This post is by Gene Caballero the co-founder of GreenPal
UNIQUE TAX-DEDUCTIBLE INCOME
It’s no secret, tax is a burden we bare out of patriotism and not by choice. All government functions depend directly on the taxes we pay on the goods we buy and the income we earn. Therefore if the budgetary plan for that fiscal year is projecting some serious heavy investment of infrastructure, you can be sure that some tax rates will most definitely be adjusted. The best and legal way to cushion yourself from all tax crunches is to contact your accountant and try to take advantage of all tax reliefs and income deductibles at your disposal. Tax laws allow for some expenses to be non-taxable hence lifting off some tax loads you would otherwise have to pay.
Most homeowners spend thousands of dollars each year sprucing their lawns. Gone are the days you would pay your neighbor’s kid to mow your lawn for just 5 bucks. Homeowners associations have gone to the extent of setting lawn standards to be abided by all homeowners. It therefore not wonder when they constantly inquire whether they can get any tax reliefs from the money they spend on their lawns. Therefore the question of the day is whether caring for your lawn is tax-deductible?
Some of the expenses we make need to meet certain criteria before being legally declared as tax-deductible, personal expenses are usually declassified as non-taxable income because the government usually deducts personal relief from the total tax due. On the other hand, expenses that are made with the intention of creating income is tax-deductible. The IRS guidelines clearly state and I quote, “…you can deduct various federal, state, local and foreign taxes directly attributable to your trade or business as business expenses.” Therefore you can only deduct the sum of money you spend to care for your lawn if your property is being used to bring in rental income. Even if you use the property partly for personal use and partly for rental income, you are legally allowed to claim the appropriate percentage of the sum you spend on your loan depending on the proportion of the property being used for business and that serving as your home.
The lawn also needs to be useful in business operations. This is the other key criteria that make the costs incurred when taking care of your lawn deductible. Should the IRS make visits to your premises you should be able to prove that the lawn you spend so much money to maintain is truly essential to the operations of your business. For instance, you have to show that the lawn is used in holding business activities like morning meetings or team-building exercises.
The other loophole you are legally allowed to exploit is if you treat the person you have hired to mow your lawn as an employee. If you treat the guy who mows your lawn like any other employee, then his wages become tax-deductible on your part and the tax burden shifts to them because they are employed and by law, all employees are required to remit tax due on all income generated. As they employ, your only responsibility would be to withhold the appropriate tax-deductible for your household employees and submit the Wage and Tax Statement (W-2 form), duly filled by both you and your employee, at the end of the tax year.
So the next time your homeowner’s association cites you for having taller than two inches of grass on your lawn, do not fret because now you have a few tricks up your sleeve on how to get your money back.