Business Tax Deductions: How To Deduct Expenses Without Keeping Receipts

Business Tax Deductions: How To Deduct Expenses Without Keeping Receipts

No taking, no deduction, right? Usually utterance, of course. The mantra of small business bookkeeping has been relentlessly burdensome for decades: " No Obtaining, No Deduction. "

My own tax clients are quick to remember me of this basic recordkeeping rule. Over the years I ' ve heard this multifarious times: " But I don ' t have any receipts. I guess I can ' t take the deduction, right? "

What ' s my response to the " No Receiving, No Deduction " moan? " Not so fast! Wherever there ' s a tax rule, there ' s an exception to the rule. "

In certain situations, taking deductions without a acceptance is actually sanctioned by the IRS. Here are three legal exceptions to the " No Recipient, No Deduction " rule.

EXCEPTION #1: Vehicle Monetary worth You are allowed to deduct your vehicle expenses to the extent that you used your vehicle for business. If you drove your car 100 % for business, then 100 % of your vehicle expenses are deductible.

And you have two options for front-page those vehicle expenses: 1 ) The Actual Amount Routine 2 ) The Purpose Method

Our focus here is on Option #2 - - because with the Way Wrinkle your vehicle amount is plainly the number of business miles times the certified IRS purpose degree.

For 2009, this degree is 55 cents per mile. In 2009, if you drove your vehicle 10, 000 miles for business, you can report a deduction of $5, 500 - - without having to keep any receipts for gasoline, oil changes, repairs and maintenance, insurance, etc.

You do have to document your business appropriateness via a written log of some sort, but this is repeatedly much easier than saving all those receipts for actual vehicle expenses.

EXCEPTION #2: Meals While Wandering When promenade out - of - town on an overnight business trip, you can deduct the actual amount of your meals ( by keeping the receipt ), or you can rely on the little known " Per Diem Scheme " ( which requires no taking ).

The Per Diem Form gives you a daily meal allowance for each day of the trip, depending on what part of the country you visit. For example, the per diem meal scale for Birmingham, AL is $44; for San Francisco, it ' s $64 ( as of 9 / 30 / 08 ).

To find the per diem amounts for every state, go to: http: / / www. irs. gov / publications / p1542 / ar02. html

EXCEPTION #3: The $75 Dollar Rule Here ' s supplementary easy way to avoid the hassle of saving receipts - - this one involves your business meal and mingle expenses. Take it it or not, the IRS does not lack a recipient when your business meal or gala charge is less than $75 per rate.

Sound too good to be true? Well, there is a " grasp ", of visit: you quiescent must maintain a record of the meeting five facts coextensive to the deductible development:

1 ) WHO did you eat with or get? i. e. the names of the people and the complexion of their business relationship to you

2 ) WHEN did the entertainment happen? i. e. the date

3 ) WHERE did the entertainment befall? i. e. the name of the restaurant or other venue

4 ) WHY did you meet? i. e. a description of the business purpose of the meal or event

5 ) HOW MUCH did you spend? i. e. the dollar amount

You should enter these five facts in a log. Your daily appointment book or day - digital watch is the perfect area to jot this down in less than a minute. Having met the IRS touchstone requirements, you can then pitch away the receiving. In the fact of an column, you ' ll be covered.

Two final comments: Exception #2 applies to overnight travel situations, regardless of whether you eat your meals alone or with business associates. Exception #3 applies to meals and entertainment expenses incurred when you are with someone with whom you have an existing or coming business relationship, regardless of whether you are in town or in overnight travel rank.

Health Savings Account Tax Deductions Win Acceptance At The State Level

Health Savings Account Tax Deductions Win Acceptance At The State Level

Last year, the number of people purchasing high - deductible health plans or consumer - unflinching health plans ruddy to 22 million, according to the Employee Benefit Research Institute. In 2010, about 17. 2 million of those buying their own insurance had high - deductible plans.
Almost 10 million had also invested in a health savings account, or HSA, to help them cover health care until their deductible was met. That amounted to an increase of 25 percent for health savings accounts in just a single year, according to a census by America ' s Health Insurance Plans.
The Public Need For High - deductible Health Plans Is Growing
With health insurance proportion hikes on individual coverage of up to 40 percent, it ' s no wonder that more people are switching to high - deductible health plans. The premiums on coextensive plans can be from 30 percent to 40 percent lower than the cost of co - pay plans. That ' s a plan that charges about $25 or $35 for doctor office visits and sometimes prescriptions.
Even though $25 to see a doctor sounds inexpensive, co - pay plans can actually cost healthy individuals more than high - deductible plans. When compared to PPO plans where the price of seeing an in - network doctor is, on average, around $65, co - pay plans save patients about $30 or $40 per doctor visit. To gap even, patients need to see their doctor at pristine eight times a year, though.
Now that preventive care, which includes an annual check up and preventive screening exams and procedures, is completely covered by plans purchased after health care reform, people are more likely to maintain their health and require fewer doctor services. Unless you need to see a doctor totally often, maintaining a co - pay plan can be appreciated.
Health Savings Accounts Offer More To Those In High Tax Brackets
For those in relatively high tax brackets, a few of the high - deductible health plans also offer likewise way to save money. Certain of these plans allow you to open a health savings account at a variety of banks or other financial institutions and get significant tax advantages.
High - deductible plans that may be combined with health savings accounts typically have deductibles ranging from $1, 200 to $5, 950 on individual plans. Deductibles for family plans scope from $2, 400 to $11, 900.
Any money deposited into an HSA up to $3, 050 for individuals or $6, 150 for families, is plain an " senior the line " conviction for federal income tax filing. Primary the line indicates that you don ' t have to itemize to get the deduction. You can still take the standard deduction.
Almost all states have joined the federal government in not taxing HSA contributions. The most recent state to pass undifferentiated legislation is Wisconsin. Gov. Scott Wayfarer made equivalent a provision law when he signed his first bill this year.
There is speculation that this new law may prop up employers to offer health savings accounts. That trend has been evident in recent years and it ' s well known that high - deductible plans not only cost individuals less than full - coverage insurance, but high - deductible plans are also cheaper for employers to offer workers.