Deducting expenses on your taxes is straight-forward in many circumstances. For instance, if you pay advertising costs for your business, simply total the receipts and list the figure under advertising on your Schedule C. If, however, you are depreciating or expensing an item, which you don’t use 100% for business purposes, you will need to find your business percentage.
Business Percentage: Business Time used divided by Total Time used equals Business Percentage. Your answer will be a decimal number. Multiply that decimal by 100 to find your business percent. Total Amount Paid times Business Percent equals the amount you may deduct.
Let’s look at an example:
Kathy wants to claim actual expenses on her vehicle this year. She keeps track of her mileage. She notes she has driven her car a total of 20,000 miles this past year. Of that 20,000, only 2000 of the miles were for business purposes.Kathy divides the 2000 business miles by the 20,000 total miles.
2000/20,000 = 0.1
0.1 x 100 = 10
Kathy used her vehicle 10% for business purposes this year. She may now deduct 10% of the total, actual costs for her vehicle.Her receipt totals are:
Gasoline = $4000
Tires = $200
Repairs = $650
Insurance = $250
Registration = $76
Interest = $150
Total = $5326Kathy may multiply her total expense ($5326) by 10% to arrive at the amount she may deduct in actual expenses for her vehicle ($532.60) on line 9 of her Schedule C.
Finding your business percentage works the same general way whenever you are figuring how much you may deduct for any item or service not used exclusively in business.
Permission to use or excerpt with proper attribution.
Simon Elisha, author, Taxes for Online Sellers—
No comments:
Post a Comment