Whether it’s a self-employment situation or a mega-corporation, the same thing holds - it is never worth making a purchase you don’t need in order to “save on taxes”.
For ease of math - let’s say revenue of $10,000, expenses of $5,000, 20% taxes. In that situation, you’ll pay $1,000 in taxes on your $5,000 of net income because yes, you can deduct legit expenses from your taxable business income.
If you decided during that year to spend $1,000 on a computer you don’t need, now you have expenses of $6,000, so you’ll pay taxes instead on $4,000 of net income - 20% of that would lead to a $800 tax liability.
So you spent $1,000 to save $200 - purchasing that computer still cost $800.
FreakSquad t1_jbsx9le wrote
Reply to comment by vtrx2000 in Dell’s Latitude 7330 convinced me that business laptops are too expensive by dapperlemon
Whether it’s a self-employment situation or a mega-corporation, the same thing holds - it is never worth making a purchase you don’t need in order to “save on taxes”.
For ease of math - let’s say revenue of $10,000, expenses of $5,000, 20% taxes. In that situation, you’ll pay $1,000 in taxes on your $5,000 of net income because yes, you can deduct legit expenses from your taxable business income.
If you decided during that year to spend $1,000 on a computer you don’t need, now you have expenses of $6,000, so you’ll pay taxes instead on $4,000 of net income - 20% of that would lead to a $800 tax liability.
So you spent $1,000 to save $200 - purchasing that computer still cost $800.