Are these legitimate self employment deductions

[rachel15116]

My daughter just started working as a hair stylist at a local salon. She will be receiving a 1099-Misc at the end of the year.  Her co-workers told her that she can deduct the following on her tax return.They said their accountant writes these off on their tax returns.

1 – Mileage to and from her home and the salon (the salon provides bookkeeping services and she does not have a home office) .

2 – Her cellphone bill. The salon texts her with messages about new / cancelled appointments. She uses her personal phone and has unlimited texting so there is no extra charge for these texts.

3 – When her fellow employees go out for lunch they call it a business meeting and write it off.

It has been a while since I had to deal with completing a tax return that includes self-employment income, but I don’t think these are legitimate self-employment expenses.  Are these deductible expenses?

Thanks

Rachel

[Critter · Accepted solution]

1 – Mileage to and from her home and the salon (the salon provides bookkeeping services and she does not have a home office) .  NO ... that is non deductible commuting like everyone else going to work.

2 – Her cellphone bill. The salon texts her with messages about new / cancelled appointments. She uses her personal phone and has unlimited texting so there is no extra charge for these texts.  Again no since she has no extra charges to attribute to work  unless she keeps accurate records on how much was business related vs personal use and then only a % is allowed. 

3 – When her fellow employees go out for lunch they call it a business meeting and write it off.  A BIG no no ... only if they take clients to the lunch will that be allowed and only if they talk business with the purpose of increasing revenue.

None of these will hold up in an audit.

Her and her coworkers really need to read the IRS rules before they get audited .... 

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

[rachel15116]

Thank you. Mothers never know anything 🙂

[SweetieJean]

"They said their accountant writes these off on their tax returns."
Sounds like the accountant is playing fast and loose with the rules.

[rachel15116]

That is what it sound like to me. But I heard it 2nd hand from my daughter and their "accountant" could just be a friend. But my daughter is not writing them off if I do her taxes.  And I showed her this conversation so she knows what the real rules are. But the real shame is that she received her associate cosmetology degree from the local community college and the school teaches NOTHING about record keeping and/or taxes.  No wonder misinformation abounds.

[Anonymous]

if a pro was preparing her return, they might ask % of cell phone used for business.  if they were told 50% they would probably write off 50%.  there is no requirement for them to ask for substantiation.  however, it would be needed if audited.  

but i agree 1 and 3 would not be deducted by pro.