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Can I Take a Standard Deduction and Still Write Off Business Expenses?

Posted on January 22nd, 2015

A typical tax filing can be relatively simple if you are taking that standard deduction. However, a lot of taxpayers become confused if they do not have enough deductions to itemize but they want to deduct expenses for a home-based business. Tax Laws

Here is a common scenario: Taxpayer A rents an apartment. But he also has a home business he is trying to get off the ground. He has no mortgage interest or property taxes to deduct, so he will be far better off taking the standard deduction than itemizing. The good news is that in this scenario, Taxpayer A can deduct expenses for his home business on the Schedule C while taking the standard deduction.

What Expenses Qualify as Business Deductions?

There are a number of expenses that can be written off on the Schedule C even if you take the standard deduction. These include:

  • Home Office (must meet IRS qualifications)
  • Office Supplies
  • Employee/Contractor Costs
  • Advertising
  • Car Mileage (when used for business)
  • Travel (air, train or bus fare)
  • Hotels
  • Meals/Entertainment (only 50% deductible)
  • Self-Employment Taxes

After calculating your income and expenses for your business on your Schedule C (or Schedule C-EZ if expenses are under $5000), you can report a profit or loss on line 12 of your form 1040. This figure will then be added to or subtracted from your taxable income (depending on if it is a profit or loss).

It is important to note that only business-related expenses from the Schedule C can be deducted while taking the standard deduction on your form 1040. This is not to be confused with work done as an employee that is deducted on your Schedule A (itemized deductions) as unreimbursed business expenses. These can only be deducted if you have chosen to itemize.

Standard vs itemized and which deductions you can take with each can become quite confusing. If you are unsure which deductions you qualify for, speak to a professional accountant. It is better to be certain that your taxes are accurate rather than risk fines and penalties from the IRS.


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