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Renting Out a Room or Part of Your House
Renting out a room or part of your personal residence during the year can be a great way to make additional income. In many cases, however, it creates an income reporting requirement on your tax return. FreeTaxUSA will guide you through the correct steps. Whether you're renting just a single room or a portion of your…
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What is Section 179 and Bonus Depreciation?
In addition to regular depreciation, you may have also heard of two other types of depreciation called Section 179 depreciation and bonus depreciation. Section 179 comes from Section 179 of the United States Internal Revenue Code and allows business owners to depreciate the full cost of personal property assets (no real…
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What Do I Need to Know About Depreciation?
All business and rental real estate owners need certain assets to make their businesses possible. An asset can be anything from a car or a computer, to a piece of heavy-duty machinery or a rental house. Assets have a certain useful life and wear out over time. As a result, we need a way to match the cost of an asset to the…
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Cost Basis of Assets
You just purchased a new business asset. How do you figure how much it cost and what to put as its basis for tax purposes? Pulling value estimates out of the air is risky, so it is best to use receipts and calculations to build the cost basis of your new asset. Cost Basis Starting Point The best method to use is…
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What Records Do I Need to Keep for Business Expenses?
As a self-employed taxpayer, you’re allowed to deduct expenses that are ordinary and necessary for your business. Ordinary business expenses: common and accepted in your industry Necessary expenses : helpful and appropriate for your trade or business. Example: Lumber for a carpenter Why? The expense is common and accepted…
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How to Take Advantage of Home Office Expenses
Having a home office allows self-employed taxpayers to deduct a portion of the house expenses if they have a qualified home office. A qualified home office can be a room in your home, dedicated space on your houseboat, an unattached garage, or even space in a barn, but it must be regularly and exclusively used to conduct…
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How to Track Business Meal or Entertainment Expenses
Meal and entertainment expenses need to have more documentation than some of the other common self-employed business expenses. You'll need to keep track of and document the following; 1) The receipts 2) What the business purpose was for eating out at a restaurant 3) Who was there at the business event 4) What business was…
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How to Track a Personal Vehicle as a Business Expense
For vehicle expenses from personal use vehicles, the IRS requires you to document the actual amount of vehicle expenses (fuel, maintenance, licensing fees, car interest, lease payment, insurance, etc.) and the miles driven that are strictly related to the business in a mileage log. In the mileage log you record where each…
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Rental income (Schedule E)
Menu Path: Income > Business Income > Rental Income (Schedule E) If you have rental income from real estate such as a single family home, apartment complex, vacation home, or any other type of real estate that you own, enter your rental information on the Rental Income screen. Income from renting equipment or vehicles…
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I Have a 1099-NEC with Nonemployee Compensation, but I Don't Have a Business. Why Do I Need a Schedule C?
Nonemployee compensation on a 1099-NEC is self-employment income and usually needs to be reported on Schedule C (or Schedule F if it is farm income) even if you are just doing a little bit of work on the side and do not have an official business. The IRS considers any income reported in Box 1 of the 1099-NEC as…