What sort of things can you use for business expense to off set your profit on your business?

Question

I do medical transcription at home part time and made close to $18,000 and got a 1099 for that. I know I can count off for printer cartridges, printer, computer, etc. but if you rent can you count off for the room you type in if it is your bedroom?? Also can use things such as cell phone, electricity, etc. I have alot of money sitting in this 1099 and I need to find some things to help off set my total profit. Thanks!!

Answer 1

You can write off rent, but only a percentage of it. Calculate how many square feet your home office area is, and divide it by the total square footage of your place, and multiply that by the monthly rent. You can write off any office supplies, computer supplies, business lunches and dinners, and any business trip expense you may have taken last year. You need the receipt to everything. Go talk to a tax guy and have him figure it out. He can make your tax amount on the 1099 disappear.

Answer 2

Hi there. I'm not a CPA, but you can write-off all legitimate business related expenses. Typically, CPAs will ask what percentage of your living area is dedicated solely to the business. If your apartment is 1000 sq feet and you need (realistically) 150 ft for a desk & storage, then you can write off 15% of your rent for the year. Same with the cell phone. And same with your automobile. And your gas. And auto repairs. And your electricity & other utilities. Plus new keyboards, paper, printers, computers, earphones, internet accts, etc.

Calculate your total auto expenses for the year and times it by (say) 50%. Then do the same with your housing (including utilities) and times it by (say) 15%. If you pay $1K/mo = $12K/yr times 15%, that's $1800 in legitimate write-offs right there. You'll quickly pay a lot less in taxes.

Hope it helps. And by the way, I recommend finding a CPA. Sure, they'll cost you $500 upfront...but you'll more than get it back. Plus, you'll understand how to run a business from a tax perspective.

Good luck!

Answer 3

There are several categories of deductions:

1. Depreciation - you buy a new PC and printer. Within some limits, you can fully depreciate it in one year.
2. Consumables - you buy paper, it gets used up, it's an office expense.
3. Home office - a sure red flag for an audit. It cannot be a space that is used for other purposes. Understand it well before you go here.
4. SEP - it's like an IRA for the self-employed. You defer paying taxes on it until you retire and draw it out.
5. Inventory - for businesses that carry an inventory of product. Less applicable for service-oriented businesses such as yours.

Answer 4

From what you described it doesn't sound like you'll have much else to write off other than office type supplies as its not necessary to travel, or is it? If so, there is mileage, shipping, etc. Also I'm sure you are required to have an email address/internet service; the cost of which could be written off. I strongly recommend using a CPA. What I will say next will not help you so much this tax year, but could significantly reduce your tax liability next year. If you have a home business, you can write off virtually everything involved with its operation. Search "Incorporate" in Amazon.com's books and you'll get several on the subject. I recommend ones by Robert Kiyosaki, Cheri S. Hill, Diane Kennedy, Garett Sutton, and C. W. Allen. Good luck!

Answer 5

You need a tax accountant, there is a lot that you can do. But you can't do it after the fact. During the year there was 1 - 2 - 3 dollar expenses that would of totaled up to the what you need for the write offs. If this is your first year, I suggest you take a lump sum general expense. For the future, keep all receipts and get some tax advice.

Answer 6

Honestly, You should talk to an accountant. Not your H&R Block one either. There are so many deductions out there for small business that a pro could help you find. Don't make the mistake by listening to someone not in the accounting business.