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The deductibility of many work-related expenses is governed by special rules. These special rules apply to both employees and self-employed individuals. The following articles discuss some of the more commonly encountered situations.
- Business Use of Your Car
- When you use a vehicle for business purposes, you can deduct the business portion of the operating expenses on your job or business. If you use it only for that purpose, you may deduct its entire cost of operation (subject to limits discussed later). However, if you use the car for both business and personal purposes, you may deduct only the cost of its business use.
- When Business Property Must Be Depreciated
Whenever property is purchased for use in a business and that property has a useful life of more than one year, its cost must be deducted over its useful life. This accounting procedure is referred to as depreciation. The number of years the property must be depreciated is largely dependent upon the type of property it is, although sometimes the type of business in which it is used also determines its assigned life.
- Mixing Business With Pleasure
- It is not coincidental that most conventions are held in resort areas during the spring through early fall months. Convention planners know quite well that convention timing and location is the key to its success. If planned properly, attendees can deduct a portion of the expenses for establishing business relationships and gaining business knowledge while enjoying a mini-vacation.
- Deductions For Business Transportation
- Home to work - Generally, travel between home and work within a metropolitan area where the taxpayer normally lives and works is nondeductible commuting, even if the trip is made more than once a day. However, if a taxpayer travels to multiple work locations in a single day, the travel between the first and last work location is deductible travel. Another way to explain this rule is that the travel between home and the first work location of the day and final trip home from the last work location are nondeductible.
- Employee Use of a Home Computer
- If a taxpayer purchases a home computer for use in their work as an employee, they can claim a depreciation deduction if the following apply.
- Deducting Sales Tax On Business Purchases
- When taxpayers buy new equipment for businesses purposes, the following question arises: "Can they separate the sales tax from the purchase price and deduct that separately as a currently deductible tax expense?"
- Keeping Records for Out-of-Town Business Travel
- Out-of-town expenses are the ordinary and necessary expenses of traveling away from "home" overnight in pursuit of your employment, trade, or business. Your home is generally considered to be the entire city or general area where your principal place of business or employment is located. Out-of-town expenses include transportation, meals, lodging, tips, and miscellaneous items like laundry, valet, etc.
- Lodging Expense Requires Substantiation
- Individuals who pay for lodging expenses while away from home on business can deduct these lodging expenses only if they are substantiated in full (record of time, place, amount, and business purpose, plus paid bills or receipts). The expenses can't be substantiated using the lodging component of the federal per-diem rate.
- For Tax Purposes, Is It Better To Sell or Trade-in a Business Vehicle?
- It does make a difference for tax purposes if you sell or trade-in your business vehicle.
- Travel Deduction - Temporary Workplace
- For purposes of determining whether transportation between work and home is deductible, the IRS states that a temporary workplace is one where employment is expected to last one year or less.