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Determining Your Income Tax Deductions
-- Direct Expenses
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RECORDKEEPING TIPS
Brigitte A. Thompson
You are allowed to reduce
your income by expenses incurred in the operation of your business.
In all cases, you must keep the receipt, invoice, canceled check,
and maintain the proper documentation to prove that your expense
was valid in the event of an IRS audit.
Qualified direct expenses are 100% deductible from your business
income. The IRS requires that these expenses be "ordinary
and necessary" in order to be deducted. They define
"ordinary" as an expense which is common in your industry
and "necessary" means that you need to spend this
money in order to operate your business.
The following is a list of suggested items that may relate to
your daycare business. There are many other expenses which may
arise in the operation of your business; these are only suggestions.
Advertising
Accounting/bookkeeping fees
Bank service charges on a business account
Business licenses
Car/truck expenses
Conferences
Diapers & wipes
Dues
Education
Entertainment for the daycare children
Equipment
Food for the daycare children
Furniture for the daycare
Gifts for business associates (Limited to $25.00 per person, per
year in 2003)
Insurance
Legal fees
Magazines & books necessary for your business
Maintenance & repairs
Office supplies
Payroll & related taxes
Postage
Printing charges
Rental of equipment
Telephone charges on business line
Toys
All information is based
on the current federal tax laws of the United States. Since these
laws are subject to change, neither the author nor BusyParentsOnline.com
assume liability for modifications that occur after the creation
of this work. Every effort has been made to ensure this information
is as accurate and complete as possible. These articles contain
general information for businesses and are offered as an overview
of the law.
© 2003 Brigitte A.
Thompson
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