Seeing as how the other thread got a little heated, I thought I would start a new thread.
This is the first year I was sent a 1099 and I'm freaking out slightly. It's my own fault - I didn't expect to have to file as self-employed so I didn't keep track of business expenses. Now I'm trying to go back and reconstruct bank statements and credit card bills to show want I spent my money on in a "business" capacity.
I made a lot of my own costumes this year, so any fabric or notions I bought to make them can be a deduction, yes? I also went to some workshops, the cost of which i am deducting.
But I'm wondering about things like food per diem charges. For example, I worked at the Ren Fair and was required to stay on the grounds all day. The only option for eating was buying food from the vendors, but of course, it was a ren fair, and they only took cash and didn't have a receipt system, so I'm not sure i can justify it.
Anyway, I guess my question to you ladies is do you file a schedule C form? If so, what sort of business expenses do you claim, and where on that stupid form do you claim them? I have turbo tax, and everyone says its so easy, but it keeps telling me I can only take small business deductions for my invatory, which I don't have because I sell services.
Here is what was said on the other thread:
This same person previously explained to me some of the things that are and are not deductible in our line of work. Allow me to share:
$800 Pharaonics costume - Deductible
Cute practice wear (Melodias (unless you perform in them), T-shirt that says 'bellydancer', etc.) - Not deductible
Cost of driving between gigs on same night - Deductible
Cost of driving to first gig and driving home - Not deductible
Dance classes & workshops, including travel to out-of-town workshops - Deductible
Gym membership - Not deductible
Music - Deductible
Computer & iPod - Not deductible unless used exclusively for your belly dance business
I hope this list helps somewhat. The good news is that while we may not be able to write off our hair care, we can fly to Egypt & study with a dance master for a big ole deduction.
I'd honestly say it's best to talk to a professional, or maybe talk to a few to find one who suits your needs.
Some are so conservative they hesitate to itemize things that CAN be. Some are so creative...they could work for Enron.
The list from a previous thread is a very good basic breakdown that is pretty much what my accountant says.
To make it more simple: If you use it for dance *and don't get enjoyment/benefit from it outside of contributing to your dance* then it can be a deduction. The IRS says, all deductible business expenses are those that are:
1. Incurred in connection with your trade, business, or profession
2. Must be "ordinary" and "necessary"
3. Must "NOT be lavish or extravagant under the circumstances"
So, SURE we need to maintain appearances in a certain way for dance...but an expensive cut and color are enjoyed during all aspects of life. Whether or not you would spend so much if you didn't dance.
Wigs, hairpieces- pretty ordinary to change or enhance your appearance for performance. Most people don't wear them outside of performance...so those can be a write-off.
Work out clothes we can wear on a day-to-day basis- doing laundry, going to a store, a walk etc. They don't count.
We don't wear the latest Bella or Eman to the grocery store. That counts.
Dance classes are obviously dance related.
Gym memberships benefit you outside of the dance. Unless your doctor prescribes particular exercises in order for you to be able to keep dancing (and you have that documented).
I have a computer and MP3 that are for dance. I have use of my husband's computer or laptop for other stuff.
If you have a room dedicated solely to dance then part of your mortgage/utilities can also be a deduction. BUT the IRS can be pretty strict about "sole purpose". I never did this until an accountant helped me with it.
That being said- last year my accountant was in the hospital with cancer. I took my previous years accountant prepared return as a guide for how to do things - and used taxact.com with the current income/expense data and did it myself.
I file a Schedule C, and echo Samira's advice - go to a tax professional, especially if this is your first time making business deductions.
My tax guy is somewhere between conservative and creative. For example, I write off my cell phone charges even though I have made some personal calls on it. But, it is my official business phone number, prominently used on all of my advertising materials, and I would say that at least 90% of it's use is honestly dance related. If you call the number, the voice mail only says Galatea Middle Eastern Dance with no mention of my real name.
Oh, and just a note from someone who made a mistake early on. If you sell hipscarves, CDs, DVDs, etc. to your students, you need to be paying state Sales and Use taxes on all of it in addition to claiming the income on your Income Tax. I thought I didn't need to bother since I wasn't really a VENDOR, I just sold the occasional hip scarf to my students at very little markup as a convenience. My tax guy nearly swallowed his tongue when he found out, and had me immediately contact the state to get caught up on what I had sold the previous year in addiction to the current one.
I used Turbo Tax and it asks a series of question about your Schedule C and you fill them in. It helps calculate everything.
According to it's calculations, i was able to write off mileage to my teaching job and the interest associated with it. It has some complex formula...but I see above:
Cost of driving between gigs on same night - Deductible
Cost of driving to first gig and driving home - Not deductible
Anyone know why there is a discrepancy?
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"Most truths are so naked that people feel sorry for them and cover them up, at least a little bit." ~Edward R. Murrow
I used Turbo Tax and it asks a series of question about your Schedule C and you fill them in. It helps calculate everything.
According to it's calculations, i was able to write off mileage to my teaching job and the interest associated with it. It has some complex formula...but I see above:
Cost of driving between gigs on same night - Deductible
Cost of driving to first gig and driving home - Not deductible
Anyone know why there is a discrepancy?
I think this is like any other job: You can't ask to get paid to drive from your house to your office because you are *choosing* to work there. You could, feesably, work someplace closer. But, for my salary job, we have two offices, so i am compelled to travel between them somedays during my work day, and can write off the milage between them. Driving between 2 gigs on the same night is like having two different offices, in that respect.
I think this is like any other job: You can't ask to get paid to drive from your house to your office because you are *choosing* to work there. You could, feesably, work someplace closer. But, for my salary job, we have two offices, so i am compelled to travel between them somedays during my work day, and can write off the milage between them. Driving between 2 gigs on the same night is like having two different offices, in that respect.
When I was working 2 jobs, the same principle applied. You can count the mileage between job locations but not what you drive from and to home.
I think this would be different for me. I have a regular job and I don't get to deduct my commute. However, I am filing for a 1099MISC and I think in that case, I would be able to deduct mileage. I am running this by an accountant.
From Samira's link: Automobile & Vehicle Expenses The use of your automobile is probably one of the most common and largest deductions for performers. The automobile use expense can be taken in two ways. The first method is by using the IRS "standard mileage allowance." In 2008, this annually defined allowance is 50.5 cents a mil through 6/30 and 58.5 cents thereafter (55 cents in 2009). To take this deduction you do not need receipts, only records that show the distances driven and the business purpose of the trips. These would include travel to performances, trips to the store picking up equipment and supplies, rehearsals, acting jobs, directing jobs, performances (both as player and observer), etc. The best tool for tracking and calculating this expense is your appointment book or calendar. If your calendar has a record of rehearsals and performances it can be used as a tool to estimate your mileage deduction (odometer readings are appreciated by IRS but NOT required). The second method is to write off direct expenses. In this method you actually depreciate the cost of the vehicle (over 5 years) and then tally up gas slips, repairs, insurance, etc and use that amount as a basis for your expense. This method requires more work and organization. If you were writing off a tour bus, cube van or other larger vehicle, the second method would be preferred. In my practice I often find the mileage allowance method generally yields the highest deduction for straight automobile use. In any case the IRS allows the taxpayer to calculate the best method year by year and take the one that yields the highest deduction (within limits).
I think this is like any other job: You can't ask to get paid to drive from your house to your office because you are *choosing* to work there. You could, feesably, work someplace closer. But, for my salary job, we have two offices, so i am compelled to travel between them somedays during my work day, and can write off the milage between them. Driving between 2 gigs on the same night is like having two different offices, in that respect.
There is a slight discrepancy in that. This may or may not apply to your situation. I work in an office, so my daily commute in the mornings to the office and from the office in the afternoon are on my dime.
However, I support things on a 24/7 basis. If there's a problem (say at 10:00 PM) and I get called to fix things, I can't do it from home, so I drive to my office and back after I fix it (yeah, it's computer related) and I can charge mileage (for both to and from the office) because the situation is not the normal commute.
You can actually call the IRS and ask them. When you call, tell them that you're filling out 1040 schedule C and have questions about what you can deduct. They'll connect you to the tax law division.
I did this last week, and waited on hold for literally 65 minutes. (I never want to hear the score to The Nutcracker again!)
BUT once I got a hold of an actual person, he was extremely helpful, and very pleasant.
You can actually call the IRS and ask them. When you call, tell them that you're filling out 1040 schedule C and have questions about what you can deduct. They'll connect you to the tax law division.
I did this last week, and waited on hold for literally 65 minutes. (I never want to hear the score to The Nutcracker again!)
BUT once I got a hold of an actual person, he was extremely helpful, and very pleasant.
Don't try to navigate these waters by yourself...they're shark infested! Hiring a tax professional...and I mean a real, full time tax pro who didn't go through a single afternoon of training to get their job...is worth every single penny. Every one of them.
I'm completely self employed and the majority of my income is from dancing/teaching. But I do contract work to make ends meet...so everything I do is either business income or 1099. I tried to do it myself and was extremely frustrated and confused. So I decided to suck it up and shell out the money for a tax pro and he got me a $3500 refund. And its all completely legitimate. He knew exactly what I could and could not deduct, exactly what the per diems allowed were (I work ren faires a lot...you get so much allowance a day that you can deduct when you travel for business), and all the random ins and outs that you will never be able to figure out on your own.
I kiss the ground that man walks on. So worth the $200 I paid him. I'd honestly have paid more.
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Stifling an urge to dance is bad for your health - it rusts your spirit and your hips. - Adabella Radici
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