What exactly are tax write offs either for personal or business uses?
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Your business has $500,000 in net profits, you owe $150,000 of that in taxes. Meaning, your take-home is $350,000.
You bought a delivery truck that you use to deliver the widgets your business makes that cost $50,000.
You ‘write off’ the truck as a business expense and the purchase price of the truck is deducted from the taxes you owe. Instead of owing $150,000 in taxes, you now owe $100,000. Your take-home is now $400,000 instead of $350,000.
But imagine you’re a start-up company that doesn’t have income yet (very common) and thus aren’t paying taxes yet. You can’t write-off any business expenses because you don’t have any taxes you can deduct from. Write-offs aren’t ‘free money.’ They just lower the amount of taxes you owe.
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