Maximizing Your Tax Deductions

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Maximizing Your Tax Deductions

Editor’s Note:  I am going to allow some of my fellow coaches and entreprenuers to share their expertise with you as a guest blogger on each Thursday for a month. 

This month is our Guest Blogger for March is Wendy Uken.  Wendy is a designated agent for the IRS and a QuickBooks Pro Advisor. She is also the co-founder of the Gonzales Tax Group in California.  You can visit her website at http://www.GonzalezTaxGroup.com.

If you’re self-employed, or have started a side-hustle, there are several ways to maximize your deductions but the most important is to be conscious of the business expenses you incur. Whenever you have a business expense ask yourself: Is this expense necessary and ordinary for my trade or business? If so, you’ll be able to deduct that expense from your gross profits thus reducing your taxable income. If not, your expense is not tax deductible.

For example:

Amy has a cookie selling business. She decides to buy a tablet to start taking credit card payments. Question: Can she expense the cost of the tablet? Answer: In this case, yes. Provided she uses the tablet for business purposes. It’s important to note that business assets (in this case the tablet would be considered an asset) are typically subject to depreciation depending on the cost of the asset. Generally, office equipment that costs $2,500 or less can be deducted in the year its purchased and used.

 

Marc is an IT Consultant to the stars. One of his dreams is to become a photographer. One day he decides to buy a camera to take pictures of his IT clients (who happen to be gorgeous models) and start compiling a portfolio. Question: Can Marc deduct the cost of the camera from the income made through his IT Consulting business? Answer: In this case, no. Purchasing the camera is neither necessary or ordinary for his trade.

Of course, this information is simply a foundation for you to build on and it shouldn’t be construed as advice specific to your situation or business. Consult a professional to help you with tax planning so you can maximize your expenses throughout the year, rather than trying to figure it all out during tax time. As Enrolled Agents (IRS Designation) and QuickBooks ProAdvisors, my team and I can represent individuals and businesses in all 50 states and we would be happy to work with you directly. Simply visit Gonzalez Tax Group and complete the “Contact Page” or give us a call at 818-539-7014.

Author: Wendy Uken

Enrolled Agent (IRS Designation) & QuickBooks ProAdvisor

Co-Founder of Gonzalez Tax Group

GonzalezTaxGroup.com

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