Expenses

[Lg901]

As an independent contractor travel agent, I work from home as well. Is there a list anywhere (besides google) of what can be written as an expense? I have kept every receipt like a hoarder And made spreadsheets from them. Not sure if this is a public question or private. Also, health insurance. I had to purchase my own health insurance outside of my employer once we lost that. I’m used to having my insurance through my employer & I am clueless on how that also falls with the self-employment in our taxes at the end of the year. Oh, then throw in a few months of unemployment because of  “ do not travel“ constantly being thrown in the mix as well :)… SOS 

[conniem123]

Here is a great source for self-employed business expenses.

What self-employed expenses can I deduct?

Can I take the home office deduction?

You may be able to deduct the amount you paid for medical and dental insurance and qualified long-term care insurance for yourself, your spouse, and your dependents.  

https://turbotax.intuit.com/tax-tips/home-ownership/deducting-health-insurance-premiums-if-youre-sel...

I hope you find this information helpful!

[Lg901]

I cannot thank you enough for doing this today. I am so grateful! 

[Opus 17]

You can also read these,

https://www.irs.gov/pub/irs-pdf/p334.pdf

https://www.irs.gov/businesses/small-businesses-self-employed/deducting-business-expenses

You can deduct ordinary and necessary business expenses. That means expenses that are a normal and regular part of the particular job you are doing.  A travel agent working from home can deduct certain household expenses as a "home office".  You can deduct phone and computer expenses (much easier if you have work-only computer and phones).  You normally wouldn't deduct gas for your home's lawn mower because that is not a business expense for a travel agent, even though it might be an expense for a landscaper.  If you decorated your home office with a $50,000 Picasso print, that would not be an "ordinary" or necessary expense.

Unemployment compensation is taxable income, make sure you get your 1099-G from your state government to include it (you may have to download it yourself if the state does not mail it). 

As a small business person, you can take a special self-employed business deduction for your medical insurance expense.  There's an article here.

https://turbotax.intuit.com/tax-tips/home-ownership/deducting-health-insurance-premiums-if-youre-sel...

Turbotax Self-Employed version (online) or Home & Business (installed on your own computer) will walk you through all these different items.

[ErwRover]

I was surprised the car payment itself is not listed as a deductible expense.

Could the purchase price of the car be used as a Section 125 deduction for self employed?

[conniem123]

Instead of depreciating an asset over a multi-year period, you might be able to deduct its entire cost during the first year of use. This is called a Section 179 deduction.

There are certain qualifications that you will want to follow closely.  Here is a great resource.

Section 179 Deduction 

Hope you find this helpful!

[Opus 17]

@ErwRover 

If you use your personal vehicle for business, there are two ways to deduct your expenses. This is described in IRS publication 463, chapter 4.

https://www.irs.gov/pub/irs-pdf/p463.pdf

You can use the standard mileage method, which is about $.55 per mile, which includes all car related expenses — depreciation, maintenance, repairs, fuel, and insurance. You must keep a mileage diary that lists the date, business purpose of the trip, and miles driven.

Or you can use the actual expense method. You keep track of all of your vehicle expenses for the year – this includes interest (but not principle) on a car payment, fuel, repairs, maintenance, insurance, and depreciation or where in tear. You must also keep a mileage diary that list your business miles driven for the year and you must know the total miles driven for the year. You deduct a percentage of your actual expenses equal to the percentage of business miles driven.  For most cars, the standard mileage rate gives a better deduction with less paperwork than using the actual expense method.

If you buy a vehicle strictly for business use, you may be able to take the entire purchase price as a section 179 deduction in the year you place the vehicle in service. However, if the vehicle is not use 100% for business, you can run into trouble if audited.  If you later take the vehicle out of service – because you stop the business or because you sell or trade it in — you will owe depreciation recapture tax on the value of the vehicle at that time. This is because if you previously deducted the entire value, you have to pay tax on any income that results from the residual value when you sell it or stop using the vehicle for business and convert it to personal use.