Tax Deductions / Expenses

General Real Estate Investing
1

As far as deductions. Can I deduct a portion of my cell phone bill since I use it for business to.

Also, I pay for alot of things in cash such as office supplies. I keep all my reciepts. However, can cash deductions be deducted. What other deductions can I make?

I’ve been keeping a mileage log… can I deduct driving I do to put up bandit signs, as well as trips to the title company, and anything else business related?

And, how do deductions work If i gross 80,000k and spend 20k on expenses etc (hypothetically) is my taxable gross income then 60k?

2

Yes.

Yes. Keep your receipts.

Yes. Keep as much detail as possible in your log - date, places you went, mileage you drove, reason for the trip, etc.

Yes.

3

Thank you for all the answers. Much appreciated. :beer

4

I received this information from one of my treasury subscription services.

Keeping Good Tax Records

In a tax emergency, would you be ready? Well–organized records not only help you prepare your tax return, but they also help you answer questions if your return is selected for examination or prepare a response if you are billed for additional tax.

Fortunately, you don’t have to keep all tax records around forever. Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.

If you are an employer, you must keep all your employment tax records for at least 4 years after the tax becomes due or is paid, whichever is later.

If you are in business, there is no particular method of bookkeeping you must use. However, you must clearly and accurately show your gross income and expenses. The records should substantiate both your income and expenses.

Publication 552, Recordkeeping for Individuals, provides more detailed information on individual record keeping requirements.

Publication 583, Starting a Business and Keeping Records, and Publication 463, Travel, Entertainment, Gift, and Car Expenses, provide additional information on required documentation for taxpayers with business expenses.

These publications can be downloaded from IRS.gov or ordered by calling 800-TAX-FORM (800-829-3676).

Actually, there is a wealth of free tax information on the IRS Web site, IRS.gov. It’s not just about recordkeeping. Individuals and businesses can find answers to almost any question about federal taxes on the web site. Helpful links found at the top of the home page will take you directly to topics centered on Individuals, Businesses, Charities and Non-Profits, Government Entities, Tax Professionals, the Retirement Plan Community and Tax Exempt Bonds.

In addition to the latest news coming from the IRS, the homepage can lead you to statistics, news releases and tax tips, local IRS offices, the Taxpayer Advocate Service, and thousands of IRS forms and publications. Frequently asked questions and answers are available or you can use two separate search icons: one by keyword and one by answering “I need to . . .”

Why wait? Summertime is a great time to visit IRS.gov.

Remember that for the genuine IRS Web site be sure to use .gov. Don’t be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.

Links:

* IRS Publication 552, Recordkeeping for Individuals (PDF)
* IRS Publication 583, Starting a Business and Keeping Records (PDF)
* IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses (PDF)
5

Excellent information. Thanks.

As far as employees, if you are paying bird-dogs and or assitants finders and marketing fees do you deduct these as expenses or do you need to claim them as some sort of payroll etc?

6

expenses. send them a 1099.

business miles are deductible. keep a log as described.

7

mcwagner - actually this is a good question… can a birddog sue you if he gets injured while searching for house for you? Could he claim he was your ‘employee’? I understand that anyone can sue anyone else for anything… I guess my question is could he build a case?

And if the answer is yes - should we consider worker’s comp insurance?

Thank you for any insight you may have on this. Have a good evening!

8

Bird dogs would have a hard time proving they are an employee. The “employer” would have to provide the tools to conduct business, manage the day to day activities of the bird dog, and the bird dog would not be able to “work” for anyone else.

9

BLL - thank you. Makes sense. Have a good weekend! :O)