If you incur expenses related to your business, you may be able to deduct those expenses on your tax return. In previous articles, we touched on deductible business-related travel, entertainment, gift, and transportation expenses, as well as requirements for recordkeeping to support your expense deductions. This publication is focused on the requirements for reporting expenses on your tax return in order to obtain business-related expense deductions.
Reporting for Self-Employed
If you are self-employed, the type of business determines where you must report your income and expenses. If you have a sole proprietorship, you must report your income and expenses on Schedule C or Schedule C-EZ. If you are a farmer, you must report your income and expenses on Schedule F.
If you have business expenses related to a vehicle that you would like to claim, you must break out the expenses on the appropriate line of Schedule C, C-EZ, or F.
If you use Schedule C:
- Report travel expenses, except for meals, on line 24a
- Report the actual cost of or standard meal allowance for deductible meals and entertainment expenses on line 24b
- Report gift expenses and transportation expenses, excluding car expenses, on line 27a
- Report car expenses on line 9
If you use Schedule C-EZ, report the total amount of all business expenses on line 2. You can include only 50 percent of your meal and entertainment expenses in the total amount you include on line 2.
If you use Schedule F:
- Report car expenses on line 10
- Report all other business expenses on line 32, including only 50 percent of your meal and entertainment expenses in the total
Reporting for Both Self-Employed and Employed
If you are both self-employed and employed, you need to maintain your business expenses separately. You must report your business expenses related to your self-employment on Schedule C, Schedule C-EZ, or Schedule F, and you must report your business expenses related to your employment on Form 2106 or Form 2106-EZ.
For your employee-related business expenses, you can report them on Form 2106-EZ if all of the following are true:
- You are employed and deducting expenses related to your employment
- Your employer did not reimburse your for your expenses
- Your use the standard mileage rate for any vehicle-related expenses
If you received Form W-2 and the “Statutory Employee” box was checked, you must report your income and expenses on Schedule C or Schedule C-EZ.
Reimbursement for Personal Expenses
If your employer reimburses you for personal expenses that are not deductible, the reimbursement is considered income to you. Your employer must report these monies as income on your Form W-2.
If you own property that produces income, any travel or transportation expenses must be reported on the appropriate form based on the type of income produced.
For example, if you have rental property income and expenses, you must use Schedule E to report the expenses. If you have travel or transportation expenses related to an investment, you must use Schedule A to report the expenses.
How can I get more help concerning deduction of business-related expenses?
If you have further questions about business-related expense deductions or you need additional help with your tax return, you should speak with a tax attorney. A tax attorney has the education and experience to show you what expense deductions you can take, how to support those deductions, and how to report those deductions on your tax return.
By completing the form below or calling the telephone number located at the top of this web site, you can speak with a tax attorney. The initial conversation is free of charge, and all conversations with an attorney are protected by attorney-client privilege.
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Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.