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Not entirely sure where this question fits...I'll put it here because it's directed at the custom razor makers.
Are you guys able to write off tools, materials, sharpening stones, etc on your taxes?
Just wondering...it'd be nice to write off a $500 hone.
I am not up to snuff on US tax law, but if you have registered in some way as being self employed / freelancer / whatever with a business related in some way to activities for which you need a hone, then yes. Either it can be written off as an investment, or it can be counted as cost and subtracted from earnings.
If you make an income by honing, restoring,... anything you officially charge money for to other people, you can deduct and write off the materials, tools,... needed for the job. Off course it also means adding that income to your tax return.
They can be written off as business expenses to the same extent that you use them for your business. Max probably uses depreciation deductions for his pool, where his business requires him to spend much time for business-related brainstorming and conference calls :D
as long as you claim all the income.
you do know that "write off" means that you only get whatever taxes you paid on the hone back in your corporate tax return, right? It doesn't mean that you get a free hone...
Yes, I understand that you can not write off the full amount of the hone. I posed this question to the custom makers because they probably generate more income than say someone that hones on the side. I'm sure that most that hone on the side do not report the cash made. I wouldn't either, but if making custom razors is your main source of income, I was wondering what the write off's are like and what qualifys as a write off.Quote:
Originally Posted by strudel
That's a slightly different question. What I can do might not be the same for you. Consult a tax pro to be on the safe side :tuQuote:
Originally Posted by jcsixx
edit: or wade through the forms and publications here: http://www.irs.gov
From http://www.irs.gov/publications/p535...ink1000208606:
Quote:
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. 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.
It is important to distinguish business expenses from:
* The expenses used to figure cost of goods sold,
* Capital expenses, and
* Personal expenses.
Actually, something like a piece of equipment (saws, grinders, etc) should be depreciated and consumables (utilities, operating expenses, repairs, grinder media, etc) would be expensed. Expensed items are deducted from income in one year, depreciated items are deducted over multiple years. As an example, Max would depreciate his pool, but expense the cost of the army of technicians that the pool requires. The bikini budget is a grey area....
Obviously, from a tax perspective, you want to treat as many things as "expensed items" as possible. See a tax consultant.
In college I had a teacher who had make a game out of deducting as much from his taxes as possible. And he pretty much got away with it. It's all a matter of having a good story and making sure the paperwork is in order.
Since he was a teacher, he needed a computer. He also needed reference materials, samples, test equipment, a dedicated office (which meant he deducted a % of his mortgage interest), chairs and a desk, running water, a second bathroom (for guests), ....
It was a non trivial amount of work to keep track of all things and still stay within the law, but if you are creative you can do a lot.