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Self-employed? Document those deductions!

Brought to you by Annette Saarinen, Accountax of Oregon - Accounting INSIDER -


ACCOUNTAX OF OREGON - Annette SaarinenIn the tax world, the burden of proof is on the taxpayer, not the tax agency.

This means that if an agency such as the Internal Revenue Service or Oregon Department of Revenue asks for more information about a taxpayer deduction, the taxpayer must prove with documentation that the deduction exists and why.

The most commonly questioned deductions for individuals are for the self-employed, including auto expenses, meals and entertainment and travel.

Mileage logs for auto expense must be kept on a regular current schedule. The business miles, divided by the total overall miles for the year, equals the business use percentage. This is multiplied by the actual costs to get the business use deduction of the vehicle. Even if the taxpayer is claiming standard business miles using the current rate, the log must be kept and should contain the date, business reason for the trip, and miles for the trip.

Meals and Entertainment must be documented with the original receipt of whom the taxpayer talked to and about what. These can be re-created, but use of a charge card statement by itself is not adequate proof. A daily schedule or appointment book could be used as a log with the receipts.

Travel is the cost of getting to a business location outside the usual tax home. It is the fare to get there, and the cost of staying there while on business.

Don’t forget to save those receipts and notes!

In next month’s column, we’ll review “office in home” deductions.

Accountax of Oregon

8050 SW Pffafle St., Suite 110

Tigard, OR 97223

503-619-1040

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