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Reporting unreimbursed partnership expenses
Contributed by: PhillipB, FreeTaxUSA Agent, Tax Pro Many small businesses report their income and expenses as partnerships on IRS Form 1065. Expenses that are paid out of the partnership entity’s accounts will be deducted as partnership expenses on Form 1065 and will then be passed on to the partners on Schedule K-1. But…
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Do I legally have to claim all my business expenses?
Contributed by: Henry, FreeTaxUSA Agent, Tax Pro One common question that arises for business owners is whether all business expenses must be claimed. Understanding the legal requirements when it comes to claiming expenses can help you make informed decisions and avoid potential pitfalls. Claiming business expenses…
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Should my royalty income be reported on Schedule C or Schedule E?
Contributed by: PhillipB, FreeTaxUSA Agent, Tax Pro What is royalty income? Royalties are payments for using someone else's property (like their work or land) or giving the property owner part of the income from it (like mining their land). Royalty income can be: a payment to a patent owner for use of a patent. a payment…
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Reporting vehicle expenses for one vehicle used in multiple businesses
Contributed by: WrenD, FreeTaxUSA Agent, Tax Pro Nowadays, many individuals earn some extra cash through various side hustles. Activities such as dog walking, ridesharing, delivering food, or renting space are common. It's common for individuals to use the same personal vehicle for multiple businesses or hustles, which…
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Should I report my new business if I did not open for business this year?
Contributed by: PhillipB, FreeTaxUSA Agent, Tax Pro If your new business was still in the start-up phase and the business received zero gross income, you would not file a schedule C until the business starts active operations of the trade or business. What do I do with the expenses I had during the start-up phase? The tax…
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Business use of vehicle overview
Contributed by WrenD, FreeTaxUSA, Tax Pro If you use your car for your business (or side hustle), you may be able to save money on your taxes by deducting some of the costs of using your vehicle for business purposes. Here are some things you need to know to claim your vehicle expenses. Business vs. Personal Use You need…
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Renting out a room or part of your house
Contributed by: MatthewD, FreeTaxUSA Agent, Tax Pro 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…
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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?
Contributed by: CoryF, FreeTaxUSA Agent, Tax Pro Need for 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…
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Cost basis of assets
Contributed by: CoryF, FreeTaxUSA Agent, Tax Pro 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…