Which expenses can I deduct from my taxes?
Thread poster: Sara Senft

Sara Senft  Identity Verified
United States
Local time: 06:16
Spanish to English
+ ...
Sep 9, 2008

Today, I completed the first half of a two day interpreting assignment. I just got home from faxing the invoice for today's portion and I started to wonder if I can deduct the cost. Since I live in the USA, like my sidebar of information says, I would prefer that USA-based translators answer.

Can I deduct the cost of faxing the invoices? Or, is this not considered a valid business expense?


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texjax DDS PhD  Identity Verified
Local time: 06:16
Member (2006)
English to Italian
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Yes Sep 9, 2008

Srta Sara wrote:
Can I deduct the cost of faxing the invoices? Or, is this not considered a valid business expense?


Yes you can, especially if you used a private service company such as UPS. It's a legitimate business expense.

Regards,



[Edited at 2008-09-09 00:27]


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Claudia Alvis  Identity Verified
Peru
Local time: 05:16
Partial member
Spanish
+ ...
It is a business expense Sep 9, 2008

If you went to Kinko's to fax your invoice, you should keep the receipt so you can present it next year when you file your taxes. If you have a fax machine in your office/home, you can deduct its cost as a business expense. However, you need to keep track of which faxes are personal and which are business-related. Just as with a phone line, it's better to keep a business-only fax line, to avoid being audited. You never know.

You can deduct any job-related expense. I deduct all my office supplies, some Paypal charges (just the business-related charges), trainings, job-related books, my ProZ membership, my emails, job-related software and hardware, etc.

Of course, you need to keep all your receipts/invoices.

Claudia

[Edited at 2008-09-09 00:34]


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Jim Tucker  Identity Verified
United States
Hungarian to English
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Question whether it's worth the trouble Sep 9, 2008

You get a standard expense deduction of around $4000 anyway - you only need to keep receipts if you are going over that. The question is whether it's worth your time doing all that paperwork for what may amount just to a few hundred bucks. For a self-employed person, this isn't a 100% straight deduction anyway - the actual tax savings are just a relatively small percentage of the total expenses deducted.

[Edited at 2008-09-09 10:49]


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Nicole Schnell  Identity Verified
United States
Local time: 03:16
English to German
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Even worse. Sep 9, 2008

The IRS only accepts deductions regarding business phone lines.

If your fax machine is hooked up to a residential phone number - not a chance. Even if you spend hours sending faxes to, say, Timbuktu at 50 cents a minute. On the other hand you literally could play chess over the phone for hours, or fall asleep during a phone call, as long as it is a business line it's perfectly tax deductible.


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ntext  Identity Verified
United States
Local time: 05:16
German to English
+ ...
Nope Sep 9, 2008

Nicole Schnell wrote:

The IRS only accepts deductions regarding business phone lines.

If your fax machine is hooked up to a residential phone number - not a chance. Even if you spend hours sending faxes to, say, Timbuktu at 50 cents a minute. On the other hand you literally could play chess over the phone for hours, or fall asleep during a phone call, as long as it is a business line it's perfectly tax deductible.


I don't think that's true.

"Long-distance phone calls related to your business are deductible. The basic local phone costs of the first phone line in a residence is considered personal and is not deductible. However, a second phone line or additional telephone services on the first line such as call waiting may be deductible expenses."
http://www.webtaxcenter.com/f1040sc.jsp


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Nicole Schnell  Identity Verified
United States
Local time: 03:16
English to German
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ntext, that's exactly what I wrote. Sep 10, 2008

The residential one is not deductible. Why this is called the "first" line is a mystery to me. Maybe for kitchen table enterprises. Our "first" line is the business one, the one that is listed in the Yellow Pages. I got a second line for the fax machine in the office. Paying business line basic fees for a stupid fax machine isn't very smart. So I got a residential one in addition. Therefore I can't deduct a cent.



Addendum:

With second phone line I mean a totally different phone number. It has nothing to do with extensions, extra outlets or added services.

[Edited at 2008-09-10 18:05]


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Kevin Fulton
United States
Local time: 06:16
German to English
Get tax / legal advice from a professional Sep 10, 2008

You're really better off obtaining tax advice from an experienced accountant. Get legal advice from an attorney. Save all receipts / invoices.

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Nicole Schnell  Identity Verified
United States
Local time: 03:16
English to German
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Kevin is right. Sep 11, 2008

I recommend to hire a CPA, not a "tax preparer". Unfortunately the latter ones might not have too much experience in attending to freelancers / small businesses.

I made this mistake in my first year, they even managed to use the wrong forms and the IRS was about to wring my neck, I got lucky but I had to learn it the hard way.


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ntext  Identity Verified
United States
Local time: 05:16
German to English
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@ Nicole Sep 11, 2008

What I was trying to say: If you "spend hours sending faxes to, say, Timbuktu at 50 cents a minute," to use your example, then the charges for those long-distance calls are a deductible business expense, even when the basic fee for the line is not deductible.

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Alexandra Goldburt
Local time: 03:16
English to Russian
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Correction Sep 12, 2008

Jim Tucker wrote:

You get a standard expense deduction of around $4000 anyway - you only need to keep receipts if you are going over that. The question is whether it's worth your time doing all that paperwork for what may amount just to a few hundred bucks. For a self-employed person, this isn't a 100% straight deduction anyway - the actual tax savings are just a relatively small percentage of the total expenses deducted.

[Edited at 2008-09-09 10:49]


Jim, with all due respect, you are giving Sara an incorrect advice.

It is like comparing oranges an apple here. Standard deduction you are talking about here, line 40 on 1040 form, currently $5,350 for a single person, is one thing; business expenses (which is what Sara has asked about) is completely another.

Standard deductions (or itemized deduction - you have a choice here) are being subtracted from your adjusted gross income, line 37 on form 1040. Now, business expenses are shown on schedule C, and they can substantially reduce your adjusted gross income. Whether or not you declare any business expenses, you still have the right to you $5,350 (more if you file as married or head of household) standard deductions.

No, answer to Sara: you can deduct any expenses that are reasonable and necessary for running a business, such as dictionary, office supplies, professional seminars, etc. Yes, if you used Kinko for sending a fax, this is deductible, too.

To Nicole: with all due respect, I am convinced that you are incorrect on this issue. Whenever you use something for a mix of business and personal purposes (internet, telephone, etc.), you estimate what portion of goes into business use, and write this portion off as a business expense.

Sara, was this assignment a result of the test you went to recently? If so, I am very glad you got it, and I hope you'll get many more!

Just be sure to keep all the receipts for business-related purchases.


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N.M. Eklund  Identity Verified
France
Local time: 12:16
Member (2005)
French to English
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General guide Sep 12, 2008

When in doubt, ask yourself.."Would I be making this expense under normal conditions (if it wasn't job related)?"
If the answer is no, then it's a deductible expense.


Here's a pretty good list:
http://www.dynastybuilder.com/articles/dlArt71.pdf

Otherwise just check out the IRS website:
http://www.irs.gov/newsroom/article/0,,id=108138,00.html


[Edited at 2008-09-12 12:31]


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Kathryn Litherland  Identity Verified
United States
Local time: 06:16
Member (2007)
Spanish to English
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good tax prep software Sep 12, 2008

I know a lot of people advise getting an accountant if you run a home business, but it didn't take me too long to figure things out and handle it last year using (TaxCut I think?). Just make sure you hold onto your receipts for business expenses and have your utility bills handy if you plan on taking the home office deduction.

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Megan Yeary  Identity Verified
United States
Local time: 06:16
English to German
+ ...
Expenses Sep 12, 2008

You can only deduct expenses if they are ONLY used for your job. For example: I have a lap top that I bought for school, and even though I now rarely use it for anything but work I still can't deduct it because it "exists" for another reason. However, if you are a member to ProZ you can deduct that, or if you get a phone line specifically for work you can deduct that.

You also might want to look into using an online faxing service, you are more likely to only use that for business if you have a home phone and it is easier to track if anyone questions you.


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Sara Senft  Identity Verified
United States
Local time: 06:16
Spanish to English
+ ...
TOPIC STARTER
How I got the assignment Sep 13, 2008

No, this was from another agency. I'm going to orientation later in the month. After I complete that, I can start getting work from them. (Here I'm referring to the company that gave me the placement evaluation.)

Alexandra Goldburt wrote:

Sara, was this assignment a result of the test you went to recently? If so, I am very glad you got it, and I hope you'll get many more!

Just be sure to keep all the receipts for business-related purchases.


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