My Taxable Items

Virtual Assistants need not worry about what to deduct and what not to deduct during their tax prep. Although there are people out there willing to assist you, there are things you can do to get the ball rolling. Depending on how long you've been in business, you might consider doing it all yourself.

If you are organized, or like me, semi-organized, you have a spreadsheet/folders/notebooks with careful notations of the money you made and the money you had to dish out during the year. Even if you some how forgot your debit card or your checkbook during a transaction, I'm sure you had a receipt written out by the client. So pull out that handy brown envelope with all the receipts you've tucked away. You'll definitely need it.

I am going to give you a few nuggets in this article to guide you in the event you are scratching your head right now. I know for some, tax time can be difficult. It is my goal to ease the pain a bit. So, here we go.

According to the IRS.Gov site:

First determine what is ordinary (common) and necessary (helpful; makes the job better). Then separate capital expenses, personal expenses and cost of goods sold.

Being a virtual assistant, I'm not sure if you sold any goods or not. If so, make a separate list. You only can deduct this one time. (For additional information, refer to the chapter on Cost of Goods Sold, Publication 334, Tax Guide for Small Businesses and the chapter on Inventories, Publication 538, Accounting Periods and Methods).

Capital Expenses

"You must capitalize, rather than deduct, some costs such as the business start-up costs, business assets, and improvements. These costs are a part of your investment in your business and are called capital expenses. Capital expenses are considered assets in your business. In general, there are three types of costs you capitalize."

Personal vs Business Expenses

Divide the total cost between the business and personal parts. You can deduct the business part. "For example, if you borrow money and use 70% of it for business and the other 30% for a family vacation, you can only deduct 70% of the interest as a business expense."

Business Use of Your Home Deductions

Mortgage interest, insurance, utilities, repairs, and depreciation.

Business Use of Your Car

"If you use your car for both business and personal purposes, you must divide your expenses based on actual mileage." (See the Standard Mileage Rates).

Employees' Pay

Rent Expense - "If you have or will receive equity in or title to the property, the rent is not deductible."

Interest - the amount charged for the use of money you borrowed for business activities.

Taxes - federal, state, local, and foreign taxes directly related to the business.

Insurance - related to the business.

Note: Remember, you can deduct all educational tools or classes, vacations, dining, conferences, seminars, online courses, etc.

I hope this helped some. I do advise you to visit https://www.irsvideos.gov/Business/virtualworkshop

Also, if you'd like to know more about me, I am Nikki Ruffin-Smith, CEO and founder of Exhale to Excel Global Outreach and Empowerment ORG (www.exhaletoexcel.org). I am also sponsor A Phenomenal Woman's Radio Networking System (Facebook). I can be reached via email - exhaletoexcel@gmail.com

Blog site: http://exhaleiiexcel.blogspot.com/