by Patriot 11 Replies latest jw friends
I have never written anything off. Even when I have been aware that certain things that I spend money on are for work.
But thats it! This was the last year I do that.
I would like to know from those of you who know, around what percentage can I recover from a business expense of about $7000?
I do security from time to time for special events and private functions. I work for myself when I do this.
So how does it work????
Thanks
If you are self-employed, see a tax accountant. I am self-employed, and complete form 1040, Shcedule C. This is the tax schedule that permits you to document your business expenses. Saving your receipts is extremely important in case you are audited.
I use Turbo tax software to complete these forms, and they walk you trhough the questions and rules. Having your tax accountant review your return for a small fee is well worth the cost, as it provides some level of assurance that you are deducting allowable expenses.
I also take mileage on my car. I use my car about 80% for business. But I log the actual miles used in business and all are deductable. Membership in related professional organizations, advertizing, postage, office supplies, purchase of a PC (usually deducted over a three year period), and much more can be written off, including medical insurance paid by your business on your behalf and interest on business debt. The rules are always being tweeked and modified, so a tax accountant can help with the latest rules.
Was the $7000 a capital expense,that is one which will become an asset with a life of more than a few years? If so, you have a choice of depreciating the expense over a period of time, or taking a one-time deduction.
I prepared taxes for a living for a number of years. I would highly recomment a tax professional for business owners who have any complex income or expense issues. It is well worth the cost in taxes saved.
Patriot,Just to add to Amazing's comments If you are not self-employed, employee business expenses can be deducted on Sch A. Expenses such as: education that is employment related, licenses, medical exams required by your employer, travel related to work,etc
These deductions are limited: you can claim the amount of expenses that is more than 2% of your Adjusted gross income.
Depreciation on computers and cell phones can be taken-you have to figure the percentage that you actually use them for work.
BTW, over the period of time I was in the tax business, I had a chance to get to know perhaps a dozen IRS auditors. There are some quirks and tricks I learned from them. If you're interested, contact me and I'll elaborate.
If you haven't made a lot of money use this website for direct deposit return.
Sincerely,
District Overbeer
Thanks guys for the info. The expense is going to be for a bomb detecting dog. I have put alot of thought into it and would like to work on my days off with the new dog in the private sector.
I cant use Bart because that is not his function and I can't have him trained because he really does not belong to me...he's the departments' property.
I am looking to know how much I am entitled to recover from an expense this big. 40%,50?
I would think a dog, being a living creature, is a tricky area to the IRS. I have some experience with people who have kennels or stables and have expensed out animals.
A capital asset is defined as something which contributes to a business income over a period of years. As such, it is not always necessary, or even appropriate, to declare the expense during one accounting period. Depreciation rules were designed for just this accounting situation.
Just like vehicles and other assets, a dog might be used primarily for business purposes, but might occasionally fall under "personal use." Some test questions:
What percentage of your income is derived from services performed by the dog?
What percentage of your annual income is derived from your self-employment?
Is the cost of training the dog reasonable for your location and specific industry?
Always good advice: save every receipt or other document pertaining to the use of this animal. If it comes into question, bury the IRS in paperwork. They hate that. Also, NEVER deal in cash. Always leave an audit trail.
The IRS recognizes and expects legitimate expenses related to earned income. It's almost a red flag if you DON'T declare some expenses...that is if you show an income.
Good luck!
Thanks Wasasister.
I believe that nearly all, if not indeed all the money that would be earned would be attributed to the dog. Without him I can't perform the duties for which someone would want to hire me in the first place.
Working security without the dog only brings me a few hundred dollars a month as opposed to having the trained K9, which according to a friend of mine who is a security consultant, would probably bring in at least a 1500 part time.
The price of the dog and its training is probably a steal compared to that of getting it done here in NYC. I'm looking at a kennel in Texas and their rates are very reasonable.
Hi Mav.
Unless I'm missing something here, your question was "What percent of your expenses can you expect to get back?"
The short answer is that no one here knows, and can only give you a rough formula.
The reason is that, we don't know your current salary or withholding basis. In order to calculate your refund, the basic formula would be to subtract your business/personal expenses and dependents deductions from your gross income. That would give you the net income, from which you'd need to go by the tax table for NY state to determine how much tax you "owe." If you *paid* more taxes than you should have, you'll get your refund.
Business expenses are not a *tax credit,* meaning you won't get money back that you didn't spend in the first place. (some tax credits are the EIC and the Rent credit in New York State.)
* http://www.irs.gov/irs/news/0,,i1%3D42%26articleId%3D26744,00.html
This is the link for new tax policies in place for those affected by Sept. 11 tragedy, there may be some resources there you don't know about.
* http://www.irs.gov/newsroom/display/0,,i1%3D42%26genericId%3D21022,00.html
You may be entitled to some special assistance in this regard, follow the above links. The IRS has set up a toll free number specifically for people affected by Sept 11, and I'm sure you qualify.
You could always call the IRS at 1-800-829-1040. Call 1st thing in the AM.
I've processed tax returns part time for about 8 years for HR Block and Jackson Hewitt, but not in the past three years so I hope this helps.
Lisa
Fuzzy Brain Class
