Top 100 Freelance Blogs

I just received the honor of appearing on -- Top 100 Freelance Blogs. I think you might want to check out some of the other blogs on the list.

-- June

Donating Services and Products to the Lance Armstrong Foundation

June:

I'm from Las Vegas, NV, and I own a production company.

We have recently been asked to have our photobooth at a Lance Armstrong Foundation event coming up in May and was trying to see if it was considered a tax deduction and what I would need to have the proper documentation to show at the end of the year.

From what I understand, I can't charge for my time, but I can charge for my expenses. Since I won't be me running the booth, it is one of my employees running the booth, using our paper and ink, our equipment tech setting and tearing it down, I am thinking that the payroll, supplies, and gas is tax deductible.

Am I correct in this or completely off base?

I thank you in advance for your time.
Gabriel


Hello Gabriel,

Congratulations on being asked and congratulations on accepting.

You are correct. All you expenses are deductible -- payroll, supplies, auto expense. Since your name will be outside the booth I assume this is a means of promoting your business. Since that is the case, then these are business deductions. If there were no business purpose for your helping a good cause then it would not be a business deduction, it would be a personal deduction.

Best,
June

Jury Duty and Women Jurors

So many of us complain about being called for jury duty and will do anything to avoid such a waste of time. And then the few dollars we're paid is taxable income. Complain, complain, complain.

Well, woman -- ladies -- take a look at this. If that is your attitude, you may rethink it when you see what was happening not all that long ago, only 70 years.

In 1939 Illinois became the 13th State to have compulsory jury service for women; 12 States, Alaska and the District of Columbia permitted them to serve but didn't make it mandatory; 23 States still maintained the jury in masculine purity.

Here's the story, titled "No Reflection," from TIME Magazine, Nov. 13, 1939, that my husband, a historian, came upon in his research. I thought it might interest you.

Illinois women, led by the League of Women Voters, have long clamored for the right to serve on juries. Last summer they got their reward: the courts upheld the constitutionality of a new law making jury service for women in Illinois
compulsory.

Recently Chicago's first mixed jury in Federal court -- six men, six women, five of them members of the League of Women Voters -- sat to hear a suit over a will of Attorney Samuel J. Howe, which cut off his son and left his $70,000 estate to Northwestern University. Son Willard C. Howe contested it.

After a month of argument before Judge Michael L. Igoe, the jury received the case on Friday afternoon. Seven favored setting the will aside, depriving Northwestern University of the $70,000 bequest. Five opposed, among them Mrs.
Katherine Merrifield, wife of Dr. Frederick W. Merrifield, professor at Northwestern. Saturday morning the arguing jurors asked for further instructions, were told that if they reached no verdict they would be locked up
till Monday. Then the minority, including Mrs. Merrifield, gave up, signed the verdict, went home for the week end.

Last week they returned to Judge Igoe's court. The foreman polled them perfunctorily. Up piped Mrs. Merrifield in a suddenly hushed courtroom: "That was not and is not my verdict. . . . I signed through cowardice. I submitted to
the will of the majority."

"A most shocking thing," said Judge Igoe, declaring a mistrial. "However," he added cautiously, "I think it is clearly understood that this is not a reflection on women jurors."

Cost or fair market value? It's out of the goodness of your heart.

Hi June,

Got a twist on the question re taking a donation for charitable services.

I get why time isn't deductible. However, I recently coded a website, created some training materials and did a training for a non-profit (getting just a fraction of my usual rate - and donating the rest).

Don't those things quality as Patents and Other Intellectual Property as per IRS Pub 526 w/ lists: Know How and Software? I'll be asking the IRS as well - but thought you'd like to mull on that. I'd be interested in your thoughts.

Thanks,
Max


Hi Max,

First let me direct those reading this to my posts expenses -- donated services or products .

And, on your question, nothing to mull. What you missed in Pub 526 in that same section is:
"If you donate a patent or other intellectual property to a qualified organization, your deduction is limited to the basis of the property or the fair market value of the property, whichever is less."

Fair market value means what you could sell something for. You do a chalk drawing of your house. Somebody wants to buy the drawing for $20.00. The drawing's fair market value is $20.00.

Basis is your cost. If you drew that picture on a piece of paper that cost 50 cents and you used 50 cents worth of chalk, then your cost basis is $1.00.

If you donated that drawing to a charity your deduction would be $1.00. Your cost.

Same applies to a website you designed or if you cut the grass for the local community center. You get to deduct only your cost.

Best,
June

An under-the-table relationship

June --

I don't know if you can help me or not but I hope you can!! I am fixing to start a job that is going to be paying me under-the-table so therefor I will have to pay my own taxes!!

I don't know how that works! Can you tell me what I need to do and how much would estimate that I would need to hold out of each week's check. Like if I was to bring home, let's say 500 a week, how much should I put back for taxes? How often do I pay in or do I wait til the end of the year??

Jennifer
Maryville, TN


Dear Jennifer,

Words have specific meanings. Something that is often forgotten in our hurry-up-instant-message society. "Sharing an awesome relationship" can mean that you've had a wonderful marriage for a lot of years or you ran into an old friend and had a good cup of coffee while waiting for the train. For your financial well-being, I am hoping you have used the wrong words. The phrase, "under-the-table" is a way of saying income that is not claimed on a tax return. Hiding income is fraud punishable by penalties and even jail depending on the situation. To understand more, read these posts on cheating .

If you mean instead that you will be paid as a self-employed, then the answers to your questions are beyond the scope of a quick blog post. I again urge you to do some reading. Start with my posts on taxes -- estimated . And then for an idea of the kinds of expenses you may deduct get your complimentary List of 100+ Indie Business Expenses right here on my website .

Best,
June

From One Wedding To Another: Deductible mileage

Hi June,

I've found your book, Self-employed Tax Solutions, very helpful in preparing my tax return this year. I have a question I can't seem to figure out from reading your section on Auto Expenses.

I've been an indie wedding photographer for almost 10 years. I've never kept a record of my travel to and from weddings until last year, I put all my weddings and appointments with clients in my computer's calendar. Although I did not write down my mileage at the beginning of the year or the end, since it is easy to use Google maps to tally up the mileage to and from weddings, can I just add them up, multiply by the mileage rate, and deduct them?

Also, since I work at home, is it considered traveling to another work site to do the wedding, and therefore only the first half is deductible, not the coming home?

Thank you so much,
Sharon
Oakland, CA


Hello Sharon,

To tally work mileage, you may use any method that works for you. A calendar and Google maps is perfect. And also remember all your errands, too.

All mileage going to and from any work location is business transportation. That includes going to and from your home office to a wedding for a shoot; from one wedding to another; from home office to the photo supply store and back.

Best,
June

Using Your Bike for Business

Hi June,

Quick question about deductions - if you are self-employed, in my case a freelance technology consultant, and you use a bicycle every day to do things for work (going to clients' offices, picking up supplies, etc.), can you deduct the cost of the bicycle as well as the maintenance?

I read that next year there will be a deduction ($20/month) for employers whose employees use bicycles for work, but in the IRS publication (http://www.irs.gov/pub/irs-pdf/p15b.pdf) specifically says (p. 19) "a self-employed individual is not an employee for qualified transportation benefits."

This doesn't seem fair! I've asked 2 other accountants and got 2 different answers, so i turn to you, the acknowledged master of all self-employed tax
issues... :-)

thanks,
eric


Hi Eric,

Hmmmm ...."quick question" usually requires a three page answer. And "fair." You want the tax code to be fair! Well, you're not an employee. In many cases there are different regs for employees and indies. This is one of those cases. Unless there's new regs next year.

Here's what I would do: Treat bicycle expense similar to car expense. Figure out how much you use your bike for business transportation versus your total use and deduct that % of the total cost of your bike. A $300 bike used 90% for business would get you a $270 business equipment deduction. Repairs, new tires would be handled the same way.

Hope that helps.

Best,
June

More kids than rooms. Home office still no problem.

Dear June,

I read your Features articles with great interest - you really have a talent of explaining complex things with an easy language and with a good humor. Great job!

About me and my business. I just started my own business a week ago. I am doing my taxes with Liberty Taxes and they promised to help me with my business as well, however I would like to receive list of business expenses that I could save on to be better prepared when the tax time comes.

My profession is software developer. I am an independent contractor. I live in Boston, MA I work 2 week in NJ at client's office and other 2 weeks from home. I drive to NJ and stay there in the hotel for work-week 2 times a month.

According to your articles it should be considered as business trip and I can claim car mileage, lodging and even food (at 100%, not 50% correct?).

I have my office setup at home, but it is a part of a big room and not separated. Can I still claim reasonable part of that room as business expense or not? I keep all my books there, but at other side of the same room is my son's bed - I have more kids than rooms and I need to catch up on rooms :)

Thank you in advance!
Thank you.
Tigran


Hi Tigran,

I will assume that you have more than one client and are really self-employed.

When you travel for business you may deduct all travel expenses, including meals and snacks. Although meals and snacks are 50% deductible, not 100%.

A home office does not have to be an entire room. It can be only a few square feet of any room, as long as it is used exclusively for your business.

There are many posts on this blog abut home office and travel. You might want to take a look at them. See the Topics list on the left.

Good luck on increasing the # of rooms!

Cheers,
June

Is your goal to make money?

Hi June,

I just received my list of business expenses, and it's great. Thanks so much for this invaluable information.

I'm still wondering about one type of business expense, however, so here's my question: As a freelance writer, can I deduct business expenses (research, publications, etc.) for a project that I am working on, but has no income associated with it? I am doing research on an idea for a book, but don't yet have an agent, publisher, contract, etc. and don't know if those expenses can be taken. What's a girl to do?

Thanks so much--for any help you can offer and for the fantastic information on your sites.

Barbara
Petaluma, CA


Hi Barbara,

Thank you for your generous compliments.

Expenses in pursuit of making a profit are deductible. As I explain in my book, as long as your goal is to make a profit you are a self-employed in business. You do not need to make money you need to be trying to make money.

For more of an explanation read these posts , especially No Profit Needed As Long As You Have A Profit Motive.

I wish you success with your book.

Best,
June