ForumsTaxes and Payroll

Up to All Forums

This Question is Answered

Post a new topic

10 Replies Last post: Nov 21, 2008 9:26 PM by OrenjiDesigns

Share

Reply

Question about Business Expenses

Oct 29, 2008 11:13 PM

Professional

OrenjiDesigns 6 posts since
Oct 29, 2008

Hello everyone! I would greatly appreciate any help regarding 2 issues I've been having trouble finding the answer to. I am a freelance web/graphic designer and use my home office to work. I have recently opened a corporation and also work outside the home.

The questions is: I share an apartment with another individual (no relationship) who lived here before me. Therefor, I pay this person half the rent. I was wondering, as a freelancer, can I put this expense as a business expense? Would it not be as if I am paying rent for one room (my office/bedroom)?

Also, when it comes to clothes for work, can I also put that as a business expense for my corporation? I work out of the house as a designer (part-time) as well, and need work clothes.

Any advice would be greatly appreciated!! Thank you very much and I apologize if these questions sound silly. I'm extremely new at this!!

Tags: accounting, tax, business, expense, corporation_income_tax, clothes, rent, home_based, small_business Report as inappropriate

Mogul

Lighthouse24 2,396 posts since
Oct 10, 2007

Share

Reply

1. Re: Question about Business Expenses Oct 30, 2008 12:02 AM

I'm not an accountant, but in general, you can only take the home office deduction for space that is used exclusively for business purposes (and nothing else). See IRS Pub. 587 for guidelines.

http://www.irs.gov/pub/irs-pdf/p587.pdf

You can only take a deduction for work-related clothing if your work requires something that would not be suitable for "ordinary wear." The IRS has broad discretion there (they disallow airline pilots to deduct their uniforms, so I'm guessing that it has to be something like a haz-mat suit to allowable).

Hope that helps. Welcome to the community and best wishes.

Report as inappropriate

Professional

OrenjiDesigns 6 posts since
Oct 29, 2008

Share

Reply

2. Re: Question about Business Expenses Oct 30, 2008 12:23 AM

in response to: Lighthouse24

That definitely answered my question. Thank you very much, Light!

Report as inappropriate

Professional

OrenjiDesigns 6 posts since
Oct 29, 2008

Share

Reply

3. Re: Question about Business Expenses Oct 30, 2008 12:25 AM

in response to: OrenjiDesigns

If anyone has anymore insight to this, I'd also greatly appreciate it. Thank you.

Report as inappropriate

Mogul

intechspecial 1,455 posts since
Jan 6, 2008

Share

Reply

4. Re: Question about Business Expenses Oct 30, 2008 2:01 AM

in response to: OrenjiDesigns

I would have to agree that this IRS publication is of good use for your question. Lighthouse does not usually steer people wrong.

I must also mention that the IRS has a toll free number specifiically to anwer small business tax questions.

The number is listed on the www.irs.gov website.

Report as inappropriate

Mogul

intechspecial 1,455 posts since
Jan 6, 2008

Share

Reply

5. Re: Question about Business Expenses Oct 30, 2008 2:03 AM

It is always best to err on the side of caution when it comes to taxes and the IRS, if you are not sure you had best contact the IRS or find a good accountant.

Report as inappropriate

Professional

OrenjiDesigns 6 posts since
Oct 29, 2008

Share

Reply

6. Re: Question about Business Expenses Oct 30, 2008 3:56 AM

in response to: intechspecial

You're absolutely right. I think I'm going to see if I can ask an accountant and call the number intech mentioned. Thank you all for your answers! They've been very helpful

Report as inappropriate

Professional

OrenjiDesigns 6 posts since
Oct 29, 2008

Share

Reply

7. Re: Question about Business Expenses Oct 30, 2008 3:57 AM

in response to: OrenjiDesigns

oops! I just noticed you put both those responses, lol. I apologize for that! Thank you intech for all your help

I'll look into right away.

Report as inappropriate

Mogul

intechspecial 1,455 posts since
Jan 6, 2008

Share

Reply

8. Re: Question about Business Expenses Oct 30, 2008 5:25 PM

in response to: emabley

Emabley-

What seems to be the problem?

Are you ok?

Report as inappropriate

Mogul

Elite1 64 posts since
Nov 14, 2008

Share

Reply

9. Re: Question about Business Expenses Nov 21, 2008 9:01 PM

Only the area used for business is deductible. In order to figure out how much is deductible you need to know the square footage of your entire rental space and the square footage of the "business only" area. You can use this to calculate the percentage of your rent that is deductible. Business Area divided by Total Area. IRS Form 8829 will provide you with the information you need for this.

As far as the clothing goes, someone else has already answered that. The only clothing deductible is that which is necessary for your profession and isn't attire you would normally wear somewear else, i.e. a uniform.

Tanya
Elite Financial Services, LLC

Report as inappropriate

Professional

OrenjiDesigns 6 posts since
Oct 29, 2008

Share

Reply

10. Re: Question about Business Expenses Nov 21, 2008 9:26 PM

in response to: Elite1

Thank you very much for your help, Elite. It was very helpful in finding the answer to my question. I will look into Form 8829. Thanks very much!

Report as inappropriate

Bank of America, N.A. Member FDIC. Equal Housing Lender

© Copyright 2009 Bank of America Corporation. All rights reserved.

Bank of America is not responsible for user posts and other user content appearing on this website and does not endorse or guarantee the perspectives, the advice, the users, the businesses, or the products or services sold by any users or businesses that appear on this website.