Category: tax deductions

If you are an employee you can claim business expenses tax deduction on several expenses that you incur in conducting the company s business. These deductions should be claimed as itemized deduction on Schedule A, Form 1040.

The IRS or Internal revenue Service recognizes the following as business
expenses on which tax deductions can be claimed: transportation charges, lodging and food expenses on business trips away from home, local transportation other than commuting to work place, entertainment and gifts.

Although the cost of local commuting is not considered for deduction, there are exceptions. If you are going from one workplace to another then you may deduct the expense. For example, trips from office to client office qualify for this deduction. If you work from your home then trips from your home office to office of the organization also qualify. You can also deduct the cost of traveling between home and a temporary work location outside the area where you live and work. A place where you expect to work for less than a year is called a temporary location. Business travel expense has a long list of heads and you can refer to Topic 511 for details.

The second head under which tax deduction is available is vehicle donation. The rules for this are slightly more complicated. The exact tax break depends on the donor’s claimed value of the gift and how the charity uses the vehicle. Thus you may not know the size of your deduction when you make the donation. In addition, there is a $500 limit on the donated vehicle s value, beyond which the rules get even more complex. A donor also gets a fair market value deduction if the charitable organization conducts major repairs that significantly increase the value of the donated vehicle.

It is therefore better to sell the vehicle and get cash in hand than get a relatively small tax deduction. An automobile should be donated when you don t wish to spend money on souping it up, and, of course, if you re in a generous mood!