Hello and thank you for your question.
The deductions that you can take will fall under two sections of the
Internal Revenue Code: Section 162 (ordinary and necessary business
expense) and Section 212 (production of income).
"IRC § 162 allows the deduction of ordinary and necessary expenses
paid or incurred in carrying on a trade or business. If it appears
that an activity was entered into for profit, the rules of section 162
are applied to each expense.
"IRC § 212 allows the deduction of ordinary and necessary expenses
paid or incurred in connection with the production or collection of
income; the management, conservation, or maintenance of property held
for the production of income; or the determination, refund, or
collection of any tax."
http://www.irs.gov/businesses/small/article/0,,id=106518,00.html
Section 162:
"To be deductible, a business expense must be both ordinary and
necessary. An ordinary expense is one that is common and accepted in
your trade or business. A necessary expense is one that is helpful and
appropriate for your trade or business. An expense does not have to be
indispensable to be considered necessary. For guidance in determining
allowable deductions, refer to Publication 535, Business Expenses
(PDF), or to the Personal vs. Business Expenses webpage for a list of
expenses that may be deducted."
http://www.irs.gov/pub/irs-pdf/p535.pdf
http://www.irs.gov/businesses/small/article/0,,id=109809,00.html
"Generally, you cannot deduct personal, living, or family expenses.
However, if you have an expense for something that is used partly for
business and partly for personal purposes, divide the total cost
between the business and personal parts. You can deduct as a business
expense only the business part that meets the general business
deduction rules of being an ordinary and necessary business expense.
For example, if you borrow money and use 70% of it for business and
the other 30% for a family vacation, generally you can deduct as a
business expense only 70% of the interest you pay on the loan. The
remaining 30% is personal interest that is not deductible. Refer to
Chapter 8 of Publication 535, Business Expenses (PDF), for information
on deducting interest and the allocation rules.
Legal and Professional Fees
Business Use of Your Home
Business Use of Your Car
Business Expenses
The costs of carrying on a trade or business are usually deductible if
the business is operated to make a profit. To be deductible, a
business expense must be connected with or pertaining to your trade or
business and be both ordinary and necessary. An ordinary expense is
one that is common and accepted in your trade or business. A necessary
expense is one that is helpful and appropriate for your trade or
business. An expense does not have to be indispensable to be
considered necessary."
People often forget to deduct their travel expenses. "For tax
purposes, travel expenses are the ordinary and necessary expenses of
traveling away from home for your business, profession, or job."
http://www.irs.gov/formspubs/page/0,,id%3D103874,00.html
For the rest, here are some useful deduction checklists:
Tax Deduction Checklist for Investment Expenses
http://www.pkatax.com/fyi/fyimar15.html
Painters, Photographers, & Other Visual Artists Tax Deduction
Checklist
http://labweb.education.wisc.edu/artcommunity/legalissues/taxdeductionchecklist.asp
PROFESSION SPECIFIC DEDUCTION CHECKLIST
http://www.cpa-services.com/tax.shtml
[you'll find links on this page to specific lists for the following]
Attorneys
Computer and High-Tech Professionals
Day Care Providers
Executive and Business Professionals
Fire Fighters
Law Enforcement and Security Professionals
Medical Professionals
Ministers and the Clergy
Outside Salespeople
Real Estate Brokers and Professionals
Teachers and Education Professionals
Tradesmen (Plumbers, Carpenters, etc.)
Interest Deduction Checklist
http://www.mytaxman.net/strategies/interest.htm
Frequently overlooked deductions
http://www.quicken.com/cms/viewers/article/taxes/53682?brand=SSB&bcrumb=deductioncenter
Deduction Center
http://www.quicken.com/cms/viewers/article/taxes/55203?brand=SSB&bcrumb=deductioncenter
Finally, a word of caution. The IRS distinguishes between legitimate
and sham business deductions:
"The statutory rules for determining whether expenses are deductible
are primarily found in IRC §§ 127, 162, 212, 274, and 280A. As part of
the scheme, abusive promoters typically advise participants to
maintain detailed records of their activities and the expenses
incurred. The existence of such records does not negate the
requirement that expenses be "ordinary and necessary" in relation to a
legitimate business activity, and satisfy any other deductibility
requirements."
http://www.irs.gov/businesses/small/article/0,,id=106518,00.html
Search terms used:
"ordinary and necessary" site:irs.gov
tax deduction checklist
Thanks again for bringing us your question; I hope you find my answer
useful. Please read through the material cited above, including the
material posted under the various links. If you find any of this
unclear, and especially if you need help relating these lists to the
activities you plan to engage in, please request clarification. I
would appreciate it if you would hold off on rating my answer until I
have a chance to reply.
Sincerely,
Google Answers Researcher
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