Why are business expenses deductible from income, but someone’s basic living expenses aren’t deductible from personal income?
In: Economics
because even though they are the same word, they are not the same things. a business expense is for writing off the costs associated with earning income. salaries, rent for your office space, materials, etc. personal expenses are things you use your income to purchase. stuff like a home office, uniforms, or supplies you personally buy for work can be written off just like a business expense provided it’s sole purpose is for work.
The government already accounts for your living expenses. at least ~$25k of your income is already not taxed……..the first $11k you earn you pay no taxes on, and you get to deduct almost $14k on top of that. So, you owe $0 in taxes until you’ve made at least $25k. For context, that’s like 40% of the average salary in the US. If you file HoH you don’t pay any taxes on almost $32k (more than half the average income).
businesses don’t get that break. They have to account for every single expense, because they pay taxes on every cent they earn in profit.
EDIT: not to mention, they’d be getting taxed on money multiple times. Expenses in one time period are generally profits from a previous time period. if i tax the full amount of your revenue, i’m essentially taxing money i just taxed last year already.
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