How do you justify writing off stuff when filing your taxes as self employed?

Question

Ok so apparently you have to justify everything you write off as a business expense, right? So, how do they define it as being justified? Do they have some sort of standard to follow depending on the type of business your running?

What if you have stuff thats for business but also personal use? Like these headphones i bought - i bought them for myself but i also use them to test out the sound cards on laptops i sell (i sell computers over the internets)

Could i go as far as writing off my half-life 2game wich i bought for myself? I could say i use it to test out the video cards on the computers i sell, and i have actually done that so that i could take pics of a laptop running that game.

Percentages? i dont get it. Percent of sales increase or something? What?

ok got it. This sucks.

Answer 1

Percentages say your computer is used 10% business you could depreciate 10%. Generally you keep the business stuff at work and the personal stuff at home and pay for business stuff from the business bank account.

Answer 2

1. What you are taking are capital expenses; they are not normal business expenses. Capital expenses, your normally depreciate. You can deduct capital expenses under section 179 deduction up to a certain limit.

2. Small stuff you can deduct as repair expenses, if they are for repair.

3. About expenses. You can deduct the costs of running your business. These are costs you do not have to capitalize or include in the cost of goods sold.
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your field of business. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be indispensable to be considered necessary.

4. When someone talks about percentage use, then it can be telephone expenses, internet expenses, water and electricity expenses for home office.
You can't do this with headphone or half-life 2 game, because then you are talking only about the year in which it was bought. You can do this for depreciation.

5. About capital goods, deduct goods mostly used for business. You may be able to claim headphone when you sell and repair sound cards, and not when you sell laptops. When you sell laptops, no one uses headphone or half-life 2game to test sound cards or video cards. So expense must be ordinary and necessary.

6. It is always better to have a separate account (and even credit card) for your business. So you keep your personal and business expenses separate. Then if you ever buy or pay a business expense by your personal check then when you get time write a business check to yourself or transfer money from business account to personal account.

Answer 3

You most definitely will need to file a Federal Income Tax return next year. There is no question about that. As to the state, I would assume that you will need to file an annual income tax return with your State Department of Revenue and report your total income for the year and that you should be able to take a credit for the amount of taxes you have already paid throughout the year. Do you have an independent accountant working for you? If so, you might want to ask him or her this question, or if you are maintaining your own books, call your State Department of Revenue and speak to someone there. I am sure that someone working for this office will take the time to explain the procedure better than I can, especially when I do not live in the State of Washington.

Answer 4

the percentage part... not true...

if you buy a computer it's depreciated over 7 years...

The game you bought for yourself,.... if you bought software for your business, then you could write it off... make sure ANYTHING you buy for your business to keep the reciept... the IRS is more likely for audit self-employed tax payers than regular wage earners...

The headphones, yes, as long as they were bought for the business...


kind of a grey area... but you could get away with it...

Answer 5

The headphones and the games, no - sounds like they are primarily for personal use, and only incidentally and occasionally used for business.

You can generally write off expenses that are required to conduct your business.

Answer 6

You need to have receipts for anything you "write off". If you don't have the receipt, don't deduct it because the IRS likes to audit people who are self employed.

I haven't gotten to the Self-Employment part of my tax course, so I don't have any other advice for you yet.

Answer 7

ask the government they teach u how to be crooked then justify theirselves and never get charged.