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Male: What deductions are available for self employed or home businesses?
Art: Deductions are covered under one particular section of the Internal Revenue code, it’s called the Ordinary and Necessary section. To have a deductible expense, the expense has to be ordinary and necessary for your business. Now, the obvious ones, electricity, right, everybody today has a computer. Unless you got an unlimited supply of batteries, you plug the computer in, so there’s electricity. Phones, we’ll deal with phones a little bit separately because a lot of folks today have given up on land lines and they only use a cellphone. And the cellphone has a separate, some separate rules attach to it. But, go under the premise that whatever it is deductable has to be ordinary and necessary for your particular business coz that’s the start point in the Internal Revenue code. Then some expenses have limitations on them, for example, business meals. Generally you can deduct 50 percent of the cost of the business meal. If your spouse goes along, and your spouse is not involved in your business, you can't deduct that cost, it’s not ordinary and necessary, where is the necessity there. So just get form schedule C on the 1040 and look at the expenses, the most obvious ones are all listed there. If they’re not, turn the form over, there’s a section on the back for miscellaneous, so things like telephone, you might insert in the miscellaneous, coz there is no line separately for telephone expenses. But the basic deal is, the expenses have to be specific to the business, they can't be personal expenses, they have to be ordinary and necessary for the course of running the business.
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