Business Job Related
Computer and Cellular Phone
If you purchased a computer or cellular phone and use it for business, you may be able to claim a depreciation deduction. Your employer must require you to have the phone or computer as a condition of your employment, and you must use them for the convenience of your employer. You must keep a record of the personal and business use of the computer or phone to determine the percentage of business use.
If you incur entertaining costs for business reasons, you may be able to deduct 50% of the amount. The expense must be considered ordinary or necessary to your profession. Entertainment generally includes any activity considered to provide entertainment, amusement, or recreation to potential business clients.
Miscellaneous Job-Related Expenses
Some of your job-related expenses that may be deducted include union dues, job-related magazines and books, and other related business expenses. Generally, you must depreciate the cost of tools used in your work. If your employer requires you to wear work clothes or uniforms that are not suitable for everyday wear, you may deduct the cost and upkeep. Job-related expenses are claimed as part of your itemized deductions under miscellaneous deductions subject to the 2% of adjusted gross income floor.
If you moved at least 50 miles in the last year and your move was job-related, you may be able to deduct the cost of moving your household goods and your traveling expenses. The standard mileage rate for moving is 17 cents per mile. Claim moving expenses directly on Form 1040.
National Guard and Reserve Members
If you are a member of the National Guard or Reserves and you must travel away from home to perform your service (such as for a drill or a meeting) in a location that is more than 100 miles away from your home, you can take a deduction for related travel expenses as an adjustment to income, even if you do not itemize your deductions. Allowable expenses include expenses for overnight transportation, meals, and lodging. The amount of the allowable expenses cannot exceed the amount the federal government pays its employees for travel expenses.
Section 179 Expensing - General
If you purchase certain qualifying equipment, you may deduct the cost by making a section 179 expense deduction. The maximum section 179 for the year is $500,000. The section 179 deduction is phased out if the total amount of qualifying property placed in service exceeds $2 million. In 2017, up to $250,000 of leasehold improvements is eligible for the section 179 deduction.
Self-Employed Health Insurance
If you are self-employed, you may deduct up to 100% of your medical insurance costs that cover yourself, your spouse, and your dependents as an adjustment to income. To do this, you (and your spouse if filing jointly) must not be eligible for coverage by an employer-subsidized health plan. If you receive a Premium Tax Credit, you must adjust your deduction.
Start-Up and Organizational Costs
You may be able to claim a deduction of up to $5,000 for start-up and organizational costs. The deduction is reduced by the amount of the start-up costs exceeding $50,000. If you cannot deduct all your costs in the first year the business begins, amortize the remaining costs over 15 years.
Tip Income - Allocated Tips
If you receive tip income, and work for a large food or beverage establishment, your employer may be required to allocate an amount of tips to you on your Form W-2. Your employer must allocate tips if the amount of tips you reported to him is below the IRS required minimum percentage of gross sales. The difference is called allocated tips and is in box 8 of Form W-2. You will have to include these allocated tips in your income and also pay Social Security and Medicare tax on them.
Tip Income - Record of Tips
Do you receive tips as part of your income? You must report all tips as wages on Form 1040. If you receive tips of $20 or more in one month, you must also keep a daily record of tips received and give your employer a written report of your tips for that month by the 10th day of the next month.
You may be able to deduct business travel expenses if you must conduct business away from your tax home. The cost of transportation, lodging, laundry, dry cleaning, and telephone expenses are some of the deductible expenses. Generally, meals are only 50% deductible. If you are subject to the Department of Transportation hours of service limits, you may be able to deduct 80% of your meal expenses.
Have you received unemployment compensation during the year? You must report all unemployment compensation as income. State and federal unemployment insurance benefits, and railroad unemployment compensation benefits are all considered taxable income. You can choose to have income tax withheld from any unemployment compensation you receive.