With the rate of inflation reaching its highest in a decade with the stock market plummeting and the conflict in Ukraine raising fears of a prolonged recession CEOs of corporations are now discussing the possibility of a recession. A recession is typically described as an economic contraction lasting a minimum of six months.
What is a Recession?
A recession is a time of decline in the performance of the entire economy, which lasts for a period of time. Experts identify a recession when the economy of a country experiences low gross domestic products (GDP) and increasing unemployment levels and retail sales that are declining, and a decrease in manufacturing and income over prolonged periods. Recessions are seen as an inevitable part of the cycle of business, or the normal cycle of contraction and expansion that takes place in a country’s economy.
JPMorgan Chase chief executive Jamie Dimon predicted an economic “hurricane” stemming from inflation and the Ukraine war, and Federal Reserve’s decision to raise interest rates and reduce their bond holdings.
How you can Save in the Recession?
Do you ever wonder how much you spend in comparison to other people? It’s normal to be interested in other people’s financial situations. Knowing how your spending fares can help you determine whether changes are necessary. In this regard here are two key locations in which Americans spend their dollars these days. One is Housing and the Second is Taxes. But you don’t need to worry because these strategies will help you to save thousands of dollars in the coming recession.
So the first one is housing. We know that a lot of people talk about the red flag by IRS on home offices but it’s really not true. The IRS has been allowing home offices since 1986. The important factor in a home office is qualifying.If you’re self-employed or with a partner, you might be able to deduct some costs for the portion of your house that is used to conduct business.
To be able to deduct the cost of business usage of the house it is necessary to make use of a part of your residence in one of the following ways:
- Always and exclusively as the principal location of business for your business or trade;
- Only and frequently as a location where you can interact with your clients, patients or clients in the routine of your business or trade;
- A separate structure that isn’t connected to your home and is that is used solely and frequently to support your trade or business
- Every now and then to store inventory or product samples that you use in your business or trade of selling goods at wholesale or retail;
- For rental use; or
- As a daycare center.
If the sole use requirement applies, you cannot take business expenses off the tax for the home or any other area that you use for business and personal reasons.
For instance, if you are an attorney and utilize the office area of your home for legal briefs or to conduct personal business you are not able to be able to deduct business-related use of your home’s expenses.
In addition, in the primary test for business locations, it is necessary to determine you’re home the primary location for your business or trade when you consider where you conduct your principal business functions and also where you spend the bulk of your working time in order to be able to claim expenses for the use you have for business from your home.
The home you live in could be considered your primary location of the business in the event that you use it for managing or administrative activities of your business or trade and do not have any other permanent location in which you perform significant administrative or management functions in the business or trade you are involved in.
The second term where you can save your money that is taxes. For taxes, you really need to work on the tax strategies if you think you are not able to work on the tax strategies you can reach out to Tax Goddess!
Tax Goddess is a tax and accounting firm that is specialized in tax reduction and audit assistance as well as accounting and tax services.
Tax Goddess is a top CPA across the US Our uniqueness is what sets us apart from other accountants. Tax Goddess has a cutting-edge way of operations. Our team of experts is a group of highly experienced tax experts who assist you in establishing an individual plan that will reduce taxes while putting together the most effective financial plan that you can.
In the last twenty years, we’ve helped entrepreneurs and individuals across the US save more of their hard-earned money by securing a total savings of $523,828,327 and more.