• chiliedogg@lemmy.world
    link
    fedilink
    English
    arrow-up
    17
    arrow-down
    1
    ·
    8 months ago

    Write-offs are entirely misunderstood by people. Writing off losses doesn’t magically make loss profitable.

    I’ll use myself as an example. I teach underwater photography at a university as a side gig. Last year I made about $3,000 teaching the class, and I also spent about $1,000 on underwater camera gear for the class. Because of that I get to reduce my taxable income by $1,000, so it’s as if I made $2,000.

    At my tax bracket a write-off reduces my income taxes by 22% of the expense. So on a thousand-dollar purchase I’m still losing nearly 800 bucks.

    • Reawake9179@lemmy.kde.social
      link
      fedilink
      English
      arrow-up
      5
      ·
      edit-2
      8 months ago

      And you still have the value, nobody takes it away from you and you propably can sell it without loss which makes it still a good deal.

      • chiliedogg@lemmy.world
        link
        fedilink
        English
        arrow-up
        8
        ·
        8 months ago

        Of course it’s better than not having the write-off. But it’s not like it’s free.

        Business expenses aren’t profit so they aren’t taxed because it’s money you didn’t actually make.

        Since most businesses operate on a small margin, removing tax deductions would make tax burdens higher than profits.

        And it’s not like that camera lens isn’t being taxed. I’m buying it from a company that pays taxes on its profits and payroll and whose employees pay taxes, and on top of that I’m paying sales tax (to a different entity of course).