As a business owner, you can deduct a variety of employment expenses on your taxes. These deductions can include things like travel expenses, uniforms and work-related tools. However, making these deductions can be very difficult and confusing without the help of an expert accountant. Don’t worry, we are here to help! CPA4IT utilizes decades’ worth of experience to help their clients organize finances, create wealth, and transform wealth into a legacy. Make sure to read the entire article to understand the process of deducting your employment expenses.
To deduct employment expenses, you’ll need to keep good records throughout the year. Be sure to save receipts for any expenses that you plan to deduct. You should also keep track of how much you spend on each expense category. This will make it easier to calculate your deductions come tax time. Here at CPA4IT, we leverage the latest cloud accounting technology. As Elite Pro-advisors of QuickBooks and Dext Receipt Bank, we utilize these tools to maintain an accurate record of our clients’ expenses.
Deduct only job related expenses
When it comes to deducing employment expenses, there are a few rules that you’ll need to follow. First, the expenses must be related to your job. This means that you can’t deduct personal expenses, even if they’re work-related. For example, you can’t deduct the cost of your commute to and from work.
“Ordinary and necessary” expenses
Second, the expenses must be considered “ordinary and necessary.” This means that the expense must be common in your line of work and it must be necessary for you to do your job. For example, a uniform may be necessary for you to do your job, but it’s not necessarily common in your line of work. Therefore, you may not be able to deduct the cost of a uniform.
Deducting accurate amount
Third, you can only deduct the amount that you actually spent on an employment expense. You can’t deduct more than what you actually paid out-of-pocket. For example, if you’re deducting the cost of a plane ticket to a business conference, you can only deduct the amount that you paid for the ticket. You can’t deduct the cost of your hotel room or meals while at the conference.
Finally, you’ll need to make sure that you’re including all of your employment expenses on your tax return. If you forget to include an expense, you may be subject to penalties and interest. So, it’s important to double-check your return before you file it.
Still unsure? Deducting expenses can be a time consuming task. But with CPA4IT, you don’t have to worry about this hassle! We make use of Cloud Accounting tools such as Quickbooks and Dext to maintain an accurate record of your expenses. Make sure to book a FREE consultation with our experts to get started today