How to fully expense building materials for handyman business when notes on the "Supplies" category says items are not deductible on federal return, only state?

[uwikthnatolsdv]

I assume all the wood, hinges, lightbulbs, etc. I bought, charged my clients for, and were reimbursed for are deductible, since their cost is included in the gross income I'm reporting

[Bsch4477]

Don’t know where it indicated that supplies are not deductible on federal return. Since the reimbursement is included in your income you deduct supplies on Sch C. 

[Critter-3]

If you are new to being self employed, are not incorporated or in a partnership  and  are acting as your own bookkeeper and tax preparer you need to get educated ....  

If you have net self employment income of $400 or more you have to file a schedule C in your personal 1040 return for self employment business income. You may get a 1099-Misc for some of your income but you need to report all your income.  So you need to keep your own good records. Here is some reading material……

IRS information on Self Employment….
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center 

Publication 334, Tax Guide for Small Business
http://www.irs.gov/pub/irs-pdf/p334.pdf 

Publication 535 Business Expenses
http://www.irs.gov/pub/irs-pdf/p535.pdf 

Home Office Expenses … Business Use of the Home

https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction

https://www.irs.gov/pub/irs-pdf/p587.pdf

Publication 946 … Depreciation

https://www.irs.gov/pub/irs-pdf/p946.pdf

          

There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Self Employed return and will help you keep up in your bookkeeping all year along with calculating the estimated payments needed ....
http://quickbooks.intuit.com/self-employed

Self Employment tax (Scheduled SE) is generated if a person has $400 or more of net profit from self-employment on Schedule C.  You pay 15.3% for 2017 SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  You do get to take off the 50% ER portion of the SE tax as an adjustment on line 27 of the 1040.  The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 line 57.  The SE tax is in addition to your regular income tax on the net profit.
 


PAYING ESTIMATES
For SE self employment tax - if you have a net profit (after expenses) of $400 or more you will pay 15.3% for 2017  SE Tax on 92.35% of your net profit in addition to your regular income tax on it. So if you have other income like W2 income your extra business income might put you into a higher tax bracket.

You must make quarterly estimated tax payments for the current tax year (or next year) if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits. 
 
- 2. You expect your withholding and credits to be less than the smaller of: 
    90% of the tax to be shown on your current year’s tax return, or 
  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

To prepare estimates for next year, You can just type W4 in the search box at the top of your return , click on Find. Then Click on Jump To and it will take you to the estimated tax payments section. Say no to changing your W-4 and the next screen will start the estimated taxes section.

OR Go to….
Federal Taxes or Personal (H&B version)
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button

[uwikthnatolsdv]

Thank your the reply. I've been self-employed for 34 years and always filed a Scheduled C, either through a CPA, or for the last 5 years, via TurboTax. In the years using TurboTax Self Employed, I've included supplies (external hard drives under $200, cables, printer ink, etc.) using the  "Supplies" category in TurboTax, but just this year I clicked on the "learn more" link for that category and find that it says that any expenses I list in the Supplies category, will not actually be expensed on the federal return. Copy of this language is below. So wondering where I should actually be putting expenses such as these, other than dumping them all in the Office Expenses:

"Supplies Expenses

Job-related expenses aren't deductible on your federal return, but some states allow you to deduct them on your state return. We'll figure out if these expenses can affect your state return and do the calculations for you.

Supply expenses are incidental items that usually cost less than $200 and last less than a year.

Examples include:

•Computer accessories, like external hard drives, trackpads, mouse, and cords

•Reference books and guides

•Cleaning supplies

•Safety and protective gear, like helmets, gloves, and goggles"

[VolvoGirl]

Job related expenses refer to a W2 employee, not your self employment business on Schedule C.  They are just giving you a disclaimer on that.  Ignore it.  

[uwikthnatolsdv]

I appreciate the reply and links. I'm not new to self-employment (34 years), but did pick up a side gig during Covid with handyman work requiring a second Schedule C, and the expenses for that would seem to differ from my other work in that I have numerous materials purchased that go into the making of a final product. So wondering where to list those in TurboTax Self-Employed's categories. 

The Supplies category has a 'learn more' link that seems to indicate that expenses listed there will not be deducted from the fed return. Here is the language"

"Supplies Expenses

Job-related expenses aren't deductible on your federal return, but some states allow you to deduct them on your state return. We'll figure out if these expenses can affect your state return and do the calculations for you.

Supply expenses are incidental items that usually cost less than $200 and last less than a year.

Examples include:

•Computer accessories, like external hard drives, trackpads, mouse, and cords

•Reference books and guides

•Cleaning supplies

•Safety and protective gear, like helmets, gloves, and goggles"

Thanks for the help.

[VolvoGirl]

Didn't my post answer that?  That is for W2 income if you are an employee.  W2 employees can no longer deduct job expenses on Schedule A.  Don't worry about it.  Nothing has changed for Schedule C.

[Critter-3]

If you are seeing that "supplies" section for an employee then you are in the wrong section.   The expenses you mention should be in the Sch C section.