Business Tax Packet

To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your field of business. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be indispensable to be considered necessary. To file you need to bring a breakdown of your deductible business expenses subtotaled by category.

You may deduct car/truck expenses for local or extended business travel, including: • between one workplace and another, • to meet clients or customers, • to visit suppliers or procure materials, • to attend meetings, • for other ordinary and necessary managerial or operational tasks or needs of your business. Note: You cannot deduct the costs of driving your car or truck between your home and your main or regular workplace. These costs are personal commuting expenses. You should have kept a record of your business-related mileage over the year. We will use the IRS's standard mileage rate of 58 cents per mile for 2020 for your deduction of business-related travel. This rate accounts for gas, repairs, maintenance, depreciation, and auto insurance (but not interest on a car loan). If you do not have a record of mileage or are unsure how to calculate your total, contact our office.

If you have business assets already partially depreciated, you must proivde a depreciation schedule from your prior year tax return.

If you use a portion of your home as your principal place of business, you may be able to deduct part of your rent or mortgage, as well as certain other relevant home expenses. In order to claim these business expenses, the part of your home used for business generally must be used exclusively and regularly for business purposes. These purposes can include home office, production/workshop space, storage, etc. For in-home daycare providers, the usage need not be exclusive. An expense that covers the entire home, such as rent or central heating, is considered an indirect expense. You may only deduct a percentage of these expenses equal to the percentage of the home's area that your business uses. For example, a 150 square foot office in a 1500 square foot home is 10% of the home's total area and would mean 10% of relevant home expenses could be deducted. An expense that applies only to the business area of the home is called a direct expense. If you heat your basement work studio (and only the studio) with a pellet stove, the cost of the pellets would be fully deductible as a direct expense. If you paint your home office (but not the rest of the house), you can claim the whole expense.

For each expense, fill in the cost and indicate whether the expense is direct or indirect. Be sure that you do notenter any expenses you might already have listed on other parts of the worksheet.

By signing below you are attesting that the personal and financial information provided to Dollars & Cents Tax and Accounting Services LLC is true and accurate. The information listed on the Small Business Income & Expense Organizer is the information that (I/WE) gave to the paid tax preparer to complete the return. I release the tax preparer from any negligence or responsibility pertaining to this return. I acknowledge that all information provided to Dollars & Cents Tax and Accounting Services LLC is true and accurate to the best of my knowledge. I understand that I am required to have any supporting documentation to validate the information provided. Furthermore, I understand that knowingly providing false information on my tax return and reporting it to the IRS, that I am taking part in a potentially criminal penalty situation and is punishable by law including but not limited to: facing court dates, restitution, and possible imprisonment. I waive Dollars & Cents Tax and Accounting Services LLC and the preparer of any error due to incorrect information provided by me.