Tax Question – Business and Personal Deductions

Question: Is there a quick checklist to help me determine what is deductible personally, for rentals, and for business?  I do not need all the details right now.

Answer: The easiest thing to do is to review the IRS forms.  The IRS forms categorizes the main deductions.

Personal Deductions
Review the bottom half of page one of Form 1040.  These are personal deductions to determine Adjusted Gross Income.

Review Schedule A, Itemized Deductions.  These are personal deductions after the determination of Adjusted Gross Income.

Rental Deductions
Review Schedule E, Supplemental Income and Loss. This form is for reporting rental activity.  The form categorizes the main expenses for a rental activity.

Business Deductions
Review Schedule C, Profit or Loss From Business.  If your business is a Doing Business As (DBA) or a single member LLC that has not elected to file for S election, then your business activity will be reported on this form.  The form categorizes the main expenses for your business.

IRS Circular 230 Disclosure: To the extent this writing contains advice on a federal tax issue, the advice is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication.