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Old 03-26-2014, 12:10 PM
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Business tax deductions for LLC

My home is in Dallas and I commute to Cincinnati every week for work to client place as independent contractor. I have a LLC and bill the client on a corp to corp.
Is my hotel, air, car rental , gas, tolls, parking and meals tax deductible,

If I drive my own car, can i use the std mileage.
For meals, do i need to keep receipts or can i use the per diem rates for the city
Are the hotel stays and airfare deductible.
I dont do much work from home, should I have a home office setup to deduct this ?
I pay COBRA for health ins, so can i deduct this ?

I am planning to file as a S-CORP if needed.

What else can i deduct in my situation. I will be talking to a CPA but to this is to get started with..
Thanks



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Old 03-26-2014, 03:48 PM
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Quote:
Originally Posted by petertheil56 View Post
My home is in Dallas and I commute to Cincinnati every week for work to client place as independent contractor. I have a LLC and bill the client on a corp to corp.
Is my hotel, air, car rental , gas, tolls, parking and meals tax deductible,

If I drive my own car, can i use the std mileage.
For meals, do i need to keep receipts or can i use the per diem rates for the city
Are the hotel stays and airfare deductible.
I dont do much work from home, should I have a home office setup to deduct this ?
I pay COBRA for health ins, so can i deduct this ?

I am planning to file as a S-CORP if needed.

What else can i deduct in my situation. I will be talking to a CPA but to this is to get started with..
Thanks
My home is in Dallas and I commute to Cincinnati every week for work to client place as independent contractor. I have a LLC and bill the client on a corp to corp. Is my hotel, air, car rental , gas, tolls, parking and meals tax deductible, If I drive my own car, can i use the std mileage. ===========>>>>>>>>>> Corp-to-Corp means that your client, which is a corporation, pays your business, which is organized as a corporation, for the services rendered by you. Your client may prefer this instead of 1099 as it protects them from the risks regarding the employer-employee relationship (even though you are paid via 1099, the IRS might still consider you an employee and disallow your independent contractor status. If this were to happen, the company you work for would owe back payroll taxes, so some companies prefer Corp-to-Corp to avoid this situation. The major difference between C2C and 1099 is that with C2C, you don’t have to pay self-employment taxes on your income. However, you do have to pay yourself a salary and with it both employer and employee taxes. you can claim a deduction for miles driven to a job assignment. The starting point must be a home, an office or a job location, and the destination must also be a home, an office or a job location. You cannot deduct miles driven for other reasons even if you drove the same vehicle. The IRS requires you to take relatively straight routes from one location to another. An auditor may not allow you to claim side trips between two points if they added to the total length of your reported deductible use. You can deduct mileage driven for non-work reasons related to the business. This includes driving to the bank to make a deposit and meeting with professionals managing your business. you have the option of deducting actual expenses. This option provides benefits if you spent more on traveling than the federal reimbursement rate provides. Actual vehicle expenses include the actual cost for fuel, maintenance costs, oil change costs, the cost of new tires, vehicle registration fees, vehicle loan interest, vehicle insurance, lease payments, vehicle depreciation and toll booth and parking fees. Vehicle loan interest, toll and parking fees and registration fees also can be deducted by those who opt for the standard mileage rate. When you use the actual expenses option, you also must calculate the percentage of business use of the vehicle. The vehicle is used 100 percent for business if you do not use it for personal reasons. Otherwise, you have to subtract a percentage of the expenses due to your personal use of the vehicle. To deduct mileage on your federal tax returns, you must keep records of your mileage. Your records must show the starting point, each stop on your trip and the total mileage. You also must include the time and the date of your trip and the business purpose. If you opt to deduct actual expenses, you must maintain records, including receipts and canceled checks, to document the expenses. You also must have records of the total miles that you drove for the year. Normally, you can record each use of your vehicle and total the mileage to meet this requirement.


For meals, do i need to keep receipts or can i use the per diem rates for the city .Are the hotel stays and airfare deductible. I dont do much work from home, should I have a home office setup to deduct this ? ===============>>>>>>>>>>>basically, You need to know the independent contractor deductions for business expenses, to reduce your tax liability and to take advantage of tax credits. Not taking the deductions, or taking the wrong ones, are common mistakes made by some independent contractors. Don't invite the IRS to audit you unnecessarily. There are times when you need to pay for meals when meeting with clients or employers. Independent contractor deductions can include meals and entertainment expenses. The maximum deduction is 50 percent of the expenses, so it's important to be wise when you budget for this category, as well as when you take deductions. You have to use a portion of your home XCLUSIVELY for business to take home office deductions as an independent contractor. Working from your bedroom or in the living room doesn't count. A dedicated room in your home, or garage, that you use as a principal place of business is allowed. You have to use the room exclusively and regularly for it to be a legitimate independent contractor deduction. Practically speaking, that means you can deduct some of your property taxes, utility bills and other bills as business expenses, based on the square feet of your home office. For example, if your home office is 10 percent of the total square feet of your home, you would deduct 10 percent of those bills. you can claim expenses and you need receipts for them
Your customer can pay you any way that's mutually agreeable to you. However they classify it, it all goes on the Gross Receipts line of Sch C. You deduct your actual expenses as evidenced by your receipts (all lodging and single items over $25) and expense diary (for single item expenses of $25 and less, excluding lodging) on Sch C.

If your customer wants receipts as proof of any expenditures, give them photocopies ONLY. Retain the originals for your records as you'll need them in case of audit. You can not use the Lodging Per Diem rates; They are provided as guidance for employer compensation. Regardless of whether you are an employee or considered self-employed, you must use actual documented lodging expenses to determine your deductible amount - subtracting any compensation. Companies can set their own per diem rates, but most businesses use the per diem rates set by the U.S. government, through the General Services Administration. If you reimburse more than the maximum allowable rate, the excess is considered a benefit to the employee and must be considered in the employee's taxable income


I pay COBRA for health ins, so can i deduct this ? I am planning to file as a S-CORP if needed.What else can i deduct in my situation. I will be talking to a CPA but to this is to get started with..======>>>>>>>>>>>>>>it depends; even if you start working as an independent contractor or have other self-employment income, the COBRA payments won't qualify for the self-employed health insurance deduction. When you're self-employed, the irs allows you to write off qualifying medical insurance premiums. However, to qualify, the insurance plan must be created under your trade or business name. COBRA coverage continues your existing coverage under your previous employer's plan. Therefore, because you didn't create the policy under your self-employed business name, you can't include the premiums you pay as part of the self-employed medical insurance deduction. Selling, general and administrative expenses are the category of deductions for s corps. You can deduct officer compensation, your wages and salaries, repairs and maintenance, rent, licenses, depreciation, depletion, advertising, employee retirement plans and employee benefits are deductions located on the first page of your 1120S tax return. Additionally, you can deduct other expenses incurred to run your business including accounting, legal, bank charges, phones, commissions, dues and subscriptions, education and training, equipment rental and lease, gifts, fuel, janitorial, advertising, dry cleaning, uniforms, meals and entertainment, travel, parking and utilities.



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