Capturing the tax-deductible expenses can put a portion of the money spent back into your bank account. A lax system could reduce your tax refund at the end of the year, consequently less money back into your account.
Day-to-day busyness can cause one to fall behind on record keeping. Keep yourself organized by using a planner, Microsoft Outlook Email & Calendar and journal. I have found it a best practice to review all of the aforementioned resources every Monday to recall the previous week’s activities. Excel spreadsheets are useful for capturing tax deductible expenses. Every other week, I complete a personal expense report that captures airfare, fuel, lodging, meals, miles driven etc. Afterwards, I staple the original receipts and file accordingly. It is important to stay conscientious about record-keeping. A lax system could reduce your tax refund at the end of the year, consequently less money back into your account.
Actual Expense and Standard Mileage Rate are the two methods for capturing automobile expenses. The Standard Mileage Rate works best for me. I deduct a certain amount for each mile driven, plus all business-related parking fees and tolls. In 2014, the standard mileage rate is $0.56 per business mile driven. The 2013 rate was $0.565 per mile. If one amassed 17, 000 business-relate miles in 2013, the itemized tax deduction would be $9,605.00. For more information, refer to Publication 463, Travel, Entertainments, Gift, and Care Expenses. For a list of mileage rates, see Standard Mileage Rate.
The portion of your home used exclusively for conducting business can be a tax deduction. The IRS now offers a simplified option for determining the business use of your home. This new method allows a qualified taxpayer to multiply a set rate by the allowable square footage of the office. Refer to Home Office Deduction and Publication 587, Business Use of Your Home for additional information.
Many costs associated with travel are 100% tax deductible. Airfare, lodging, and dry cleaning for company business and travel are examples of tax deductions. One exception is dining out; you can only deduct 50% of the actual costs for meals. I travel often and attempt to include leisure time by discovering interesting places and visiting local attractions. This is allowable as long as the business is the primary reason for travel. If family members and friends accompany you, then separate your expenses from theirs and deduct only your expense. Refer to 511-Business Travel Expenses for further details.