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taxes and deductibles

If I am self employed, what makes more tax sense, keeping all my receipts for deductions, or just simply filing the maximum deduction amount allowed? Is there a tipping point where one makes more sense?

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confidentmac
Level 6

Re: taxes and deductibles

I think it's worth filing Schedule C and identifying deductions. There may be a tipping point as a solopreneur in terms of income and when you might want to incorporate instead. I'm not an expert here, though. Can I can connect you with a tax professional I trust who can help you out?

Re: taxes and deductibles

Disclaimer: not a CPA either, but I think it’s worth while to pile up those receipts and try to itemize deductions or atleast see what works best at the end of the year. Find a CPA that’s an expert in your industry that can help you identify deductions you may not have thought about and make sure you are structured the best way for your situation. Also, use ReceiptBank or a similar app, it’s such a timesaver, you’ll love it!!
Community Manager JasonB
Community Manager

Re: taxes and deductibles

Hey @ZackOfAllTrades - if the replies above were helpful, you can click the "Accept as Solution" button! 

 

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Serge
Level 6

Re: taxes and deductibles

Well, I can be wrong. But if you're filing for the maximum allowed deductions, and dont actually have done those things, that's tax fraud. As a business, you should be keeping and tracking every expense goin out, and hopefully have a good accountant who can file your deductions properly.

Re: taxes and deductibles

TALK TO AN ACCOUNTANT, or at least a bookkeeper who is a certified tax preparer. Every business situation is unique, there are significant variations in tax parameters between local, state and federal levels, and mistakes can be a HUGE problem.

chriseshar
Level 6

Re: taxes and deductibles

This is an easy answer. Your only option is actual expenses. There is no such thing as a maximum deduction for a business. There's no standard deduction for a business, and how could there be? Some businesses make $100, others make $1,000,000.

You are required to report your actual expenses on Schedule C.

You may qualify for the new 20% pass through deduction, but that won't be part of Schedule C, and it also does not permit a taxpayer to not accurately report the deductions of their business on Schedule C.

As an accountant, I recommend that you set a time weekly, daily, or monthly (depending on the volume of your business) to work on your record-keeping. You can also use the advice of an accountant or online resources to figure out what categories you should focus on. 

If you file as a corporation or multi-member business, keep in mind the same principles apply- no standard write-off exists.

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Kpmulkey1
Level 4

Re: taxes and deductibles

You’re probably talking about 2 different things. As for your business expenses (assuming you have such a business), you definitely need to keep those subject to a few qualifications. If you are referring to individual itemized expenses, you may be better of taking the standard deduction that went up to 24,000 or more for 2018 and beyond. If you don’t have a mortgage, this is probably the best route. However, a lot of what you are talking about has a lot of subjective possibilities which is better off being discussed with a CPA that is more familiar with your situation and can provide some qualitative input.
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bonnie_bill
Level 8

Re: taxes and deductibles

Tax Deductions ?

File honestly and accurately. The last thing a small business needs is to have any taxing authority on their backs. No time for that when trying to make a living. Use all the legitimate deduction you qualify for and no more to stay out of trouble. They can come back on you for years. 

 

Been there, done that, and got the T-Shirt.

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Moderator Meckell
Moderator

Re: taxes and deductibles

Thanks for weighing in @bonnie_bill