Deductions

[JoseMelano]

I have a partnership LLC.

Is the water I drink while on the job tax deductible? If so, 100% or 50%? I have a mobile detailing business and need to stay hydrated at all times. 

Are the shoes I buy to detail in also tax deductible?

Are my cell phone, and wifi bills a tax deductible to a certain extent? For example if I use each about 40% of the time for my business, would it be only a 40% deduction?

Is my prescribed medicine tax deductible? As well as my chiropractor visits? If so, do I report it on the 1065, or the 1040?

[Irene2805]

To answer your questions:

1.  No - You cannot deduct the water you drink on the job.

2.  Yes - If the shoes are specialty shoes and ONLY used when detailing,  If you can wear them at other times (regardless of whether you do or not), they are not considered special equipment and you cannot deduct them.

3.  Yes - you can deduct the business portion of  your cell phone and WiFi bills.

4.  Your prescription medicine and medical bills are deductible on your 1040 return.  Please keep in mind the following about deducting your medical expenses:

• You don't get the benefit if you are taking the standard deduction.
• If you itemize deductions, you will only be able to take total medical expenses that are greater than 7.5% of your adjusted gross income

[Opus 17 · Accepted solution]

Food and drink is not a deductible business expense, except that you can deduct 50% of the cost of food and lodging if you are traveling out of town for business purposes for at least an overnight stay.

Clothing is not a deductible business expense unless it is unique in some way that it cannot be worn for ordinary use. For example, a priest’s collar could be a deductible expense, but a black shirt and slacks would not be deductible.

Personal medical expenses are deductible on schedule A of your personal tax return, not on a business return.  You could potentially set up an HRA, or health reimbursement arrangement, whereby your company reimburses you personally for medical expenses not covered by insurance. However, this requires legal advice, and would have to be set up for the future, it would not be retroactive to last year. It’s also more complicated if you are more than a 2% owner of the company.

If you have a dedicated business only cell phone or Wi-Fi connection, that is a deductible business expense.  If you use your personal phone and Internet for work, there are two different arguments.

1. You can’t deduct any costs as a work expense if you are on a flat rate plan, because your work usage does not increase your cost.

2. You can deduct a percentage of your cost as a work expense if you have records that give you some kind of reasonable basis for how to divide the costs. You can’t just divide the cost in an arbitrary manner. You have to have some kind of record, or proof, that would give you a reasonable basis to calculate the percentage of work use.

I personally believe argument #1 is more correct, and I seem to remember reading a tax court case about it, but I don’t have the citation at hand. Some people will suggest that #2 is acceptable, it is on your own risk if you are audited.