Looking for ways
to reduce your tax bill? The IRS provides hundreds of deductions that taxpayers
can claim but many taxpayers are not aware of them. No one has the time or
wants to read all of the tax forms and instructions to find out what they are. A
good resource to find hidden tax deductions is the book, Lower Your Taxes by
Sandy Botkin.
There are tons of
hidden tax deductions that can be claimed. One hidden tax deduction that taxpayers
can claim is free services. Here are nine ways to deduct free services and
other expenses on your taxes.
- Pro Bono. Pro bono is when you donate your time and services for free or at cost. If you donate time and services for an event but ask for payment to cover traveling expenses - the time and services are considered donated and can be deducted. However, the services must benefit the general public.
- Free Services. If you provide free services to a charity, you may have to claim the income for the value of the job as if you were paid even though you did not. For example if you are a speaker, provide a seminar to a charity, and would normally be paid $1,000, you may have to report $1,000 on your taxes. Talk to an accountant to or contact the IRS tax help line to get specific tax information about the services provided. The services must benefit the general public.
- Volunteer Work. If you volunteer your time and services to help a charity you can deduct costs for hosting a party or fundraiser for an organization, supplies purchases that are required to perform volunteer work, cost of a uniform or clothing required to perform volunteer work, telephone expenses, and travel expenses such as parking, tools, gas, miles traveled, etc. Keep receipts of all expenses.
- Food. You can deduct food and tips as long as you have the receipts as proof of payment.
- Entertainment. You can deduct entertainment expenses except for alcoholic beverages.
- Expenses. You can deduct “ordinary” and “necessary” expenses associated with or necessary for your job especially for a trade. Ordinary expenses are common expenses for your trade or profession. Necessary expenses are those that are helpful for you to perform your job and apply to full-time or self-employed employees.
- Travel Expenses. Some travel expenses can be deducted if they were incurred to benefit a charity. Travel expenses that can be deducted include hotel costs, rental car and airline tickets.
- Business Meetings. If you attend conferences or business meetings for your job, you can deduct travel expenses including the cost to drive to the event if you are not reimbursed by your job.
- Car Mileage. If you use your car for your job or business and use it for that reason only, you can deduct the entire operation costs. If your car is used for your job and business, you can only deduct the cost for business use. You can deduct mileage usage using one of two methods: the standard mileage rate or the actual expense method.
The deductions are only
allowed if you itemize your deductions. Visit the www.irs.gov website to get
more information.
