Deductions and Write-Offs

Earn tax-free income.

Maximize deductions.

Maximize tax credits.

Contributing to a retirement account – 401k or IRA.

Opening a health savings account.

Contributing to employer-sponsored plans.

Profiting from investment losses.

Check for flexible spending accounts at work.

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Hello Katie,

In order to answer your question properly, it is important to know the tax structure of your business; is it a corporation, Single-member LLC or sole proprietor.

Since we can only deduct the portion of your home that is used exclusively and regularly for business (the rule of thumb for the percentage to be in the range of 5-20%), I would advise you to pay for the expenses out of your personal accounts, then record the deductible portion on a monthly basis on a separate sheet. At the end of the year or on a monthly basis, provide an employee reimbursement report to your company for payment.

In general, the deductible portion of the mortgage, real estate taxes, utilities, and insurance need to be booked as "due to shareholder". Once it has been paid by cutting a check or transferring the money out of your business account to your personal account, you will need to reverse the entry by getting rid of your account "due to shareholder" and reducing your cash balance.

Hope my answer helped.

Hello Scott,

Unfortunately, the value of time or service is not tax-deductible, but any expenses that incur due to the pro bono work that are directly related to the charity are tax-deductible.

First, congratulations are in order.

To answer your question, yes, it is possible to be both an independent contractor and an employee at the same time. Having said that, hopefully, you are not serving in both capacities for the same individual/company, as that would be questionable. So, if you are an employee for one company, but you’re an independent contractor serving your own clients on the side, there is no problem there.

Come tax-time, you will receive a Form W-2 for your work as an employee. You will continue to report your income as an independent contractor the same way you have done in the past (assuming you’ve been an independent contractor prior to 2021). In your question, you don’t state how you’re filing as an independent contractor, so I cannot speak to that issue.

To answer your last question, you cannot write off any of the expenses related to your work as an agent against your employee income. As long as you have income as an independent contractor, you can continue to write off your agent expenses. The only issue is that you don’t want to end up with a loss, as you could be subject to the hobby loss rules.

If you found this free advice helpful, please leave me a review, either through Google (search for Adam Dickreiter or by using the following link https://g.page/adam-dickreiter-cpa-pllc/review?gm) or through this website (CPAdirectory).

First, thank you for your service! You are correct that she cannot “give” you $180 worth of service AND expect a write-off at the end of the year. This is a black and white issue. She can certainly donate her services, but she cannot get a write-off. The Internal Revenue Code never allows a donation for services or time. You can pay her, and she can donate the $180 back to the 501(c)(3); however, that’s not in the best interest of the farrier. She could end up paying more tax that way because she could be subject to both income and self-employment tax on the $180 of income. Then, she may or may not get the value of the $180 donation back to the organization. So tax-wise, it may not be a wash for her. It’s best for everyone if she simply donates her time and gets no write-off.

If you found this free advice helpful, please leave me a review, either through Google (search for Adam Dickreiter or by using the following link https://g.page/adam-dickreiter-cpa-pllc/review?gm if it is active) or through this website (CPAdirectory).

Yes and no.

Technically, I would code it to a contra-revenue account, something like Sales Returns and Allowances (that would be a general ledger account for a business that sells products). So you would debit or increase that account on the income statement and credit or decrease your bank balance on the balance sheet.

The effect would be that it would lower your profit (bottom line). So in that sense, it’s like a business expense, but it’s not actually an expense, it’s a reduction to overall revenue.

Because DoorDash, GrubHub, and Uber Eats are all online food ordering and delivery platforms, you’re basically doing the same activity, just for different companies. Therefore, IRS will consider them one business. You should file just one (1) Schedule C for all three activities. On the other hand, if you were also doing a completely different activity, such as landscaping, you would need to file two (2) separate Schedules C, one for the online food delivery activity and one for the landscaping work. May you have a successful and safe business!