Since we talked about tax deductions last week, we will finish off the month with a few more words about the way you can save money on your taxes. There are many things that people think they can deduct but that in fact not deductible. The one thing that comes to mind is the expense for clothes. I have talked to many women who think that the expense for business clothes is tax deductible.
Much as we can justify paying for business suits and using those suits to make a great impression, the expense is not a business tax deduction. Since the business outfits can be worn outside of business meetings, these expenses are not exclusively for business purposes, and therefore the price of the business clothes is not deductible. The only clothes that you can deduct are those that have a logo. If you wear apparel with your company logo you can take a deduction for the price. Besides, when you wear this outside of business meetings, you will be advertising your business all the time.
The opportunity to share your business with everyone you meet is also an advantage when it comes to tax deductions. You may not want to spend a lot or money on personalized apparel in the beginning, however it could be something to consider in the long run. This is one more reason to create a logo that you like and that represents you and your brand well. Of course, nothing is set in stone - there is always an opportunity to do better once we know better. And the same applies to your branding.
One tax deduction that a lot of people miss out on is the expense they incur with their car. Most women in business that I have talked to take the deduction, they are aware of the fact that the auto expenses are tax deductible, however, they don't keep good records of the mileage driven for business and therefore the tax deduction is many times a guesstimate. The biggest issue is that without good records, the IRS can decide that the deduction is invalid in case of an audit. The second issue is the possibility of the deduction taken being smaller than the correct amount; in this case the women business owner end up paying more taxes than required.
There are a lot of apps now available for mileage tracking. The most common ones are TripLog and MileIQ. Some of the business programs used for accounting and reports can also be used for mileage tracking - the one that I know of is TaxBot. If there are others, I would love my readers to post their favorites in the comments. I would like to know what others use, and what programs can do, so that I can check them out, and also improve my tracking for business expenses and deductions.
Showing posts with label business expenses. Show all posts
Showing posts with label business expenses. Show all posts
Monday, August 27, 2018
Monday, August 20, 2018
Keep More Money Month - Chapter 3
As we are getting closer to the end of the summer, we are talking about keeping your money. And since this time of the year is the favorite time for travel for many families, I wanted to share some ideas about tax deductions you can take with your vacation travel.
Before I get into details, I will caution you to keep great records of what you actually do on the trips, so you can prove that the trip had business purpose. The good news is that your vacation can be (partially) tax deductible. It takes some math to figure out what percentage of the expanse you can take out, so please make sure you figure it out correctly.
There are 2 scenarios that I want to discuss today. The first one is when you plan to travel for business and decide to take your family with you. The second scenario is when you plan a family vacation and would like to be able to deduct some of it on the taxes.
If you plan to travel for a conference, convention or any other type of business reason, and you figure the location is just awesome enough to want to show your family, you probably decide to stay a few extra days at the destination. Let's say you travel for a 2 day conference that happens on Wednesday and Thursday, and decide to stay over the weekend and return on Sunday. You take your family with you and enjoy Friday and Saturday at that location. Now a 2-day trip became a 4-day trip, and since half of the time there was spent at the conference, you can also deduct half of the plane ticket price.
Another deduction can be part of the cost of the hotel room - make sure you only deduct the percentage of the room rate for the days of the conference. Let's say you use 50% of the first 2 nights, since you share the cost with your husband (technically). The time you spend with the family - the 2 extra vacation days - is not tax-deductible, so please stay away from any trouble with the IRS. Make sure you keep track of your food expenses for any meals you eat at the conference with fellow attendees - half of that will be a tax deduction.
In the second scenario, if you plan to travel with your family already, and would like to save some of the money off your taxable income, you need to make sure you have some business activities while you are away. These can be business meetings, prospecting - if you can provide services or products to people at that location.
Whether you plan to travel for business and then decide to extend the travel time in order to spend time with the family, or you plan a family vacation and then schedule some business meetings in that area, you can deduct part of your travel expenses. One word of caution: keep track of the time you spend for business and deduct the percentage that pertains to that time.
Before I get into details, I will caution you to keep great records of what you actually do on the trips, so you can prove that the trip had business purpose. The good news is that your vacation can be (partially) tax deductible. It takes some math to figure out what percentage of the expanse you can take out, so please make sure you figure it out correctly.
There are 2 scenarios that I want to discuss today. The first one is when you plan to travel for business and decide to take your family with you. The second scenario is when you plan a family vacation and would like to be able to deduct some of it on the taxes.
If you plan to travel for a conference, convention or any other type of business reason, and you figure the location is just awesome enough to want to show your family, you probably decide to stay a few extra days at the destination. Let's say you travel for a 2 day conference that happens on Wednesday and Thursday, and decide to stay over the weekend and return on Sunday. You take your family with you and enjoy Friday and Saturday at that location. Now a 2-day trip became a 4-day trip, and since half of the time there was spent at the conference, you can also deduct half of the plane ticket price.
Another deduction can be part of the cost of the hotel room - make sure you only deduct the percentage of the room rate for the days of the conference. Let's say you use 50% of the first 2 nights, since you share the cost with your husband (technically). The time you spend with the family - the 2 extra vacation days - is not tax-deductible, so please stay away from any trouble with the IRS. Make sure you keep track of your food expenses for any meals you eat at the conference with fellow attendees - half of that will be a tax deduction.
In the second scenario, if you plan to travel with your family already, and would like to save some of the money off your taxable income, you need to make sure you have some business activities while you are away. These can be business meetings, prospecting - if you can provide services or products to people at that location.
Whether you plan to travel for business and then decide to extend the travel time in order to spend time with the family, or you plan a family vacation and then schedule some business meetings in that area, you can deduct part of your travel expenses. One word of caution: keep track of the time you spend for business and deduct the percentage that pertains to that time.
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