Lots Of Travel Expense Info

Katie had requested my Self-employed Business Expenses list. On the request form I ask: Where do you get most of your tax advice? Katie's response was "I don't... :( "

My response: "Please don't say 'I don't ...?' Your homework: Read my site or blog 15 minutes a day!"

I advise that to any indie who doesn't get any simple and accurate tax or recordkeeping advice.

Katie sent the following:
Thank you so much for all the information you have provided me! I've been reading your site everyday for a good 15 mins... or more!

I'm still confused on travel expenses for my field of work. As a free lance stage manager, I often go to other cities for weeks at a time. (Mobile, AL for 4 weeks, Tulsa, OK for 9 weeks, etc.). They often house me, but I drive there and around the city as well as provide my own meals when out of town. There usually is not much or no kitchen available to me and I end up eating out most of my time there. Can I deduct my mileage while I am there and driving around? Also, am I allowed to take the IRS per diem? I was unclear what exactly I am able to deduct while I'm out of town.

Thanks for any help that you could provide! (I'm working on getting your book at the library and look forward to reading it!)

Katie
Shawnee, KS


Dear Katie,

Take a look at these posts expenses expenses -- travel (17) and these expenses -- travel-per diem-temporary worksite (10) . I think you'll find you answers there. If not please let me know.

-- June

Keep It Simple: Round Off

Hi June,

I have been working as an IT Contractor from home for three years.

Occasionally, I have local travel expenses relating to my business (driving to the bank, post office, or home office store). I have been keeping good records and track of mileage. However, I am confused as to the rounding of mileage. If a trip is 2.5 miles, for example, should I record that as 2.5 miles or 3 miles?

Thanks, Billy
Arlington, VA


Hi Billy,

I always round off numbers, whether mileage or money. Five or more brings it up to the next whole number. Less than five does not. And I never do pennies.

So:
2.5 = 3
2.4 = 2
$1.85 = $2
$49.49 = $49

-- June

Don't cheat yourself. Use a tax pro.

June,

I always find your expertise invaluable!

I recently got beat in an audit and I know I really did not get beat I just did not know how to represent myself so the end result is I lost.

I do have another question, last yr I had to leave the area for over a yr. I lived in an extended stay to the tune of about 2800.00 a month on top of that I had my normal expenses for supporting my home in another state as well as living expenses in extended stay like groceries and occasional eating out. Should these items be on a Schedule 'C' or is there somewhere else it would be best to show these expenses?

Mark


Hi Mark,

Based on your question, I gather that you prepare your own tax return. I assume that means that you faced the audit on your own. I see that you have been a follower of mine since 2008 so I'm sure you know that I think most indies should not prepare their own tax returns. Help with an audit is another reason to use a tax pro.

As to your question: All business expenses for a self-employed must go on the Schedule C. Your question shows me that you don't know a whole lot about indie tax returns. My guess would be that if you're like most indies -- you try to be legitimate with your tax return and you are probably cheating yourself. I am really pushing you to at least check out an indie savvy tax pro.

BTW -- before you start writing off all the expenses you mention above be sure to read these posts: expenses -- travel and temporary worksite .

Best,
June

Deductions in a Fifth Wheel

June,

My husband is an Union Electrician and I am a self-employed JAMMON (jack of many – master of none) who works from home with my S-Corp – run solely by myself with the occasional help from a consultant. Due to the lack of construction work in the Indianapolis area (the last 18 months) we recently sold EVERYTHING that we owned, purchased a fifth wheel and will travel the country following work that my husband can obtain with the IBEW (International Brotherhood of Electrical Workers). I will continue to work from the fifth wheel as all I need to operate is a computer and cell phone (I do bookkeeping, graphic design, data analysis, high level admin, etc).

We would like to maximize our write-offs and albeit we don’t have many expenses these days aside from a fifth wheel payment, campground fees, cell phone and internet – we want to maximize.

I will be writing off my cell phone and internet as well as other office supplies and operating expenses, but what about other expenses such as the fifth wheel payment and its maintenance costs? Campground fees?

Mileage for my husband from the fifth wheel to his job site and back? Me from the fifth wheel to my clients and back (provided I am in the same State as my client at the moment),

What about items purchased for the fifth wheel such as storage bins, baskets, lawn chairs, propane, etc?

Any advise you give for the travel employee / traveling small business owner would be greatly appreciated.

My husband has associated with many other traveling electricians who write EVERYTHING off, but our small town accountant isn’t on the same page.

J What can we do? Thanks!
Courtney


Dear Courtney,

Generally I don't advise corporations via my blog, however, since much of what you ask applies to a lot of indies I'll see what I can do here to help you out.

If you live out of your fifth wheel [trailer or camper hooked to your vehicle] you must allocate any deduction for its use the same way you would for any home office -- exclusive use on a regular basis. Read these posts home office or studio . All supplies for the running an maintenance of the fifth wheel would be governed by the home office rules.

Supplies exclusively for your business, such as storage bins, would be 100% deductible.

Since you move around all the time I would allow only mileage from one business location to another. That means if you can establish a home office in the fifth wheel then driving from it to a client would be business miles. Here's some auto expense posts expenses -- auto-transportation .

If you pretty much stay in once place and move only when a job comes up, read these posts for possible deductions temporary worksite .

Hope that helps. And don't write-off "EVERYTHING." That doesn't go over well with the guys at the IRS. And, if you know better they may look at it as fraud.

BTW -- I also hope that your small town accountant had a really good reason to have you complicate your life by forming an S-corp.

Happy Trails!
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

Spouse On A Business Trip

June --

I am a Medical Physicist. I started part-time independent consulting in 2004 while still employed full-time. Consulting has increased and as to Jan 2008, I will be full-time independent (sole-proprietor). I just found your website--what a great resource, Thank You.

In Sept 2008, I attended a professional conference in Boston. My wife joined me on the last day and we spent the next several days in New Hampshire. I have employed her to handle finances and admin since 2006. Naturally we discussed some of the business aspects of the conference while we were in NH but that was not the purpose of the trip for her. Are any of her expenses deductible?

Is there a best mechanism to substantiate deductibility for spouse/employees for business conferences?

Thanks, Joe
Dallas, TX


Dear Joe,

I assume from your email that your wife is your employee. If she is then you may deduct all the costs of your employee's travel expenses in the exact same manner as you may deduct yours as the employer. So, if Boston were the business portion of your trip and New Hampshire were the fun, or personal, portion, then you cannot deduct the New Hampshire costs nor could you deduct the cost of your employee's New Hampshire travel.

When you take an employee on a business trip you must be able to show the necessity of having that person with you. Whether it's to transcribe notes, schedule appointments, wine and dine associates, there must be a clear business reason for attendance. This is especially so if the employee is your spouse.

If your wife-employee handles only your recordkeeping and secretarial chores then you must find a reason for her to accompany you. For instance, is she a good researcher? Can she investigate primary source documents for you at the university's library for non-circulating material while you attend the conference?

Best,
June

House Trailer or Motel

June --

Regarding travel related expenses: cost to operate and maintain a house trailer, would that also include the purchase price of a trailer to use instead of lodging while on a temporary work assignment, or would it have to be depreciated?

Laura
Fort Pierce, FL


Dear Laura,

Assuming you have established that the house trailer -- or part of the house trailer -- is a legitimate business expense then you must depreciate the cost. The procedure is similar to depreciating a home office.

-- June

You cannot deduct personal expenses when on a business trip.

Hi.

I'm a business owner online retailer.

Is it possible to deduct expenses like gas mileage, meals, etc on Saturdays and Sundays if I'm conducting business in the US?

For example, I travel from New York to California for business meetings on Friday and Monday. Can I deduct my weekend expenses in between? If the answer is yes, then I have 2 concerns: 1. If I wanted to go to the park or zoo on Saturday of my business trip, may I deduct my parking fees and meals at the park/zoo? 2. May I deduct all the mileage for that weekend, even though I'm not conducting any business (such as driving from the hotel, to the zoo, to a restaurant, and back to the hotel)?

Thanks!
Jamie
El Paso Texas


Dear Jamie,

If I understand you correctly, then you travel from NY to California on Friday for a Friday business meeting. You stay in California for the weekend in order to attend a business meeting on Monday. On Monday you return to NY.

If that is so you may deduct the cost of getting to and from CA. All the meals and lodging while traveling to and from, and while in CA, are business expenses and deductible. You may not deduct any personal expenses such as costs to attend or get to the Zoo or a show.

There's more info on travel expenses in these posts expenses -- travel (14) .

Best,
June

Temporary Work Assignment

Brenda from Palatine, IL is an indie who provides organizational development and learning and instructional design consulting. She inquired: "Recently, I have picked up 2 clients in Virginia and DC that have provided me with 1-year contracts, which in essence has required me to stay in the area." "I want to be sure that while I am working for these clients in the area, that my lodging expenses are deductible. My permanent residence is in Illinois."

I have had many questions about the deduction of expenses related to what is known in tax jargon as “temporary assignment" or "temporary worksite.” For instance, if you regularly work at one place -- called your tax home -- and also work at another location, it may not be practical at the end of each work day to return to your tax home from this other location. You may need to "live" at this other location for a while. What is deductible? Here's a guide:

A job assignment may be temporary or indefinite. Which one it is makes a big difference in the amount of expenses you may deduct.

If your other work location qualifies as a temporary work site then you may deduct related travel expenses. And, as you can read here, travel expenses can mount up. A temporary work site or assignment is, generally, work at a single location that is realistically expected to last (and does in fact last) for one year or less.

If, on the other hand, your work assignment or job is indefinite, you cannot deduct your travel expenses while there. An assignment or job in a single location is considered indefinite if it is realistically expected to last for more than one year, whether or not it actually lasts for more than one year.

You must determine whether your assignment is temporary or indefinite when you start work. If you realistically expect an assignment or job to last for one year or less, it is temporary.

An assignment that is initially temporary may become indefinite due to changed circumstances. A series of assignments to the same location, all for short periods but that together cover a long period, may be considered an indefinite assignment.

Be sure to check out the long list of travel expenses on my website.

Travel Expenses for Husband & Wife

June --

I have been a self-employed historian, located in Columbus, Ohio, since retirement from my teaching position at Ohio State University.

My income comes from book royalties, lecture honoraria, and contracting to teach seminars and workshops. My question is this: If my wife accompanies me on a research trip to an out-of-town library or archives, engaging in research on my behalf, can I deduct her expenses in any way other than by formally hiring her as an employee (and incurring the obligation to pay into her social security, etc.)?

Can I pay her as an independent contractor, obligated to report her own income and pay her own social security and deducting her own expenses?

Can I simply deduct her expenses as if they were my own?

Sincerely,
Michael

Wow! Michael, you are the first self-employed historian to send me a question. My husband is a historian. Here's two of his books A Battle for the Soul of New York and 1929: America Before the Crash.

On to your question: The only way to deduct travel expenses for a spouse is if the spouse is your employee.You say, "incurring the obligation to pay into her social security." Well, unless your income is greater than the year's required amount your combined social security costs will be the same whether she is an employee or not.

And if she is an employee you may deduct her travel expenses. So there may be a tax benefit and yet cost you nothing but time.

Be sure to read my posts in this category payroll -- spouse as employee to learn more about the advantages of hiring your spouse.

Best,
June

On-the-road Meal Deductions

June --

I've been a newspaper courier for 5 years.

I deliver several different weekly newspapers all in different cities. I use my home as an office. I travel over 500 miles a week and my routes are quite large. I'm on the road for 10 - 12 hours a day 3 days a week. I get very tired from driving that long + lifting bundles. I sometime stop to eat and rest. Would my meals be deductible?

Thank You, Kevin from Kent, Ohio


Hello Kevin,

You don't say whether you stay overnight nor how long you rest. Based on what you've said, your meals are not deductible.

Meals while on the road are deductible if your trip is considered "travel." Travel means you must stay overnight or you must rest to properly perform your duties.

If your trip is considered travel you may deduct all travel expenses and the cost of meals and lodging.

In my book, Self-employed Tax Solutions, all travel and also travel-meal expense is explained in depth. It is an expense topic that has a lot of rules as well as nuances. Here's a Travis Truck Driver example directly from my book:

Travis Truck Driver leaves the terminal at five in the morning. Three hundred miles later he’s at the turnaround. While his truck is being unloaded he has a big lunch and then dozes off outside the diner while waiting for the guys to finish the reloading. He then heads back to the terminal where the truck is again unloaded. He’s home by midnight. Travis’ lunch break nap was just that, “a nap.” It was not enough time to get adequate sleep. His trip is not considered travel. Therefore he cannot deduct travel expenses.

Best,
June

Can I deduct meals & lodging?

June --

I've worked as a software consultant on 1099 on and off for 15 years.

I work at my clients business site 3-4 days of every week and the rest of the week I work at home. My home is 60 miles from my clients business. Since it's such a long commute I always stay in a hotel close to the clients site the 2-3 nites I'm working at the clients place. I do this every week. Can I deduct travelling expenses for the hotel/food etc? I do not claim a home office deduction.

Thanx a lot in advance.
Brian :)



Hello Brian,

You say "clients site" not client's site nor clients' site so I don't know if you are talking about one or more clients. If you have only client brings that brings up the question : Are you really self-employed?

Knowing nothing else about your work or number of clients, I'll assume for this situation that you are legitimately self-employed.

You have no home office so you may not take the commute to your client's site.

Sixty miles is not a long drive. If for your convenience you are staying there rather than driving back home then you may not deduct costs for lodging and meals.

If your work requires you to be available on your client's site for so many hours that you would be too tired to safely drive back home then lodging and meals would be a legitimate deduction.

Best,
June

Trucker Expenses

June --

What are the usual and customary expenses of a long haul truck driver?

Frank


Hello Frank,

A trucker, much the same as any other indie, may deduct expenses related to his business.

For starters, I emailed to you the list of expenses typical to all self-employeds. I also suggest that you read Is it a deductible business expense? on my website .

In my book, Self-employed Tax Solutions, all travel and also travel-meal expense is explained in depth. To sum up: Generally, you may deduct all travel expenses and the cost of meals and lodging if your business trip is overnight or long enough that you need to stop for sleep or rest to properly perform your duties. In most cases, you can deduct only 50% of your meal expenses. Here's a Travis Truck Driver example directly from my book:

Travis Truck Driver leaves the terminal at five in the morning. Three hundred miles later he’s at the turnaround. While his truck is being unloaded he has a big lunch and then dozes off outside the diner while waiting for the guys to finish the reloading. He then heads back to the terminal where the truck is again unloaded. He’s home by midnight. Travis’ lunch break nap was just that, “a nap.” It was not enough time to get adequate sleep. His trip is not considered TRAVEL. Therefore he cannot deduct TRAVEL expenses.

As a long haul trucker, however, I assume Travis' situation does not apply to you. There is a special per-day meal allowance for transportation workers. You're a transportation worker if your work involves moving people or goods by airplane, barge, bus, ship, train, or truck, and if you are regularly required to travel away from home through various parts of the country.

If this applies to you, you can claim a standard meal allowance of $52 a day. Were you not considered a transportation worker you would need to determine the standard meal allowance for every area where you stop for sleep or rest.

As I said, generally, you may deduct only 50% of your meal expenses. However, if you are subject to the Department of Transportation (DOT) hours of service limits, that percentage is increased to 75% for business meals consumed during, or incident to, any period of duty for which those limits are in effect.

Hope that puts you on the right road.

Best,
June

Designers Dozen: Tax Saving Tips for the Graphic Artist

Take notice all you unique visual designers – whether you use Dreamweaver or Six Apart or Oil on Canvas; whether your income is $2,000 a year or $200,000 a year; whether you receive a 1099 or not: The IRS applies the same rules and regs to all of you.

That’s right, unique carries no weight with the IRS. You all must follow the same rules.

Here are some time and money-saving tips -- a Designers Dozen -- on how to simplify those complex rules to fit your unique situation. All stem from questions you have asked me or areas I know you need help in.

1. Use two offices. Forget the old husband’s tale that home office or studio is an audit red flag. The IRS has lightened up on this. Even if you work out of two or three places, if used exclusively for your work they are all legitimate deductions. Yes, both your home studio and the spare room at the beach rental where you do your three-hour morning blogging routine are deductible business expenses.

2. Work at home to increase your business transportation deduction. If you freelance at someone else’s studio you can still deduct costs for the area of your home used exclusively and regularly for your business – no matter how small the area. And by having two work places you’ll increase your deduction for auto use or public transportation costs.

Here’s why: The IRS does not allow a deduction for commuting from home to work and back. But it does allow a deduction for getting from one workplace to another. If you work in your home studio and then drive to your other studio you are now driving “from one workplace to another.” You’ve increased your business miles and the amount of your auto deduction, or made your subway trip a business expense.

This also applies to something like attending the Boston Flash Forward Conference. Creative Bostonians without a home office would not get to deduct the “T “ cost from their home to the conference.

3. Careful, no office sharing allowed. Keep in mind the all-important IRS exclusive use rule: that your office must be yours and yours only. If you’re the designer for Clyde Client and your wife handles the tech side of Clyde’s site and both you and your wife use the same office – sorry, no deduction. The way around that: make one spouse the employee of the other. BTW – there are a whole lot more benefits to hiring your spouse.

4. Hire your spouse. Even if your honey only helps you out with printer jams or errand running, pay him for it. Putting him on your payroll opens up a vast array of deductions. You can provide generous employee benefits and deduct the costs of those benefits from your design income. What kind of benefits? Well, for one thing, you can give him a medical plan that covers his family – that’s you and the kids. That would make your trip to the doctor a deductible business expense.

5. The more broadly defined your business the more deductions you can take. If you sell Web page templates for MySpace, Blogger and Moveable Type via your blog, and also generate AdSense income from the blog, and also consult on how to promote through blogging, you need to think of all that as one business. Give your work an expansive general description, like consultant to the virtual universe. Claim all the income --- every dime. Consider as a possible business expense everything you do that makes you better at making money.

6. Keep it simple. By taking the broadest possible view of all your income generating ventures you can group them as a single enterprise and thereby can really simplify your recordkeeping. But don’t stretch it beyond reasonable limits. A single business that combines dog walking and web design is just too far fetched. But that combination might very well stand up if you design only for pet stores and pet services.

7. Why do you watch TV, rent DVDs, see a movie? If it’s just for fun, no tax deduction. However, if seeing the visual art of others is vital to your own creativity, keeps you abreast of current design trends, or clues you in to the latest fashion, then consider the costs a tax deduction.

8. TV for research. Has the artistic void on network TV forced you to get cable? Well then, part of your monthly cable cost is a business deduction. And remember, the business use portion of the cost of your TV and DVD player is also a business expense.

9. Are you allowed to deduct a gift basket of fruit to Grandma? Of course you are -- if Gram has some connection to your business. Did she show you how to hook up your scanner? Make curtains for your office?

You’re an indie business and even though you may have a personal relationship with someone, that does not rule out also having a business relationship. This is particularly pertinent in gift-giving. Of course, if you bought your client a basket of fruit as a birthday present you would treat it as a business gift deduction. But what about the friends with whom you have a business connection? If dinner at a friend’s house was planned so that she could help you with your Webby’s submission, then the chocolate you arrived with is a business gift.

Of course, all the costs related to your Webby’s submission are business expenses. And when you’re the winner and head to the awards event this spring, well, your travel expenses are also deductible.

10. Deduct your laundry and dry-cleaning. Spill ink or red wine on your white silk blouse while attending an awards event? Dry cleaning and laundry while on a business trip are deductible expenses. You may also deduct the costs of the first dry cleaning bill after you return home.

But don’t get too creative and save all your winter’s dirty clothes for cleaning the day after you return from a 3-day workshop.

11. Just starting out? Final Cut Pro and Adobe After Effects not bringing in the bucks yet? No problem. Even if you haven’t yet made your first dollar as a graphic designer you may still deduct your expenses. As long as your goal is to make money, you’re in business – whether you actually make any money or not.

12. Invite the public! If your Grand Opening or gallery show is open to the public you may deduct the entire cost of food and liquor served. If it is for invited guests only, you may deduct only 50% of your costs. Note, it doesn’t matter how many people actually attend the function.

13. Discuss these ideas with your tax pro before incorporating them into your business. That’s the most important tip of all. If your tax pro isn’t aware of them … time to get a new pro!

Be sure to take a look at my 2009 money saving offer for visual artists. It 's right here.
-- June

Travel Or Start-up Costs

Hello June,

I have been a self-employed chiropractor for 28 years. I am taking a brief trip with my wife and daughters to Las Vegas. I have considered moving there to practice chiropractic. Would my expenses and my families' expenses be deductible if I could document investigation of health care environment, locations, visit other chiropractors, etc?

Craig from Minnesota


Hello Dr. Craig,

The expenses for your family members are not deductible. [If your wife were your employee, her expenses would be deductible in the same way as might yours.]

If you go to Las Vegas for business purposes, your expenses would fall into one of two categories: Travel or Start-up Costs.
The two posts below Expenses While Changing Work Locations and Travel Expenses should help you determine whether or not the expenses fall into the "travel" category.

If they don't fit the travel category, then consider start-up costs. Let's think of a practice in Las Vegas as a new business. Expenses prior to opening a new business are considered start-up costs. If the new business actually gets started, then you may deduct the expenses.

However, if the new business does not get started, the expenses you had in trying to establish yourself in business fall into two categories:

1. Exploratory or General: The costs you had before making a decision to begin or acquire a specific business. They include any costs incurred during a general search for or preliminary exploration of a new venture. These costs are personal and nondeductible. These include going to Las Vegas to check things out, as you described.

2. Investigative or Specific: The costs incurred in your attempt to acquire or begin a specific trade or business. These costs are capital expenses and you can deduct them as a capital loss. For instance if you paid an attorney or accountant to review a Las Vegas chiropractor's practice that you were thinking of purchasing.

Looking at the IRS guidelines on start-up costs for a business that never gets off the ground, it's quite clear that the agency wants to rein in people who have a notion to explore the possibility of going into business for themselves, but only as long as they can write off the "search" at the expense of their fellow taxpayers.

If a business never gets started then exploratory expenses never can be deducted; but specific expenses always can be deducted -- one way or another. Be aware that when the IRS says "specific business" it means just that -- that the costs are incurred trying to start a new business or buy an existing one. It does not mean exploring a specific type of business.

Therefore, someone aspiring to a new indie business can be assured of getting a tax deduction if he settles on a business and makes concrete moves toward starting it up, whether the business actually gets started or not.

Deducting Dunkin Donuts: Meals On The Road

Hi June,

My husband is a finish carpenter, he works for one company but is considered an independent contractor and gets a 1099 so we deduct for a lot of things at tax time. My question is this: Can he deduct for food expense while he is out on the road driving to and home from work? The reason I ask is I added up all his Dunkin Donuts receipts for coffee he buys while at work and it was $1,212.00 for the year of 2006. I'm hoping we can deduct this but I seem to remember the woman at H&R Block saying we couldn't. Please help us to know what we can and cannot deduct.

Thank You!!
Julie


Good Golly, Miss Julie! That's about $24 a week on donuts. Maybe it's time for celery sticks and carrots. A lot cheaper, too, because lunch on the job is not deductible. The only time regular meals are deductible is when your husband is traveling, and travel means overnight.

And, as always, read the book that can simplify your tax and financial life, AND save you money!
SELF-EMPLOYED TAX SOLUTIONS .Best,
June

Expenses While Changing Work Locations

Hi June,

For the past several years, I have owned a portrait photography business in Florida as a sole proprietor. I've closed the business now in anticipation of a move to Tennessee, where I plan to re-open my business as a full-time venture. If I make business purchases like new equipment prior to the actual start-up in Tennessee, will they qualify as business deductions on my taxes? Someone once told me that if you purchased items prior to being "official" (licensed), then you couldn't write them off.

Thanks, Cheryl D


Hi Cheryl,

And I bet that someone was Aunt Tillie whose grocer's son once delivered food to an accountant. Right?

I assume you did not stop being a photographer during the move. You simply put things on hold while you packed up boxes and made the trip. You are not changing professions, simply changing locations. I'm sure that if you met someone on the trip who said he wanted to use your services, you'd take the information and contact him as soon as you were settled in your new place. You see you were open for business even though your studio was on the move.

Your business did not end its existence. And so because you were in business and willing to take clients all your expenses are the same as before and after the move.

Were you not already in business but had expenses preparing to go into business those costs would be start-up costs and would be treated differently on your tax return than regular business expenses.

And, as always, read the book that can simplify your tax and financial life, AND save you money!SELF-EMPLOYED TAX SOLUTIONS .

-- June

Travel Expenses

Hi June,

I hope you can answer this for me. I am a freelance writer who contributes regularly to our regional paper as well as a magazine we recently launched. I am what you would call a generalist (features) covering all kinds of topics -- design, food, interviews/profiles, travel, social issues etc... I get to write pretty much whatever I pitch.

My question is this: Because of my inherently lazy nature, I didn't hustle nearly as much as I could have and so didn't make more than $1500 this year.

The paper wants to run a travel story on a city in Switzerland I visited with my husband when he was on business. What can I deduct?

Are there limitations for deductions based on how much I get paid for an article? I will probably get $250 for this short piece.

Thanks so much! Your site has been a huge help so far! Thanks for your time

Robin -- Milroy Pennsylvania


Hi Robin,

First, know that, as long as you were pursuing freelance income for a profit you may deduct all your expenses related to pursuing that income. There are no limitations for deductions based on how much you get paid for an article.

The TRAVEL section in my book, SELF-EMPLOYED TAX SOLUTIONS, is the one section in which I tell readers that they'll never remember it all. They'll have to refer to it often, it's very complex. So I'll attempt a quick summary regarding your Switzerland trip. You didn't go there for business, so your general travel expenses are not deductible. You may deduct only costs of the trip that specifically relate to the piece you would write. For instance, if you paid admission to a cultural museum and that is the attraction you wrote about.

The best way to get the most business travel deductions is to know the rules and plan ahead.

Great! Glad my site is so helpful.

Cheers,
June