The Tax Factor was created to educate individuals and small-business owners about taxes. Let’s face it, nothing in life is guaranteed except death and taxes. Okay, maybe that sounded pretty depressing but the goal of this blog is to help you find the information to learn how to make taxes work for you. Taxes can be extremely complicated but knowing about deductions and credits can save you thousands of dollars per year.
Jan 15, 2013
Tax Organizer for Business Professionals
KEY EXPENSES FOR BUSINESS PROFESSIONALS
FEES & DUES:
Dues paid to professional
societies related to your profession are deductible. However, the cost of
initial admission fees paid for membership in certain organizations or social
clubs are considered capital expenses.
Educational expenses are
deductible under either of two conditions: (1) Your employer requires the
education in order for you to keep your job or rate of pay; or (2) The
education maintains or improves your skills in profession. The costs of courses
that are taken to meet the minimum requirements of a job, or that qualify you
for a new trade or business are NOT deductible.
The basic local telephone
service costs of the first telephone line provided in your residence are not
deductible. However, toll calls from that line are deductible if the calls are
business related. The costs of a second line (basic service and toll calls) in
your home are also deductible if that line is used exclusively for business.
Your auto expense is based on
the number of qualified business miles you drive. Expenses for travel between business
locations or daily transportation expenses in going between your residence
and temporary work locations are deductible; include them as business
miles. Your trips between home and work each day or between home and or one or
more regular places of work are COMMUTING and are NOT deductible.
Document business miles in a
record book as follows: (1) Give the date and business purpose of each trip;
(2) Note the place to which you traveled; (3) Record the number of business
miles; (4) Record your car’s odometer reading at both the beginning and end of
the tax year. Keep receipts for all car operating expenses –gas. Oil, repairs,
insurance, etc., and of any reimbursement you received for your expenses.
Expenses of looking for new
improvement in your present line of work are deductible – you do not have
actually obtain a new job in order to deduct the expenses. Out-of-town job
seeking expenses are deductible only if the primary purpose pf the trip is job
seeking, not pursuing personal activities.
Generally, to be deductible,
items must be ordinary and necessary costs in your profession and not
reimbursable by your employer.
Record separately from other
supplies, the costs of business assets which are expected to last longer than
one year and cost more than $100. Normally, the costs of such assets are
recovered differently on your tax return than are other recurring, everyday business
expenses like business cards, office supplies, etc.
Expenses of traveling away
from “home” overnight on job-related and continuing-education trips are
deductible. Your “home” is generally considered to be the entire city or
general area where your principal place of employment is located. Out0of-town
expenses include transportation, meals, lodging, trips and miscellaneous items
like laundry, valet, etc.
expenses by noting the date, destination and business purpose of your trip.
Record business miles if you drove to the out-of-town location. In addition,
keep a detailed record of your expenses – lodging, public transportation,
meals, etc. Always list meals and lodging separately in your records. Receipts
must be retained for each lodging expense. However, if any other business
expense is less than $25, a receipt is not necessary if you record all of the
information in a diary. You must keep track of the full amount of meals and
entertainment expenses even though only a portion of the amount may be