Texas REALTORS® 2018 Winter Meeting | Feb. 9-13 | Austin, Texas

How to make your business-related tax deductions bulletproof

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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

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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.

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