Questions about deductible expenses?

Question

I had about $10,000 in freelance/1099 earnings last year, which is enough that I'm getting more serious about deductions so I can avoid paying as much of that tax as possible. I'm a programmer, so I purchased a laptop and plan to deduct that and any hardware I purchased. I feel like it's a stretch, but was also wondering if home expenses (e.g. smoke detectors, new furnace, etc.) are deductible. Is there a way to characterize vacation as a business expense if I incidentally did business/work networking and someone from the trip ended up working with me as a direct result? And what are sort of the standard easy deductions -- charity, donations, etc.? Is there anything else?

Answer 1

If you work in your home, you can deduct a percentage of your mortgage interest, utility bills and home repairs. The percentage you can deduct is equal to the size your home office space consumes. If for example your office takes up 10% of your home's square footage, you can deduct 10% of your mortgage interest, utility bills (except phone) and home repairs. But make sure your home office qualifies as a home office. A home office must be a separate room in your house, and cannot be used for any reason other than your business (you cannot use the room for personal storage, a utility closet, a TV room, etc).

Donations to non-profit organizations are tax deductible. Contact the organizations you gave money to, and ask if they are non-profit and if donations are tax deductible. The IRS only allows a certain limit for charity donations, and a limit on donations which you do not have a receipt.

As for your trip, to claim it as a business expense the trip needed to be soley for the purpose of business. If you spent 5 days on vacation but had only one 30 minute business meeting, it will be hard to justify as a business expense. If you can prove you obtained a client, you may be able to deduct a portion of your airfare (but not for anyone other than you).

Although it may cost you a couple hundred bucks to hire a CPA to do your taxes, you could end up with greater deductions (and less penalties).

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Answer 2

The new furnace would not be deductible at all. It would increase the tax basis of your home and reduce any gain when you sell. The smoke detector in more likely to reduce your insurance rates than your taxes. To deduct a trip, the primary purpose must be business. Even then the portion that relates to vacation is not deductible. I'm not sure if you can deduct the computer in the year purchased of if you are required to depreciate it over its expected life. As mentioned in a previous answer, you may be eligible for a 'home office' deduction. Be sure you understand the rules before claiming this deduction. It is currently on of the IRS's favorite items for audits. The link below is and IRS article for Self-Employed Individuals. It may provide some help.

Answer 3

Are smoke detectors and carbon monoxide detectors deductible?