Recently there has been an increase in self-employed workers, freelancers, and side gigs. You can look at different forums (Reddit, Facebook, Instagram, Esty, Ebay, and others) and see an increase of activity.
Before starting this short discussion there are a few references that you should review: Form 1040, Schedules 1, 2, 3, C, and SE. Along with Publication 334, Publication 535, Publication 463, and Publication 583 at IRS.GOV.
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Here’s good news. IRS regulations allow you to claim a prorated (reduced) gain exclusion—a percentage of the $250,000 or $500,000 exclusion in select circumstances.
The prorated gain exclusion equals the full $250,000 or $500,000 figure (whichever would otherwise apply) multiplied by a fraction.
The numerator is the shorter of:
BUSINESS EXPENSES: Can I write off a vehicle purchase?
This is just an overview of the question. For more detailed explanation see the publications below.
If you have a business, you need to be familiar with the rules for business expenses. I am a simple guy and don’t do will with legal speak. Everything you need is in the US Code Section 26. However, the IRS has publications that explain the code sections in plain English. You can’t use a publication as a legal reference or defense. You can use it to understand what is allowed.
These publications for IRS.GOV are the ones I go to when explaining business expenses. I highly recommend reading them:
Publication 334 – Tax Guide for Small Business
Publication 535 – Business Expenses
As a small business owner, what is causing you pain?
When thinking about issues small businesses are facing, I think of tax and financial reporting issues in three major areas:
1. Compliance
2. Making Business Decisions
3. Choosing Accounting Technology
Let’s explore each area small businesses face and how I could help.
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