Issue link: https://www.massageandbodyworkdigital.com/i/77400
BUSINESS SIDE Less obvious deductions shouldn't be overlooked. Basically, if it's for your business, it's a deduction. Taking a lomilomi class in Hawaii? Write it off. Buying music to play during massage? That's deductible. The business use of your car is tax-deductible; that is especially important to those therapists who do outcalls for a living. And practitioners who work at home defi nitely need to take advantage of the home offi ce deduction (see Deductions to Consider, page 25). For complete details on deductions for the self-employed, visit the Internal Revenue Service website and see Publication 535: www. irs.gov/pub/irs-pdf/p535.pdf. If you are an employee, you may still be entitled to certain tax deductions, as long as they are not expenses that are reimbursed by your employer. For instance, if you're obligated to pay for your own work uniform, that's a deduction. However, you must itemize your taxes in order to take advantage of that, and you can only deduct what is in excess of 2 percent of your adjusted gross income. EXPENSES YOU CANNOT DEDUCT Deductions can be confusing and the IRS has little sympathy for those who abuse them, so proceed with caution. Following are some examples of possible deductions that may suit practitioners. While uniforms are tax-deductible, clothing that is adaptable to everyday use is not. You might have a hard time convincing the tax auditor that you can't also wear those khaki pants and polo shirts you wear to work to the bowling alley or the grocery store. Job-hunting expenses are only deductible when you are seeking to change jobs within the same profession, and cannot be taken when you are looking for your fi rst job, or changing career tracks altogether. In the same Home Offi ce Deductions In order to take advantage of the home offi ce deduction, it must be your primary place of business and be where you regularly meet with clients. You can only deduct home repairs and maintenance if they are done on the portion of your home that serves as your home offi ce. The portion of the rent and/or mortgage payment and utilities that you can deduct are dependent on the amount of space that constitutes your home offi ce divided by the total square footage of your home. For example, if your home is 1,000 square feet and your offi ce is a 10 x 10 room, that's 10 percent of the space in your home. When fi guring utilities, consider not only the percentage of space but also the amount of time that you are actually working in the home offi ce, and adjust accordingly. You can't take the full 10 percent if you only work six hours a week. The IRS is very strict about home offi ce deductions. If you are taking the deduction, your space should be dedicated exclusively to your work. Don't use it for double-duty, such as a storage space for non-massage related items or as an extra guest room or playroom for the kids. vein, a therapist just starting her career may not be able to deduct the cost of taking the exam required for initial licensure, but once in practice, would be able to deduct the cost of an advanced certifi cation. Personal expenses, like gym memberships and nail and hair services, can't be deducted unless you're a model or an actor who can prove it's vital to your career to look good. You can deduct the costs of belonging to a professional membership organization, but you can't deduct your membership to the local country club. If your business is strictly an outcall business and you document your mileage, that's a legitimate deduction. However, some folks have had the crazy idea that they can deduct the entire cost of their auto by putting a magnetic business sign on the family car. Wrong. The only thing deductible in that case is the cost of the sign. MAXIMIZING YOUR PERSONAL DEDUCTIONS If your business is structured so that the income is directly yours, or passed through an entity to you to be reported on your personal tax return, and your deductions fall below the threshold that it would serve you to itemize your tax deductions on your personal return, you'll just be taking the standard deduction. According to the IRS website, for the tax year 2010 that amount is $5,350 for a single person or a married person fi ling separately, and $10,700 for a married person fi ling jointly or with a dependent. On the other hand, if you have more than one child or other family member who is your dependent, if you're paying a mortgage, if you have steep medical and dental expenses, casualty and/or losses due to theft, have made substantial contributions to charity, have contributed to your own retirement account, or even bought a new car, you may be better off itemizing your deductions. There are a lot of available tax credits and outright tax exemptions for certain circumstances, such as for people who have retired, people who have drawn unemployment payments, child care credits, adult education credits, credits for earn CE hours at your convenience: abmp's online education center, www.abmp.com 23