Self Employment Income - Allowable Non Farm Expenses

Advertising and promotional fees

• Amounts paid for advertising and promotional fees

Bad Debts

• A bad debt may be claimed if the income that the debt represents is definitely known to be worthless.

Car and Truck Expenses

• Allow the business portion of expenses for:
  • Gasoline
  • Oil
  • Repairs
  • Insurance
  • Tires
  • Parking Fees
  • Rental Fees
  • Garage Rent
  • License Plates
  • Allow a deduction for vehicle registration, prorated for 12 months.

Commissions and Fees

• Commissions and Fees

Depletion

• Individuals who have an economic interest in mineral property or standing timber may deduct the cost of using up those natural resources

Depreciation

• Depreciation

Employee benefit programs

• Contributions to employee benefit programs that are not a part of a pension or profit sharing plan.

Interest

• Interest paid to banks or other financial institutions for a mortgage on real property used in the business that is not the client's home or the home of any partner in the business

Legal and Professional services

• Legal and professional fees that are ordinary and necessary expenses directly related to operating the business.

Office Expenses

• Expenses paid as operating costs of an office

Pension and profit sharing plans

• Contributions made to pension, profit-sharing, or annuity plans for employees of the business

Rent or leases

• Amounts paid for the use of property rented or leased for the business

Repairs and Maintenance

• Amounts paid for repairs and maintenance to property that does not add to the value or increase the life of the property

Supplies

• Supplies and materials used in the business.

Taxes

• Taxes paid by the business:
  • State and local sales taxes imposed on the individual as the seller of goods or services
  • Taxes on Income Producing Property
  • Real estate and personal property taxes on business assets
  • Licenses and regulatory fees for the trade or business paid each year to state or local governments
  • Social Security and Medicare taxes paid to match required withholding from the employee's wages
  • Federal unemployment taxes
  • Federal Highway use taxes

Travel, meals, and entertainment

• Expenses for lodging and transportation connected with overnight travel, if they are directly related to or associated with the active conduct of the trade or business

Utilities

1. All payments for utilities, including telephone, are allowable deductions for a business that is NOT run in the client's home or the home of any partner in the business OR
2. If the business is operated in the home of the client or the client's partner, determine the percentage of the home that is used on a regular basis for business purposes and allow the same percentage of the utility costs

Wages paid to employees

• Wages paid to employees of the business

Donations to business organizations

• Donations to business organizations

Subscriptions to trade or professional publications

• Subscriptions to trade or professional publications

Insurance Premiums

• Premiums paid for insurance related to the trade or business

Day Care Provider Business costs

• If the business is a day care provider, the costs related to purchasing, preparing, and serving meals for children in day care are treated as expenses