Wednesday, December 21, 2005

Tax Deductions for side job

In response to a comment request to an earlier post, I'm posting a quick one regarding the types of tax deductions I take for my side income.

I deduct all sorts of costs....even if it's a few dollars, I save the receipt and put them into categorized folders on a monthly basis. That way, I'll have the proof in case I have a man in a suit knocking on my door.

My computer, car, cell phone, land phone line, high speed internet, etc are very necessary to perform my particular side job.

I deduct yearly depreciation value of computer/car, cost of ink cartridges, computer maintenance costs (i.e. computer repair costs, internet equipment set up costs like your modem cost), gas mileage costs @ 0.485 cents per mile, cost of copies, costs of buying anything that has to do with office supplies (file folders, paper, pens, you name it), postage stamps, car maintenance costs (I even save car wash receipts), lunch/meal costs, high speed internet as well as the land phone line (need it for fax machine) monthly bills, wireless phone monthly bill, all the computer/work related peripheral equipment costs (ex. I bought a USB storage drive and I'm deducting its cost) to any office furniture I buy.

Actually, I use these items and services for personal use too, but because they're vital to efficiently do my side job, they can be deductible. I don't own the house, so I can't deduct the home depreciation. But if you won the house/apartment, I think you can deduct that too.

I am ashamed to say that I take all the categorized folders with the totals added for each category, and take them to my family's tax accountant. He charges only $200 since he handles taxes for all members (three different households) of my family. I am going to ask him in detail if how he will handle the side income this year. I should be more involved.

2 comments:

  1. Hey, don't be ashamed, my next question was going to be how did you find your accountant. I wouldn't mind paying for one, if they are going save me money and keep me legal.

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  2. My sister found him through a friend of hers who recommended that this accountant would try to save her as much money as possible within the legal limits.

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