Simpe Deduction
Tax day is fast approaching. Have you got all your W-2′s and whosits and whatsits? Good. Now before you sit down to figure it all out, you might want a little refresher on what you can and cannot deduct from your taxes, because you might be paying for things you can write off, or, you might be omitting items you think are business expenses but are not in the eyes of Uncle Sam. Warning: I am not the IRS and this is not a complete list. If in doubt, as a professional.
You can deduct:
Educational expenses. If you took a course that “maintains or improves skills required in your present job”, you may write tuition off, along with transportation and book fees. If you are filing as a self-employed individual, you can include educational expenses on Schedule C Form 1040, Schedule C–EZ, Form 1040 or Schedule F of Form 1040. If you are filing as an employee, speak with HR.
Office supplies, furniture and equipment. The gubment has more details on their site.
The phone. Keep your phone bill and circle the business-related calls and add them up at the end of the year to deduct 100%. If you use your home phone for your business calls, the regular fees will not be deducted but you can write off everything if you have a separate line just for business.
What to be careful about:
Your home office. The devil is in the details and the government is picky about what consitutes a home office. It had better really resemble something like an office in your home, not just the computer where you and everybody else does the work. Some guidelines here.
Mileage. Yes, you can deduct business-related mileage but keep careful record of what is business and what isn’t. You can’t just guesstimate: keep details of travel date, mileage, tolls, parking costs and the purpose of your trip.
Travel and meals. Travel and lodging is tax deductible but only 50% of dining expenses on the road are. Also, eating while you work does not count unless you’re with a client, talking business and then you can talk off another half.
For further information, CCH Incorporated is a helpful resource for reporters if you can’t afford an accountant. Or, if you have patience, the IRS site itself. But the best advice I got was from another writer who has business background: “Worry less about the amount of the deductions and more about the pretax income net of expenses. For example, I got a file cabinet free off of Craigslist. I could have gone to Office Depot and bought a brand-new one with a big deduction. I could have ordered an even-more expensive one from Levenger and gotten an even bigger deduction. But the free file cabinet costs much less overall – I may have a slightly higher tax bill, but I’ll keep more of the money that I made.”
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