Calculating business expenses

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The PA Investor
Posts: 25
Joined: Tue Jan 21, 2020 2:48 pm

Calculating business expenses

Post by The PA Investor »

So I have another job that pays me with 1099. I drive to multiple sites, use my phone and internet for work, and chart at home on my personal laptop How do I calculate the following business expenses?

phone and data
internet
depreciation of car
depreciation of laptop
depreciation of cell phone? (not sure if that's real or not but correct me if I'm wrong)
miles traveled for inter-facility commuting
rent

And any other business expenses that you can think of would be great. Thank you.
smitcat
Posts: 6964
Joined: Mon Nov 07, 2016 10:51 am

Re: Calculating business expenses

Post by smitcat »

The PA Investor wrote: Tue Jul 07, 2020 6:11 pm So I have another job that pays me with 1099. I drive to multiple sites, use my phone and internet for work, and chart at home on my personal laptop How do I calculate the following business expenses?

phone and data
internet
depreciation of car
depreciation of laptop
depreciation of cell phone? (not sure if that's real or not but correct me if I'm wrong)
miles traveled for inter-facility commuting
rent

And any other business expenses that you can think of would be great. Thank you.
It is unclear if this is in addition to a 'regular' full time job or as a new change from a typical job.
casualflower
Posts: 334
Joined: Thu Jul 16, 2015 9:36 am

Re: Calculating business expenses

Post by casualflower »

Most of what you list isn't tax deductible. You should really talk to an accountant, or a good bookkeeper, which I am not. But unless you have a separate phone line and internet connection for just your business they're not expensable or depreciable. For rent, you'd need a separate room with walls in your living space and deduct a pro-rated portion of your rent based on square footage. Mileage is deductible, but you've got to log *all* you miles (including non-work related).
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Eagle33
Posts: 1136
Joined: Wed Aug 30, 2017 3:20 pm

Re: Calculating business expenses

Post by Eagle33 »

casualflower wrote: Wed Jul 08, 2020 9:01 am Most of what you list isn't tax deductible. You should really talk to an accountant, or a good bookkeeper, which I am not. But unless you have a separate phone line and internet connection for just your business they're not expensable or depreciable. For rent, you'd need a separate room with walls in your living space and deduct a pro-rated portion of your rent based on square footage. Mileage is deductible, but you've got to log *all* you miles (including non-work related).
Can one log the end of day mileage on Dec.31 previous year and log end of day mileage of current year for the total mileage, then subtract the logged business mileage to get the non-business mileage. You are not trying to deduct the non-business mileage, so why would IRS require detailed logs of non-business miles?
Rocket science is not “rocket science” to a rocket scientist, just as personal finance is not “rocket science” to a Boglehead.
casualflower
Posts: 334
Joined: Thu Jul 16, 2015 9:36 am

Re: Calculating business expenses

Post by casualflower »

Eagle33 wrote: Wed Jul 08, 2020 9:54 pm Mileage is deductible, but you've got to log *all* you miles (including non-work related).
Can one log the end of day mileage on Dec.31 previous year and log end of day mileage of current year for the total mileage, then subtract the logged business mileage to get the non-business mileage. You are not trying to deduct the non-business mileage, so why would IRS require detailed logs of non-business miles?
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I was wrong. You don't need to log your non-business mileage. But you do need to substantiate all your business miles. So, you have to justify each trip. My accountant friend recommends writing the starting odometer and ending odometer each time you turn the key for a business trip with a detailed explanation: "Visiting xyz customer for onsite consultation about 2019 tax return extension." Of course, nowadays, there are apps that help you log mileage, but I'm still a little old school.
AB609
Posts: 55
Joined: Thu Oct 17, 2019 9:02 am

Re: Calculating business expenses

Post by AB609 »

You log the odometer reading at the beginning of the year and end of the year. You log the beginning and ending use for each business trip along with the destination and purpose. I just use a simple paper log and do the math at the end of the year.
robphoto
Posts: 199
Joined: Tue Sep 25, 2018 12:42 pm

Re: Calculating business expenses

Post by robphoto »

I use Expensify, a free app (though you can pay for premium features) to log my expenses. You can also take a photo of your receipt and it's saved in your account. I usually forget to set a trip odometer, so I use Google map directions to get the mileage of the trip I did. For each trip I put who it was for and what I did: ClientName to Newtown to review X Project.

Ask an accountant, but I think you can assign a portion of your internet and phone cost to the business, but not the whole thing. I use my phone mostly for business, so I list half the cost as part of the business. Depreciating a laptop? If you buy a laptop for the business, you can deduct the cost in that year. I've never tried to depreciate something I already owned, not sure how that works. There is a formula for the home office deduction by number of square feet. It's a very small allowance. However, if you rent a place just for your business, that's deductible.

You might want to look at the IRS Schedule C, and its instructions, now to see how things are categorized and deducted.

The ambiguity about whether or not you have to keep track of your total miles, as well as those for the business, is that you can either keep track of every car expense, and then deduct the percentage of it that is for business, or you can use the standard mileage deduction, and just keep track of business miles.
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