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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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I have a head hunting sole prop. and I was wondering how I

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I have a head hunting sole prop. and I was wondering how I could transfer money into a Netspend pre paid card and take a tax deduction? Or would I have to purchase a gas card, retail card for tax savings? This is for people that have referred people that get hired with our clients.
Submitted: 5 years ago.
Category: Tax
Expert:  RD replied 5 years ago.

In order to claim the amount you pay to the referred people- you will have to issue them a prepaid card (so that you have no control on this amount and not own it). You cannot retain incidence of ownership and claim this as an expense.

 

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

Customer: replied 5 years ago.
So are you saying that I cannot write this off as a business expense. Is there any way to write it off as an expense like a gift card? I want to be able to write all of this large sums of money as a business expense. Let me know how this is possible. This will be a re-occuring theme in my business.
Expert:  RD replied 5 years ago.

You can write off the expense as a referral fee or commission if you pay it to them before the end of the year. This is presuming that you are a cash basis tax payer.

 

You may want to look into some other deductions such as setting up a self employed 401K account and contributing to the retirement plan and reduce your income, paying most of your expenses before the year end, deferring some income to the next year if that is possible. This would help you in reducing your tax liability.

 

You can also buy the assets that you may need for your business and claim depreciation and/or section 179 expense and thereby reduce your income.

 

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

 

 

RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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