Posted by NCLisa on 7/17/06 2:01pm
Msg #133643

What expenses do you claim?

I keep reciepts for everything, whether I can claim it or not, on the chance that I may be able to. What type of things do you claim, especially when you are busy? Do any of you claim that lunch at BK because you are on the road for 8 hours?

Reply by lonestar_tx on 7/17/06 3:16pm
Msg #133662

I charge $6 for first signature, and a dollar per additional signature, $15 for fax backs, $25 for printing (up to 85pgs) $35 (up to 120pgs), .048per mi, all as a tax deductible expense. Everthying else, I use as taxable income.

Reply by WDMD on 7/17/06 3:30pm
Msg #133664

"I charge $6 for first signature, and a dollar per additional signature, $15 for fax backs, $25 for printing (up to 85pgs) $35 (up to 120pgs), .048per mi, all as a tax deductible expense. Everthying else, I use as taxable income. "

Are you saying you deduct $25-$35 from your taxable income everytime you print, $15 everytime you fax, and .48 per mile ( IRS lets you deduct .445 per mile)? How do you figure you can do that?

Reply by lonestar_tx on 7/17/06 3:59pm
Msg #133675

Your itemized business expenses are tax deductible right?

I keep track of my expenses on every invoice I send out to the TC/SS. Your notary income is non-taxable so the first $6 in TX is non taxable. The next $10 (11 signatures per pkg on avg for me) is also tax free notary income. Any business expense such as faxing, mileage, etc are all itemized deductions.

Any office supplies, or making copies are expenses I list in my monthly tracking in QuickBooks, and Quicken I can easily list how much I spent.

I deposit the entire check into the Operating Business Account, then I pull out 15% of my income on every check and put it into a tax expense account. At the end of the year, I will pay up to Uncle Sammy.

Reply by WDMD on 7/17/06 4:06pm
Msg #133677

Obviously those expenses are legit, I was just curious about the figures you listed.

Reply by SharonMN on 7/17/06 4:17pm
Msg #133681

Re: What expenses (vs. charges) do you claim?

I'm no accountant, but I think the key to deductibility (assuming a business purpose) is whether you are SPENDING or RECEIVING money.

If you buy (spend $) a fax machine and paper, that's deductible. If you charge somebody $1 (you receive $) per page, that's income. If you went to Kinko's and SPENT $1 per page for faxbacks, that's deductible. All those lines on your tax form are where you deduct your expenses from your income.

I don't think meals would be deductible unless you could justify it as business purpose/marketing (taking a title co. out for coffee while you try to get them to hire you), but I really don't know the rules there.

Reply by lonestar_tx on 7/17/06 5:21pm
Msg #133696

Re: What expenses (vs. charges) do you claim?

I have only made the out of pocket printing and faxing expenses tax deductible. However, depreciation of my 4 in one machine 8 cents per page on letter,9 cents per page on legal and 25 cents for scanning (pricing based on Office Max), is a great way to reduce the tax burden on the service I provide.

Reply by WDMD on 7/17/06 5:42pm
Msg #133698

Re: What expenses (vs. charges) do you claim?

Thats an interesting way of figuring depreciation. I have never seen in a IRS pub that you can figure deprecaition based on a per page figure. Could you direct me where in any IRS publication you found this information?

Reply by lonestar_tx on 7/17/06 8:26pm
Msg #133725

Re: What expenses (vs. charges) do you claim?

It sounds like I better call the the IRS and do my home work. I did not know I would need to pay quarterly taxes. I just went into business for myself April 21, 2006 - so I better figure this out quick. Thanks. Shelley

Reply by dickb/wi on 7/17/06 8:44pm
Msg #133727

Re: What expenses (vs. charges) do you claim?

shelley...please do yourself a huge favor and keep a list of all the monies that you spend on your business and all the income that you receive from it and take it to a tax preparer so that you get a good feel of what you can do and not do........notary income is not tax exempt....it however is exempt from self emplyment taxes [fica--aka social security tax].....you don't as a rule take a depreciation on office equipment, you deduct it all in the year of purchase.......you do however depreciate your auto as well as its expenses [whether actual or milage allowance]......as the rcipient of audits 4 years in a row i learned a lot and i have been self employed for 51 years.......good luck in your venture.................

Reply by Roger_OH on 7/17/06 6:09pm
Msg #133702

Re: What expenses do you claim? - Be careful!

Hi Sherry, you stated earlier in the thread that your notary income is non-taxable, and that's NOT correct. ALL income is subject to federal, and if applicable, state and city taxes. Only self-employment taxes are exempt from notary income, and even those fees are only exempt for the actual notarial acts, NOT additional signing agent fees such as travel, etc. You will have to file a Schedule C for your business income and expenses with your tax return.

I hope you've acquired an EIN number (very simple) so you're not using your SSN for your business. You may also discover, depending upon your tax situation, that the IRS, state ,and local taxing authorities will require you to make your payments to them quarterly. Would definitely suggest consulting with a CPA or tax pro before filing your first return as a business

Good luck. I thought you were one of the nicest people at FASS.

Reply by MelissaCT on 7/17/06 7:27pm
Msg #133713

Re: What expenses do you claim? - Be careful!

Roger, good points.

I NEVER fully deduct everything that I possibly can...

Had a bwr who won the lottery -- $5k per month for life. She had saved all her losing tickets for years. Got audited & since she hadn't fully deducted everything (on advice from her accountant), the auditor found that the IRS actually owed her $$. I'd rather take that chance, than to over-deduct and owe the IRS plus penalties...

Just my opinion & some food for thought. When in doubt, always be conservative.

Reply by Graeme Hickey on 7/17/06 8:17pm
Msg #133723

You can claim anything that is remotely related to your signing business. that ranges from mileage, auto maintenance, printer toner, paper, and yes, you can claim meals on the road under "travel meals".

Reply by John_NorCal on 7/17/06 9:47pm
Msg #133731

Re: What expenses do you claim? Beware!

The best advice that I have seen in this thread is to consult with a qualified tax preparer. Claiming meals is not usually a deductible item unless your business requires you to be away from home for an extended period of time. Not in the course of your day to day activities no matter how many hours you are putting in. If your business requires you to stay away from home overnight then yes, you can deduct meals and the cost of lodging. Otherwise you can't deduct it. I have pasted below, excerpts of the rules applying to business travel expenses. Get professional tax advice and stay out of trouble.

Travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession, or job. Generally, employees deduct these expenses using Form 2106 or Form 2106-EZ and on Form 1040, Schedule A . You cannot deduct expenses that are lavish or extravagant or that are for personal purposes.


You are traveling away from home if your duties require you to be away from the general area of your tax home for a period substantially longer than an ordinary day's work, and you need to get sleep or rest to meet the demands of your work while away.

For more information on travel expenses, refer to Publication 463, Travel, Entertainment, Gift and Car Expenses.

Reply by KimK/pa on 7/17/06 10:30pm
Msg #133746

Re: What expenses do you claim? John

John
Your post was right on about meal deductions. Also if you buy another notary lunch for business purposes they also would be tax deductable (receipts are a must) but some of the other post almost have it correct.


All of the income you receive is taxable. The fee for notarized documented signatures are still taxable but do not get included in the self employment tax> (like someone already stated.)
Depreciation: You can depreciate your office equipment ( it is your call whether you want to break up the expense in years or depreciate it all in the same year (sec179) Some businesses know that they might be showing a heavy profit in the years to come and so they take a small percentage of the expense every year(i.e. depreciation) or if you are already showing a profit for the past year and you need all the expenses you can get ,business will section 179 ( take off the whole amount you paid for that expense for that tax year.

As for other expenses, bank charges, organizations fees (must be business related, NO Gym memberships), magazine subscriptions (business related) expenses to advertise, 2nd phone lines. Home office (very detailed but can be done, % of utility bills ect)
Okay I am boring myself, there is sooo much more that is tax deductable I have a few pages I could send if any of you are interested. I really tried to put write this so anyone could understand. I hope this helps.


Kim

Reply by John_NorCal on 7/17/06 10:59pm
Msg #133754

Re: What expenses do you claim? Kim

You're right, I assume that you do taxes also? I get these questions all the time in our tax practice. The big question that I have seen here on this forum is notary fee income. As we know notary fee income is taxable. A few people think that it is tax free and that is inherently incorrect. I guess I could have addressed my post to some of the other comments that were made, but the meal deduction really stuck out in my mind.

Reply by KimK/pa on 7/17/06 11:29pm
Msg #133760

Re: What expenses do you claim? John


John,
In my previous post I should not have addressed it only to you. I was giving kudos to you and addressing other posts. Yes I am a tax nerd, odd how addicting tax info can be.
We really are a strange but original breed, nice to meet ya.
Kim

Reply by Tracy_ME on 7/17/06 10:25pm
Msg #133744

I haven't seen anyone mention business use of home... which would be a portion of your rent or home mortgage interest only, property taxes and insurance, utilities, depreciation on your home, etc. If your home were 2000 sq ft and your home office were 200 sq ft - you would take a deduction of 10% of those expenses. These would be considered "indirect" expenses on form 8829 - Your direct expenses would be if you painted, papered, new carpets etc. Keep in mind that in order to take business use of home expenses you must use the room exclusively for business. You cannot take these deductions if you are set up in the corner of your living room or dining room. Form 8829 bottom line will pull over to line 30 of your sch. C.

You can also take deductions for other office equipment desks, chairs, book cases, tables whatever is in your office. I deduct everything in my office - clock on the wall, bulletin boards, etc, etc. My office has its own 1/2 bath so I claim toilet paper, paper towels, soap, etc. I make sure that I get a separate receipt for my business expenses when I go to the grocery store for such items.

Reply by John_NorCal on 7/17/06 11:04pm
Msg #133756

Good thinking Tracy. I used to shy away from home office deductions as being an invitation to audits (used to be the case) until a colleague pointed out the savings to the tax payer as long as proper documentation is maintained. You SE tax will also be lowered by taking the home office deduction.

Reply by Jon on 7/18/06 3:37am
Msg #133784

All I am going to say is GET THE ADVICE OF A TAX PROFESSIONAL. Some of the advice I see in this thread is good, some is making me sick to my stomach. This board is no place to get reliable tax advice. How do you know who to believe when you get conflicting info? If you are unsure or have questions, please do yourself a favor and utilize the experts that make a living doing taxes. Spend the money, the fee for the business portion of your taxes is deductible. Not to mention the headaches you WON'T have by having your taxes done correctly.