Getting Down to Business Deductions

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The finance gorilla reminds you that you can probably deduct your new iPad… as long as less than 50% of the time is spent playing Clash of Clans. By  for matthew_dann2003. The IRS allows you to claim “ordinary and necessary” expenses related to your business. Don’t be intimidated by the word “necessary.” It means the expense should be common, helpful, and appropriate for the kind of work you’re doing. It’s perfectly reasonable to claim a rug for your office as a “necessary” expense, even if your business won’t collapse without it. Some common items to deduct include: Office supplies like paper, planners, staples, etc. Desk, chairs, filing cabinets, rugs Computer, printer, scanner (you may have to prove these are for business use more than 50% of the time) Phone line (if you have a separate line for your business) You may also be able to deduct some design services! “Reasonable advertising expenses” are deductible, so talk to your accountant about your car wrap and new business cards.

If your business is new, some design services may be classified as start-up costs, which are usually treated as capital expenses. You may still be able to amortize some of the costs. Your tax advisor can help with your specific details. Tax info for work-at-home parents — Many small business owners and freelancers perform the daredevil balancing act of parenting and working from home. Childcare is a crucial tool for most working parents to get the background remove service job done. You may be responsible for withholding and paying social security, Medicare, and federal unemployment taxes if you hire a nanny or sitter. Page 4 of the Household Employer’s Tax Guide features two tables with the information you need to withhold the right amount of taxes and keep appropriate records.



If you pay someone to care for your children or other dependents, you may be eligible for a tax deduction. The Child and Dependent Care Expenses credit lets you claim up to $3,000 for one qualifying person and $6,000 for two or more. A qualifying person is a child under 13 years old, or a dependent living with you who can’t care for him- or herself. To claim the credit, you must be paying for care in order to work or look for work. The babysitter’s fee for a night out with your spouse doesn’t count. The wages you pay the nanny while you ship orders do. Tally up work expenses and deduct reimbursed expenses on Form 1040, 1040A, or 1040NR. As always, file your records carefully for future years. The IRS offers a lot of ways for home workers to claim deductions and credits on their tax return. Filling out some extra paperwork is worth it to avoid paying too much in taxes this year.