Monday, March 26, 2012

Abusive Home-Based Business Tax Schemes

One of the tax breaks for some start-up businesses is the fact that some otherwise non-deductible personal costs become deductible as home office expenses if certain conditions are met. To be qualified, the home office must be used regularly and exclusively for the taxpayer's trade or business. The home office deduction amount is limited to the profits earned by that trade or business.

Unfortunately, criminals have used, and continue to use, this feature of the tax law as a part of schemes to rip off unsuspecting people. The IRS has information on some of the perpetrators of these schemes here. These include people who have gone to prison for tax evasion, money laundering, fraudulent use of the U.S. mail and other crimes.

By the way, most of these home based business cons were pyramid schemes as well.

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