Hello and thank you for your question
The following are permitted deductions, ordinary and necessary
expenses with respect to your consulting practice:
Car Deductions -- The cost of all driving you do for your business
(with the important exception of commuting to and from your home to
work) is tax deductible. The standard mileage rate for business
purposes rose to 37½ cents per mile. For medical or moving purposes,
it rose to 14 cents per mile.
http://www.irs.gov/newsroom/article/0,,id=133290,00.html
Office Expenses -- You can also deduct money you spend on your
business office. For example, you can deduct the rent and utilities
you spend on an outside office or other workspace.
Home Office -- You must use an area of your home regularly and
exclusively for business. The area must also be the principal
location of your business or the place where you usually meet with
clients. Your home office doesn't need to be a separate room, but it
should be separated from the rest of your living space -- you can't
take the deduction for your living room, for example, if you
occasionally sit on the couch and work on your laptop. If you
qualify, you can deduct part of your rent or mortgage interest,
electricity and other utilities, homeowners insurance and cleaning
bills. The size of the deduction is based on the percentage of your
home that you use for business.
Business Travel -- Travel expenses are also deductible. These include
airfare or other transportation costs and hotel or other lodging
expenses. Unfortunately, the law only allows you to deduct 50% of the
cost of meals.
Meals and Entertainment -- You can deduct 50% of the cost of a meal in
a restaurant, or an entertainment event like baseball game, if you
have a serious business discussion before, during, or soon after the
event.
Depreciation -- When you buy business property that will last more
than one year, you may deduct the cost a little at a time over a
period of years. This process is called depreciation. Examples of
depreciable property include machinery, computers, office furniture,
and even race horses. However, you don?t always have to depreciate
such long term business property.
Rent for Equipment and Tools -- Many people in your situation don?t
buy expensive equipment, vehicles, or tools -- they rent them instead.
This rent is fully deductible as a business expense.
Supplies -- Supplies are business items that you finish using in less
than one year. They include everything from paperclips to postage
stamps.
Legal and Professional Services -- You can deduct business-related
fees that you pay to attorneys, accountants, consultants, and other
professionals.
Insurance -- Insurance you buy just for your business is deductible --
for example, business liability insurance or insurance for business
property. If you have a home office, you may deduct a portion of your
homeowners insurance. Self-employed people are also allowed to deduct
100% of their health insurance premiums from their income taxes.
Business Start-Up Expenses -- If you are not yet in business, but are
thinking about starting one, you don?t get any deductions. However, if
you actually begin the business, many of the expenses you incurred
starting it up are deductible over the first 60 months you are in
business. Such expenses may include research, advertising, travel
expenses for finding a suitable business location, and operating
expenses incurred before the business begins, such as rent, telephone,
utilities, office supplies, and repairs.
[The above is taken from Top Ten Deductions for Your Business
http://www.nolo.com/article.cfm/objectID/1B65EFBB-C612-4357-B2F0C1BA55125B1A/catId/18561DB2-AC42-4896-A8349B2EA7F2043B/213/287/112/CHK/
and
Home-Office Deductions are Worth the Hassle
http://www.kiplinger.com/columns/ask/archive/2004/q0130.htm
See also
a 10-point checklist to make sure no deduction goes unfiled
http://www.businessweek.com/smallbiz/content/dec2003/sb20031211_7423_sb012.htm
Search terms used:
consultant "tax deduction" checklist
irs 2004 cents per mile
Thanks again for letting us help - - I hope you find this answer useful.
Sincerely,
Google Answers Researcher
Richard-ga |
