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Old 05-17-2012, 09:47 PM   #61
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I think we should all keep in mind that most people think money is to spend. With our LBYM mentality and nose to the grindstone drive towards FIRE with attendant spreadsheets and retirement calculators and constant discussions of investment asset allocation, taxes, SS start dates and managed wealth decumulation we are the oddballs. The OPs DH sounds like a pretty squared away normal person to me. I hate seeing some people here categorize him as an irresponsible spendthrift. From what the OP has posted I suspect he works very hard and makes a good living. Cut him some slack and let him buy some toys.
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Old 05-17-2012, 11:33 PM   #62
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I shared this thread with him yesterday and he now understands what the big deal is. Until he gets his shopping addiction under control I'm not comfortable retiring.
Does he enjoy sleeping with one eye open, or does he have a death wish?!?

Spouse is having the opposite problem. She's shopping for window blinds, and she's found the blinds of her dreams, but she hasn't bought them yet. She's going to wait until they go on sale, and then she's going to get them for 10-20% off.

If we add up the time she's invested in the shopping, plus the driving and the return trip, then the savings work out to about minimum wage.

But she did make me throw out a pair of $2.99 Goodwill shorts today.
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Old 05-18-2012, 03:21 AM   #63
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From what the OP has posted I suspect he works very hard and makes a good living. Cut him some slack and let him buy some toys.
You're exactly right. He is a wonderful person and loves many aspects of his job. And he's most happy when his job gets to help people (he works in the public sector and spent about six months in China helping put their infrastructure back together after the earthquake).

This spending thing is really small in the grand scheme of things and it's something we're going to work on together. For me, I have to lighten up, and for him, he has to use his allowance for his spending....easy, peasy...but of course it's easy peasy now that we know what the issue is.
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Old 05-18-2012, 03:26 AM   #64
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But she did make me throw out a pair of $2.99 Goodwill shorts today.
Nords, you sound like my younger brother. He has saved just about every penny he's ever earned and left the work force at about 40 (he got layed off, had plenty of money and never looked back).

He is an avid road cyclist and has had the same gloves for almost 15 years. I can't tell you how many times he's repaired them with duck tape, yet he'll drop $5k on a new frame no problem...it's all in the priorities.
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Old 05-18-2012, 11:49 AM   #65
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He is an avid road cyclist and has had the same gloves for almost 15 years. I can't tell you how many times he's repaired them with duck tape, yet he'll drop $5k on a new frame no problem...it's all in the priorities.
I completely understand-- after 15 years he probably feels that he's finally gotten them broken in just right...
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Old 05-19-2012, 06:11 PM   #66
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Sounds like OP is on the right track. Here is what works for us: We each have our own Amazon credit cards for personal purchases, since we both buy a lot of stuff on Amazon. The Prime fee is paid from household expenses.

I use Accountedge software, both for business and personal bookkeeping. I'm not sure how Quicken works, but in Accountedge I just allocate/budget $200 per month for each Fun Fund, which rises to $500 for the month that is your birthday, as well as for December to cover gifts.(Accountedge allows for different amounts each month.)

As the months roll by, the budget builds up. When someone buys something (check or credit card) that is personal, it logged to the "Fun Fund" expense, just like Groceries or Auto etc. At the end of the year, if the Fun Fund is underbudget, we roll over the balance to the next year by adding it to the January budget. If over budget, then January starts off negative.

So if I ran the budget from Jan - May (5 months), the budget would be $1000 each ($200 x 5). The program will say:

Fun Fund A - Actual $900 - Budgeted $1000 = -$100
Fun Fund B - Actual $1200 - Budgeted $1000 = +$200

We really don't pay too much attention to it, and somehow it never gets too out of whack. My DH tends to buy more clothes and shoes than I do, so he's usually over spending, but I just tell him that and he stops for a month to catch up. I might find that I'm way underbudget and will buy a nice piece of art, or something special.

In 23 years, this system has worked really well. $200 isn't much if you need to buy tech stuff though. If we want to buy something like a $3K camera, iPhone, iPad, etc., I purchase it from the business account, we make sure to use it in our work and then write it off. Anything we buy for the business is 43% - 47% discounted, due to self-employment, Federal and State taxes. Sometimes a big purchase at the end of the year will drop us from 28% to 25% tax bracket, or keep us inside the Roth limits, so I run those numbers carefully.

We manage to share the financial stuff together although we specialize in different aspects of it. We decide on our asset allocation yearly. I do the cash flow and decide how much we can save this month, he keeps track of what to buy in our brokerage accounts each month depending on what we need. I do the book keeping for business and personal since it's the same application (although he knows his way around Accountedge a bit), and then also work out our estimated taxes. He does all the personal filing (I hate filing) and works more with the CPA. I've taken more interest in figuring out the sequence of withdrawals and taxable savings, as well as when and how to claim SS.

I used to not be interested in the investing side, leaving it to DH, but I found that he was more comfortable with more risk than me, as well as more active management. I think after last summer's drop he understands now that we need to balance our portfolio with more conservative holdings that can ride out a bad storm, and not be so enamored of managers. We're getting there, but it's a process.

So as you can see, you can divide up the tasks quite finely. Maybe he would like to work on the safe withdrawal rate, researching buckets, researching what tax bracket you'll be in and which pot to draw from. If he doesn't know spreadsheets, he could take an online course. The busier he is the less time he'll have to shop!
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Old 05-20-2012, 08:15 PM   #67
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...
If we want to buy something like a $3K camera, iPhone, iPad, etc., I purchase it from the business account, we make sure to use it in our work and then write it off. Anything we buy for the business is 43% - 47% discounted, due to self-employment, Federal and State taxes. Sometimes a big purchase at the end of the year will drop us from 28% to 25% tax bracket, or keep us inside the Roth limits, so I run those numbers carefully.
...
Is this legal? Or are you just "working the system" to your advantage, to get your "stuff" at a discount?
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Old 05-21-2012, 06:20 AM   #68
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Is this legal? Or are you just "working the system" to your advantage, to get your "stuff" at a discount?
Absolutely, I've known people that run their whole lives around "business expenses." The key is "business use" to be able to take the deduction. You can not only subsidize your purchases of tangible objects but you can make sales calls in Paris if you can show a credible potential client if audited. In traveling reasonable meals and transportation are covered but don't try to get the tax deduction for the Orsay tickets unless you take your client there for entertainment.
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Old 05-21-2012, 10:14 AM   #69
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Is this legal? Or are you just "working the system" to your advantage, to get your "stuff" at a discount?
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Absolutely, I've known people that run their whole lives around "business expenses." The key is "business use" to be able to take the deduction. You can not only subsidize your purchases of tangible objects but you can make sales calls in Paris if you can show a credible potential client if audited. In traveling reasonable meals and transportation are covered but don't try to get the tax deduction for the Orsay tickets unless you take your client there for entertainment.

Not quite legal as the other poster posted... IOW, you are only supposed to take a % of the expense that is used for business...

Say you buy the IPad as mentioned... if you use it 20% for business, and 80% for personal use... you are only supposed to expense or depreciate that 20% business use... the other 80% that most people write off as business expense is the 'not legal' part...

Now, what 2B says can be done to an extent... but I would bet that if audited you would need to be in a business that actually had overseas customers... IOW, if you own a carpet cleaning business in Topeka, it is kinda hard to say you are looking for carpets to clean in Paris... but, if you do have clients in other countries, it is not out of line that you might be able to get one in Paris...


But most people really abuse the rules for business use... especially with car expenses...
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Old 05-21-2012, 10:45 AM   #70
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But most people really abuse the rules for business use... especially with car expenses...
I would agree (and much beyond car expenses)...
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Old 05-21-2012, 10:50 AM   #71
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Absolutely, I've known people that run their whole lives around "business expenses." The key is "business use" to be able to take the deduction. You can not only subsidize your purchases of tangible objects but you can make sales calls in Paris if you can show a credible potential client if audited. In traveling reasonable meals and transportation are covered but don't try to get the tax deduction for the Orsay tickets unless you take your client there for entertainment.
Knowing people who "run their whole lives around business expenses" doesn't make it "absolutely" legal. It's not legal to deduct personal expenses beyond the legitimate % of business use as Texas Proud noted, even though it's done every day. The problem is it's nearly impossible for the IRS to follow up on every deduction, so it's widely abused. Unless your total deductions are way out of line for your business/industry, the odds of being audited and caught are probably slim...

Another reason our tax code needs to be simplified, fewer deductions and lower rates...
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Old 05-21-2012, 10:51 AM   #72
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Is this legal? Or are you just "working the system" to your advantage, to get your "stuff" at a discount?
Chill. Our business is tech consulting, web design, book authoring and ebooks, plus we make money from writing for a professional video and a photography website. The IRS would have a really hard time denying that camera equipment and iPads were not a business expense. Not to mention that our business expenses are still very low in relation to the amount of income we have.
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Old 05-21-2012, 11:15 AM   #73
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Knowing people who "run their whole lives around business expenses" doesn't make it "absolutely" legal. It's not legal to deduct personal expenses beyond the legitimate % of business use as Texas Proud noted, even though it's done every day. The problem is it's nearly impossible for the IRS to follow up on every deduction, so it's widely abused. Unless your total deductions are way out of line for your business/industry, the odds of being audited and caught are probably slim...

Another reason our tax code needs to be simplified, fewer deductions and lower rates...
I hesitate to alert the moderators to your blatant political remark.

I never said it was "absolutely legal." I agree the tax code can be easily manipulated to deduct what normal wage slaves could only buy as personal expenses. It's available, whether fully "legal" or not, so people use it.
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Old 05-21-2012, 11:22 AM   #74
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I hesitate to alert the moderators to your blatant political remark.
I couldn't care less what you do, knock yourself out...

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I never said it was "absolutely legal." I agree the tax code can be easily manipulated to deduct what normal wage slaves could only buy as personal expenses. It's available, whether fully "legal" or not, so people use it.
Then at least 4 of us misunderstood your reply, must be our mistake...
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Old 05-21-2012, 11:46 AM   #75
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I hesitate to alert the moderators to your blatant political remark.

I never said it was "absolutely legal." I agree the tax code can be easily manipulated to deduct what normal wage slaves could only buy as personal expenses. It's available, whether fully "legal" or not, so people use it.

The question was "Is this legal?" Your answer was "Absolutely".... I do not see how you can not say that you did not say it was absolutely legal....
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Old 05-21-2012, 11:59 AM   #76
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In 23 years, this system has worked really well. $200 isn't much if you need to buy tech stuff though. If we want to buy something like a $3K camera, iPhone, iPad, etc., I purchase it from the business account, we make sure to use it in our work and then write it off. Anything we buy for the business is 43% - 47% discounted, due to self-employment, Federal and State taxes. Sometimes a big purchase at the end of the year will drop us from 28% to 25% tax bracket, or keep us inside the Roth limits, so I run those numbers carefully

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Chill. Our business is tech consulting, web design, book authoring and ebooks, plus we make money from writing for a professional video and a photography website. The IRS would have a really hard time denying that camera equipment and iPads were not a business expense. Not to mention that our business expenses are still very low in relation to the amount of income we have.
Your first post seems to indicate that you wanted the camera for personal use, but would buy it and make sure you use it in your business to write it off.... but the main purpose for the purchase was.... you wanted a camera for personal use... (that is how I read your post)...

The rules are pretty simple, if you use something for both business and personal use, you only deduct the percent that is business, not 100%. Just because you can get away with it does not mean it is legal.... I am not making a moral judgement here, just pointing out that what you seem to say is not legal....
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Old 05-21-2012, 12:01 PM   #77
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The question was "Is this legal?" Your answer was "Absolutely".... I do not see how you can not say that you did not say it was absolutely legal....
My use of the word "Absolutely" was in response to Rustward's comment of "did people do this." I see looking back that his first question was "Is this legal" even though several other questions followed. Well, it is "absolutely legal" to the extent that the expense is used for bonafide business purposes. The IRS does not do witch hunts, to my knowledge, of small business owners except in the most egregious of situations. (Then it wouldn't be a witch hunt.)

This is just like people issued a company cell phone are not prorated on the cost based on their use for a personal call. What about laptops or computers on our desks? Realistically, it is the same issue it is just that a business owner has a greater degree of control of what expenses are "required" in their business. There is not a minimum ROI that must be documented.

If PaddyMac has the occasional business use of a $3,000 camera, he can certainly buy it and use it as needed for business purposes. If he happens to take it on his month long trip to France, PM is still ok. I would suggest that one of the first things PM should do when the camera arrives it to put it to some business purpose.

The biggest stretch I am personally aware of is someone buying a hunting rifle/scope and routinely writing off the cost of the "business deer lease." The logic was that they routinely take clients deer hunting. He had several pictures of him/clients standing over dead deer with the rifle clearly in some of the picture. He was certainly up there without clients a significant number of times during the year. I am not aware of the IRS ever questioning this.
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Old 05-21-2012, 12:49 PM   #78
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I enable the behavior by not calling him on it every time I see a purchase hit the home account.

If we could get this one small area fixed, life would be just about perfect
Maybe he should open his own Amazon account and pay for it from his checking. I would hate to police small spending amounts, but it would show up when I do month end.
DW insists on tracking cash spending. It has been tough over the years, but we found a way to balance the cash each month with "Fudge Spending" item. It usually means dining out and paying cash.
We aimed to live off one income only, before retiring and putting the other income into savings, that way we could transition to 'no paychecks' without a great shock. Never the less it's tough when decumulating starts.
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Old 05-21-2012, 01:24 PM   #79
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Your first post seems to indicate that you wanted the camera for personal use, but would buy it and make sure you use it in your business to write it off.... but the main purpose for the purchase was.... you wanted a camera for personal use... (that is how I read your post)...
Perhaps you don't understand that when you are self-employed and make your living from your creativity, there is no such thing as "personal" use. We don't have "hobbies". (Hobbies are for people who need to relax because they hate their jobs, imo!) If we spend money on anything that is not a "need", it has to be able to generate income in some way. It's a mindset that perhaps 9-5ers don't have.

For example, we went on a boat trip on Lake Powell last year and took hundreds of pictures of the canyon walls. This year we used them to create mixed media art (they are now hanging in a gallery for sale). This year we took another trip to Lake Powell to take thousands more pictures. We could argue that the boat trips were business - we didn't, but we could have if we really wanted to push it. But if one of these paintings sell and the gallery owner wants more, you can bet that I'll be digging up that boat trip receipt...

Or, if we buy a musical instrument, we use it to write music that accompanies a video tutorial. The only personal stuff we do now is gardening, but even that we managed to turn into a business a few years ago by selling plants to botanic gardens. When it proved to be not as lucrative as the tech stuff, we gave it up.
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Old 05-21-2012, 02:02 PM   #80
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Perhaps you don't understand that when you are self-employed and make your living from your creativity, there is no such thing as "personal" use. We don't have "hobbies". (Hobbies are for people who need to relax because they hate their jobs, imo!) If we spend money on anything that is not a "need", it has to be able to generate income in some way. It's a mindset that perhaps 9-5ers don't have.

For example, we went on a boat trip on Lake Powell last year and took hundreds of pictures of the canyon walls. This year we used them to create mixed media art (they are now hanging in a gallery for sale). This year we took another trip to Lake Powell to take thousands more pictures. We could argue that the boat trips were business - we didn't, but we could have if we really wanted to push it. But if one of these paintings sell and the gallery owner wants more, you can bet that I'll be digging up that boat trip receipt...

Or, if we buy a musical instrument, we use it to write music that accompanies a video tutorial. The only personal stuff we do now is gardening, but even that we managed to turn into a business a few years ago by selling plants to botanic gardens. When it proved to be not as lucrative as the tech stuff, we gave it up.

An interesting answer.... but don't think that someone who disagrees is someone who has not owned their own business... or has not dealt with people who have the same thinking as you...

WAY back when.... I was a tax accountant... there was this multi-millionaire doctor who wrote books, owned a lot of property etc. etc.... he made money on a lot of different items... One of the things that was very interesting about him was he did not stay at hotels... if he went someplace he actually bought a place and would rent it out after he left... he owned RE all over the world... he told the tax partner who handled his account... "everything I do is for business", kind of like your statement... he wanted to deduct the salary of his maid, all his other household staff, his jet, cars etc. etc... you get my drift... the partner said "not with us doing your return"...

Another wanted to deduct the $2 million he spent on his daughter's wedding.... saying that he had so many business people there that it really was a business meeting... again, a no from the partner...

I get what your are saying.... just because you say it does not make it correct... I also know that there are a lot of very weak connections between what is for business and what is not... and I also know that a lot of businesses do things that the CEO likes so there is a business connection..

OH, almost forgot the one that was audited... there was this rich guy who bred dogs... he spent about $1.5 million a year on them... but had income of about $500K... year after year... when the IRS did their audit, they said it was a hobby as there was no profit motive involved... he got a big tax bill (also had many deduction they said were not valid)...

Again, not saying what you do is or is not what many people do... and even if audited you might not have to prove much... I am just stating what the rules say...
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