Did you know that the average American works approximately “5 Months” just to pay their taxes? Plus, did you know that when you start your own home-based business, you could save an incredible amount in taxes over the course of a year?

As promised in this video, the current Business Mileage Rate for 2010 is $.50/mile.

Let us take a look at how the Rich save on paying taxes vs. the Poor and Middle Class.

• The Rich own companies/corporations and other businesses which are assets.
• The Rich spend their money through these entities first to buy more assets and then they’re taxed by the government on whatever money is left over. Then buy liabilities.
• The Poor and Middle Class mostly own liabilities and very little in assets.
• The Poor and Middle Class are taxed by the government FIRST and then spend whatever money is left over.

Do you see the major difference here?

By not having your own business, the income you receive is taxed at a much higher rate and more is taxed with little to no tax deductions. And many Americans have little or no savings or investments for retirement. But by starting your own home-based business, you are now starting to think and invest in your future like the Rich. Your own business will give you tax write-offs that you would never have by being just an employee.

As a home-based business owner, many of the things you are paying for now, become legitimate tax deductions. Here are just a few examples of legitimate write-offs by having your own business. The first thing you must do is establish a home office. Now that you have a home business with an established home office, what are some of the typical things that you can write off?

• Telephone – A separate business telephone and any expenses related to it- such as long distance- can be an income tax deduction. A home telephone is not a write off because it’s also used for personal use. Note: Deductions for cell phones are limited to the business use percentages.
• Office Equipment – Personal or a Notebook computer, printer, copier, calculator and etc can be deducted if they are used exclusively for your home business. If not exclusive use, then a deduction is allowed but again limited to the business use percentage.
• Office Furniture – A desk, chair, filing cabinets, lamps, and other furniture that you use in your home office.
• Office Supplies – Includes pens, paper, file folders, ink cartridges for your machines, erasers, bulletin boards, calendars, dictionary, glue, transparent tape and etc.
• Travel – Auto, airline tickets, hotel rooms and etc. If you travel during the course of operating your home business, you’ll need to keep a contemporaneous log of your expenses. The Internal Revenue Service (IRS) allows you to deduct so many cents per mile. On Jan. 1, 2009, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) are .55 cents per mile for any business miles driven.  Airline tickets and hotel accommodations are fully deductible for a business-purpose trip.
• Entertainment – Dinners, lunches, sporting events and other legitimate functions can be used at 50% of the expense when business is discussed and documentation and records are kept.
• Mortgage/Rent – A percentage of mortgage/rent, utilities and other home services can be write-offs based on your overall square footage used exclusively to run your home business.
• Professional Fees - Don’t forget the payments to your lawyer and accountant for services directly related to the operation of your home business including tax return preparation.

The above are some of the major tax advantages of owning your own home based business.

Starting one of these businesses can cost you anywhere from less than $100 to over $1,000’s. There are all types of home-based businesses out there today, but you have to decide which one is right for you and your family.

A final word of CAUTION! Do your research and don’t get caught up in the “Hype” of becoming rich over night. Too many companies and individuals use this tactic to recruit you into their business. A legitimate business will require work and effort on your part. But the rewards and tax advantages will eventually outweigh not starting your own business PEROID.

**Since tax laws change every year, check the current laws so you know exactly what you can and cannot deduct on your income taxes. For more information you can visit www.IRS.gov/ to find out the current laws. Anyone who operates a home business should consult their accountant or tax adviser to get the most legitimate deductions available.