How to make your business-related tax deductions bulletproof

Translate this page
A blank IRS form with a pen and envelope on top of it.

02/27/2015 | Author: Editorial Staff

“It’s not enough to say ‘My accountant takes care of my taxes.’ If you don’t have the right documentation, there’s only so much an accountant can do,” says Sandy Botkin, CPA, attorney, and former IRS trainer.

During his recent webinar “Keep more of your commission with tax breaks,” ​Botkin explained the importance of documenting deductible expenses before handing your files over to a tax professional. 

5 questions you should be prepared to answer
Even if you only use credit cards for your business, it’s not enough to rely on the statements to prove your deductions were business-related, Botkin says. Instead, he suggests documenting the answers to five basic questions if you plan to deduct a meal, entertainment, or other expense for your business.

  • Who were you with?
  • What did you discuss?
  • Where did you go?
  • When did you go?
  • How much did you spend?

How to deduct home-office expenses
If you use a room or part of a room in your home as your principal place of business, you may be able to deduct related expenses. Botkin says the space must meet three criteria to be deductible:

  1. You use the space exclusively for business.
  2. You use the space regularly for business—four to five days a week for at least 45 minutes per day.
  3. You do the majority of your management and administrative work from this space, and you don’t have another office for administrative work.

Track expenses from your mobile device
Botkin says most accounting systems are designed to show where you spent your money, but they don’t hold water when it comes to proving tax compliance. That’s where TAR benefit partner TaxBot can help.

TaxBot is a tool that offers IRS-compliant expense tracking, GPS mileage tracking, and the ability to store photos of receipts to prove your expenses. Texas REALTORS® receive a 50% discount on monthly and annual subscriptions. Just visit tar.taxbot.com to get started.

To learn more about deducting business-related expenses, watch a free replay of Botkin's one-hour webinar

Categories: Benefits, Business tips
Tags: taxes, taxbot, member benefits, benefits, business tips


Comments

Carol Temme on 03/06/2015

My own personal hot button is “Me and ______” did something , instead of He or She and I did———-

Rick DeVoss on 03/05/2015

Vivianne, I appreciate the use of correct grammar.  Too many folks these days want to abbreviate everything with two thumbs on a mobile device.  We are professionals, people.  We need to act like professionals.  We especially need to write like professionals when we are on a public blog, or in any advertising.

And on this site as well, I believe we all need to identify ourselves fully as a Realtor.  That means showing first and last name.  I am quite surprised that it is not required by the TAR administrator.  In fact, it should require the name of our Brokerage.  Perhaps if enough people made their opinions known to the TAR staff, they would change the sign in requirements.    It says “Name is Required.”  Perhaps they never thought a Realtor would try to camouflage themselves by signing in with a first name only, or an alias…

Vivianne on 03/05/2015

Finally someone who pays attention to grammar while most people butcher the English language.  Bravo, Mike!  Just want to add that all of them are pronouns.  Who is the subject (nominative) case.  Also, please when you use a preposition followed by a pronoun, use the objective case, e.g “for you and me” not “for you and I”.

Tinsley Alexander on 03/05/2015

I’ve been using Taxbot for the last month or so.  Easy to use, keeps track of receipts, mileage, and most important- ask those ever so important questions that the IRS wants to know answers to before it let’s you save it.  You can import your bank statements, credit card information.  Has category suggestions, but allows you to change them or add to them.  You can do as my accounts under 1 as you wish (I have a personal and a business set up).  Syncs to accounts, and to your iphone.

Mike McEwen on 02/27/2015

Really.  Who is the pronoun; whose is the possessive and whom is the objective case

Denise Askea on 02/27/2015

Really, Mike…..

Mike McEwen on 02/27/2015

Whom, not who.


Leave a Comment

Read our commenting policy



advertise with us

Legal disclaimer

The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

While the Texas Association of REALTORS® has used reasonable efforts in collecting and preparing materials included here, due to the rapidly changing nature of the real estate marketplace and the law, and our reliance on information provided by outside sources, the Texas Association of REALTORS® makes no representation, warranty, or guarantee of the accuracy or reliability of any information provided here or elsewhere on texasrealestate.com. Any legal or other information found here, on texasrealestate.com, or at other sites to which we link, should be verified before it is relied upon.

Advice for REALTORS®

What you don’t know about Texas license holders

How to talk to your clients about student debt

Does a property need to be rekeyed if the owner was the previous occupant?

How REALTORS® stay safe

Subscribe

More advice for REALTORS®