0
In featured/ freelance/ Life in the Reporting Lane

Tax-Deductible Expenses for Court Reporters and Small Businesses

Spread the love

So, the key terms are:  ORDINARY and NECESSARY.  What’s ordinary and necessary?  Well, it would be an expense that is common and accepted in your trade or business and helpful and appropriate for your business can be written off for taxes.

TIPS:

Save and organize your receipts and invoices by category

Track your income and expenses monthly (Download HERE)

Make quarterly estimated tax payments

Create a spending budget and stick to it

Track your mileage (Download HERE)

Tax Deductible Expenses for Court Reporters

and Similar Independent Contractors

  • Advertising/Promotions (see Marketing Costs)

  • Bank Fees (exclusive business use only)

    • Bank services fees: monthly fees, ATM fees

  • Bookkeeping & Accounting: Services and software (QuickBooks, Quicken, TurboTax, etc.)

  • Credit card fees: annual fees, late fee)

  • Charitable Contributions: must be 501(c)3) of up of $250 or greater (get receipts!)

  • Childcare

  • Consultants (See Professional Fees)

  • Continuing professional education

  • Cost of Goods Sold

  • Dues, memberships, and subscriptions: Professional organizations, ex., NCRA, NVRA, and other local reporting associations

  • Education

    • Books & research materials: printed books, e-books, audio books, magazines, newspapers

    • Professional development: conventions, seminars, courses

    • Workshops & training: in-person training, online courses.

  • Equipment: Purchased in the tax year, depreciation from prior years.

  • Equipment Rental: loaner machines

  • Gifts Given ($25 per person per year

  • Home Office: $5/square foot of your home used for business purposes

    • Rent/mortgage, utilities, electric, water & garbage, security system, Internet, land line phone

    • Homeowner’s or renter’s insurance, repairs (keep those receipts!)

    • Pest Control

  • Income: If you use Quicken or QuickBooks for Small Businesses, use client names as sub categories which will allow your report to give you a grand income total as well as a breakdown totals for each client.

  • Insurance: for your business, not health

  • Interest Expense: interest paid on borrowed funds to start or grow your business. If you take funds from a home equity loan, this is a personal itemized deduction of up to $100,000.  You can make an election to treat a home equity loan as not secured by your home, making the interest a fully deductible business expense.  Also, finance charges and other loan interest

  • Internet

  • Licenses & Permits

  • Maintenance, Repair, Support: all microphones, steno masks, steno machines, laptops, tablets, Realtime connections, cables, etc.

  • Marketing:

    • Online: Facebook ads, Adwords, MailChimp

    • Promotion: business cards, flyers, signs, publication ads, pens, cups, etc.

    • Website: domain names, hosting, themes, plugins, subscriptions, website services

  • Meals & Entertainment: 50% deduction when you’re conducting business. For it to qualify as a business expense, you must have a business discussion, have the expectation of future business and/or clear business setting.

  • Merchant Processing Fees: credit card processing fees

  • Notary Fees

  • Office Expenses

    • Cleaning & Pest Control

    • Equipment: printer, computer, laptop, water dispenser

    • Payroll (W-2s) and Payroll taxes

    • Postage

    • Printing: transcript production, Thank You cards, branded stationary

    • Software: Dropbox, Google apps, Evernote, QuickBooks, Adobe, Microsoft

    • Supplies: pens, paper, ink, toner, file folders, paper clips, etc.

    • Water, snacks, soda delivery

  • Professional fees

    • Legal

    • Accountant: bookkeeper, tax prep

    • Consultants

    • Sub-Contractors: proofreaders, scopists, typists

  • Rent: Lease of office space, see Home Office

    • Utilities – for business space

    • Electricity

    • Water & garbage, security system, the Internet

  • Software: purchase and support fees

  • Telephone/ Cell Phone: based on the percentage of use for business-related communication can be written off your annual carrier rate. Also, answering service, long distance, etc.

  • Transportation: You can write off $0.56 per business-related mile when you drive from your primary business location. Keep track of dates of trip, purpose, destination, odometer readings, and total miles per trip

    • Auto

      • Insurance, gas, mileage

      • Parking & tolls

      • Registration fees & licenses

      • Repairs & maintenance: tires, car washes, oil changes, service

    • Public Transportation

      • Taxis, Uber, Lyft, car service

      • Bus, subway fares

    • Travel Expenses

      • Airfare

      • Ground transportation: taxis, Lyft, Uber, public transportation

      • Lodging: hotels – Airbnb

      • Local travel: taxis, Lyft, Uber, public transportation in your local area

      • Travel meals

    • Taxes

    • Utilities (see Rent and/or Home Office)

Mileage Deductions

The average independent contractor can receive as must as .54-.56.5 cents in deduction per mile driven.  This is not just for business mileage, miles you drive for medical reasons or for charitable work can also be deducted.   Be sure to keep careful records of each drive, which include: date, destination to/from, the purpose of the drive (business, charitable, medical), miles driven.

If you are self-employed, you can take the highest deduction rate and have the least restrictions. Self-employed business owners can deduct 57.4 cents per mile driven for business. These miles can rack up when you consider business meetings, picking up supplies, and traveling to a secondary work site. There are no thresholds when it comes to the self-employed. You can deduct every single business mile.

PHILANTHROPIST?

If you volunteer for a charitable organization or nonprofit, you can deduct these miles in your charitable donations deductions. You can claim 14 cents per mile. You must be personally volunteering, not driving anyone else to a volunteer activity, including family members. There is no threshold for this mileage deduction and the amount does not have to exceed any portion of your income.

MOVING?

If you are moving because of your job, you may be able to deduct your mileage. The move must be at least 50 miles unless you are on military orders. You must work at least full time for 39 weeks in the year following the move. This deduction is 23 cents per mile.

WORKER BEE WITH REIMBURSEMENT?

Another possible mileage deduction is for employees who travel for work and are not reimbursed for their mileage. Even if they are, the employee can claim the difference between what their employer reimburses and the federal mileage deduction. For example, if an employee gets reimbursed 25 cents for each mile, you can then claim the additional 32.5 cents in mileage deductions on your annual taxes. Be aware, however, that your expenses must exceed two percent of your adjusted gross income.

 

Let’s Get Organized

If you do not organize small business taxes properly and you get audited, you’re in serious trouble.  So let’s make sure that never happens!

First things first – KEEP ALL OF YOUR RECEIPTS.  Yes, even that receipt for $4.89.  So whether you stash your bits of paper in an old tissue box, a wipes container, shoebox, or a desk drawer, be sure to keep them in the same one place, and put all of your receipts and statements there. 

Alternatively, since most people keep track of their credit/debit card purchases online, create a spreadsheet, or use a printable (available HERE) to jot down all of your business expenses for the year.  It’s best to track your expenses each week. But if you do it on a monthly basis, you’ll be grateful when your accountant starts buzzing you for information! 

Ideally, you’ll have computer subfolders in categories under one main file under the year and your business name or however you’d like to name it.  Just know where to move all your statements and scanned receipts.  Sound complicated? Nah.  It’s more tedious than anything else, but you’d be amazed and so proud of yourself when it’s all in working order.

If you’re old school and still working in the paper world, get a bin, some hanging file folders (make those your categories), and let loose!

So, whether you do this with paper or electronically each week, month, or every few months, just so long as you know where all of your receipts are and you do it as part of your regular routine, you’re all set.  Bottom line, track your expenses, save your receipts just in case, and remember where you put everything!

 

Clever Ideas Found on Pinterest:

https://crismanfamily.wordpress.com/category/crafts/

http://carissashaw.com/organizing-receipts-tax-time/

http://www.controllingmychaos.com/2008/07/receipt-keeper-how-i-manage-some-of-my.html

You Might Also Like

0
Your Cart
Your cart is empty.
%d bloggers like this: