FAQFrequently Asked Questions
Common questions our clients ask us…
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.
It is important to separate business expenses from the following expenses:
- The expenses used to figure the cost of goods sold,
- Capital Expenses, and
- Personal Expenses.
If you use your car for business purposes, you may be able to deduct some of your operating expenses or take the standard mileage rate. The cost of commuting between home and your work is not deductible.
If you travel on business, either in-town or out-of-town, and your employer does not reimburse your expenses, you may deduct many of them on your income tax return.
If you entertain a business associate at a restaurant, you can deduct 50% of the business-related meal. Be sure to keep the receipts and a record of the business purpose.
Your professional library can also be a source of tax deductions. Books, magazines and journals related to your field can be deducted.
The uniform your company requires you to wear may also be a deduction. If the uniform is not suitable for everyday wear, the cost of the uniform and the upkeep may be deductible.
Education expenses related to your work may also be deductible. Courses designed to help maintain your skills in your present job are generally deductible. Plus, the mileage from work to school, usually one way only, is deductible.
If you are looking for a job in your same field, expenses such as employment agency fees and resume preparation are deductible. So are the miles driving to and from the interview. The expenses for an out-of-town interview are deductible if you are paying for them.
Out-of-town conventions can also be deducted if not paid for by your company, so save receipts for your lodging and meals. If the convention was in town, your mileage to and from the convention location may be deductible.
Yes, The cost of operating a car, truck or other vehicle is tax-deductible when driving for business purposes, medical purposes, moving and relocating, or charitable service.
The amount of your deduction is based on the number of miles you’ve spent driving for the tax-deductible purpose. You can calculate your actual car expenses, or you can opt for a standard mileage rate.