of time up front. After he showed some of his checks to those same people, they quickly changed their tune and now tell him to keep doing it. Last I heard he was making like a crazy $50,000 per month now. I haven't spoken with this guy in like 5 years.

The thing about the MLM, is that by the time it starts having a windfall of cash, you should be way past your 341 and discharge. Timing is everything in a bankruptcy. That's why you need to plan it out properly.

I know many people who did a Chapter 13 and deeply regret the suffering, just like a guy I was on the phone with last night told me (friend of the family). He hates it. Nobody will give him credit because he's already in all of the debt for 5 years making payments to old creditors. As long as you don't have anything you want to keep, such as vintage cars with a ton of equity, then the 7 is the way to go. If you have stuff now, then you need to sell it all and wait more than 24 months before you file. That's a long time to stall collection agencies. You may have to move around a lot like a gypsy and change jobs so that people can't find you. It worked for me. I probably have more people included in my bankruptcy than anyone on this entire forum. And not one organization had ever put a judgment or lawsuit against me in 20 years. So this many not be morally good and the right thing to do, I must be doing something right.

Justbroke, how do you like my sig? I didn't want to steal your thunder without giving you credit. Otherwise you could come back and say, "Hey!! You copied me, you leech!!" Hehhehehe.

[justbroke]

It's only considered a hobby if you go for like 3 years and never make a profit. If you just have write-off's every single year and no money at all coming in, THAT'S A RED FLAG.

Please be aware, I'm not attacking any MLM or otehr home-based business. I wanted people to know for a fact, that the IRS does audit this class of taxpayers more than they audit any affluent taxpayer. By a large margin at that.

[debtmonster]

It's only considered a hobby if you go for like 3 years and never make a profit. If you just have write-off's every single year and no money at all coming in, THAT'S A RED FLAG.

So if you pick an MLM, be sure to stick with it and actually make money. Don't just start writing stuff off and then not get any deposits from it.

I make over $50,000 per year from my home business, so I've had no issues with it being called a "hobby". If what you're doing is construed at being wrong, then Turbo Tax will tell you in an audit check. When my CPA did my taxes, he said my risks for an audit were low.

Just make sure you keep receipts for everything and log all of your miles. You get awesome write-offs for miles. If you go to a friend or family member's house to talk to them about your business, all of those miles are a write-off. Last year I wrote off nearly 20,000 miles.

[justbroke]

Be careful with tax write-offs for business expenses (as someone who has owned and operated a business for the past 4 years).

I concur! The IRS is very wary of "home office" deductions and small business that may be construed to be just a hobby.

Did you know that a "home office" deduction makes your change of being audited much much greater? So significant, that I don't even claim it anymore, because it's a hassle anyhow (depreciation/recapture and such).

One of the common things for the IRS to do with "home office" deductions and people with small Schedule C deductions, is to ask for pictures of teh "office" and business. They don't even ask you to come into the office. Once they get the pictures, if they see so much as ONE personal item in that area... guess what? No deduction. People have claimed their kitchens as home offices before, and the IRS is tired of it.

Even if you have a dedicated room, and as crescentmoon points out, the IRS is wary if you use that room, computer, phone, or any other "business" item for personal use. Any personal use. While that's drastic, as many of us "surf" at our "real" jobs... the IRS is making a distinction.

Be very wary.

[crescentmoon]

Be careful with tax write-offs for business expenses (as someone who has owned and operated a business for the past 4 years). The phone might be a write off, but you have to use it solely for business expenses in order to count it 100%. Same with cell phones. Same with home office. Same with office computer. Ever look at personal stuff from your business computer? Not a 100% deduction anymore. And, all of these things listed are red flags for IRS audits. So, just be careful.

KBB