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Tax Write off Question

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Tax Write off Question

Old 01-29-08, 09:29 AM
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Tax Write off Question

Quick question..

I have a side business installing remote starters.. I have registered as a business and just have a question regarding write offs..

Internet access.. I use the internet for business purposes (looking up diagrams, ordering parts etc) but it's mainly for personal use.. Am I able to write off the $49.95 per month or any part of it?

Thanks!
Old 01-29-08, 09:35 AM
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Of course
Old 01-29-08, 09:45 AM
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Thanks! Is that "of course" I can write off all 12 months @ $49.95?
Old 01-29-08, 09:47 AM
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I'm not an accountant but I'm pretty sure you can. I used my vehicle for work purposes for 3 months last year and I get to write off every single penny in interest that I paid for the entire year.
Old 01-29-08, 09:48 AM
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You can deduct any expenses incurred in earning your business. This includes the business portion of internet fees
http://en.allexperts.com/q/Tax-Law-Q...l-business.htm
Old 01-29-08, 09:55 AM
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Originally Posted by Brian Shannon
You can deduct any expenses incurred in earning your business. This includes the business portion of internet fees
Business portion? How the heck am I supposed to figure that out? Take the amount of time used for business and divide that by the amount of time used for personal use?
Old 01-29-08, 09:58 AM
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You have to think like an accountant. What part of your internet service would you have to have in order to conduct your business? That would be full internet service of $49.95. If you didn't have that, you couldn't look up the documentation that you need. The fact that you also have it available for personal use is just a matter of convenience for you.
Old 01-29-08, 09:59 AM
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Originally Posted by John Galt
You have to think like an accountant. What part of your internet service would you have to have in order to conduct your business? That would be full internet service of $49.95. If you didn't have that, you couldn't look up the documentation that you need. The fact that you also have it available for personal use is just a matter of convenience for you.
Giddy up! Makes sense to me! Thanks!
Old 01-29-08, 10:21 AM
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Originally Posted by tbird2340
Giddy up! Makes sense to me! Thanks!
disclaimer: You might want to make sure it makes sense to a CPA as well
Old 01-29-08, 10:25 AM
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Originally Posted by John Galt
disclaimer: You might want to make sure it makes sense to a CPA as well
That's not necessary.. If the govt comes back on me I'll tell them the internet told me it was ok..
Old 01-29-08, 10:52 AM
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Originally Posted by John Galt
I'm not an accountant but I'm pretty sure you can. I used my vehicle for work purposes for 3 months last year and I get to write off every single penny in interest that I paid for the entire year.
The IRS may have a different opinion unless you only owned the vehicle for 3 months last year.
Old 01-29-08, 11:17 AM
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Originally Posted by X
The IRS may have a different opinion unless you only owned the vehicle for 3 months last year.
If they do then they need to talk to turbotax. There was a specific question that stated something along the lines of "Enter the total amount of interest paid on the vehicle for the year (Even if you did not use the vehicle for business purposes for the entire year)"
Old 01-29-08, 11:17 AM
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These are the exact questions I have, and why I got an accountant for the year. I started working from home 2-3 times per week, so I've got to figure out what I can write off (electricity, internet, etc..)
Old 01-29-08, 11:27 AM
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Originally Posted by John Galt
If they do then they need to talk to turbotax. There was a specific question that stated something along the lines of "Enter the total amount of interest paid on the vehicle for the year (Even if you did not use the vehicle for business purposes for the entire year)"
And what did it do with it? I'm sure it deducted only the interest of your amount of business use of the vehicle.

Topic 510 - Business Use of Car

If you use your car in your job or business and you use it only for that purpose, you may deduct its entire cost of operation (subject to limits discussed later). However, if you use the car for both business and personal purposes, you may deduct only the cost of its business use.

http://www.irs.gov/taxtopics/tc510.html
Interest. If you are an employee, you cannot deduct any interest paid on a car loan. This applies even if you use the car 100% for business as an employee.

However, if you are self-employed and use your car in your business, you can deduct that part of the interest expense that represents your business use of the car. For example, if you use your car 60% for business, you can deduct 60% of the interest on Schedule C (Form 1040). You cannot deduct the rest of the interest expense.

http://www.smallbusinessnotes.com/fe...rdmileage.html
Old 01-29-08, 11:27 AM
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Originally Posted by John Galt
If they do then they need to talk to turbotax. There was a specific question that stated something along the lines of "Enter the total amount of interest paid on the vehicle for the year (Even if you did not use the vehicle for business purposes for the entire year)"
Here's what the IRS says on their website:

Business Use of Your Car

If you use your car in your business, you can deduct car expenses. If you use your car for both business and personal purposes, you must divide your expenses based on actual mileage. Refer to Publication 463, Travel, Entertainment, Gift, and Car Expenses. For a list of current and prior year mileage rates see the Standard Mileage Rates.

http://www.irs.gov/businesses/small/...109807,00.html

I'm pretty sure the same goes for internet access - they want you to deduct only a certain portion based on the percentage used for business.

Of course, this only matters if you get audited

Edit: D'OH! X beat me to it
Old 01-29-08, 11:30 AM
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Originally Posted by John Galt
If they do then they need to talk to turbotax. There was a specific question that stated something along the lines of "Enter the total amount of interest paid on the vehicle for the year (Even if you did not use the vehicle for business purposes for the entire year)"
My guess is that there was a separate question in TurboTax about how much you used your car for business versus personal, and TurboTax did the math on how much of your automotive interest was deductible.
Old 01-29-08, 11:33 AM
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But the interest paid is different each month, why wouldn't they just ask what the interest was for the time I used the vehicle? Not that it really matters that much to me. I just plugged in the numbers that they asked for and let the software do the rest.
Old 01-29-08, 11:35 AM
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Taxes don't get so detailed that they only consider the interest at the actual time the asset was used. The yearly total of interest is considered against the yearly percentage of usage.
Old 01-29-08, 11:37 AM
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I guess this thread explains my C+ in Intro to Accounting.
Old 01-29-08, 12:17 PM
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Ok.. Should I still follow John's advice to my question.. I mean he seemed so intelligent at the time.. Now I just don't know..
Old 01-29-08, 12:29 PM
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I work in politics, it's my job to get people to believe my bullshit

As I said, consult an accountant for a definite answer but you can always just say that you would use free dial up if it weren't for the business in the case that you did get audited.
Old 01-29-08, 12:29 PM
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If you need the internet for your business, even if you didn't use it all for business, wouldn't it cost the same? Could you have done without the internet access charge except for the business need? I would deduct it all. If your business is making a profit.

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