Another tax write off question

[deronsizemore]

Can you write off programming work on taxes? It seems like it could just be considered a business expense. I don't know how to program, so I hire someone to do it and then write it off as an expense.

Common sense tells me this wouldn't be legal...but I don't know.

[Chris]

absolutely.

If you're in this industry you can write off:

1. Design work/or templates bought
2. Programming work
3. Advertising/promotional service/submission fees
4. web hosting
5. your pc
6. your internet access
7. a second phone line, if you have one just for business
8. ditto for fax
9. possibly a portion of your home or rent for business use (talk to an accountant for sure, this one is tricky).

Basically anything you need to run your business is a writeoff.

[deronsizemore]

absolutely.

If you're in this industry you can write off:

1. Design work/or templates bought
2. Programming work
3. Advertising/promotional service/submission fees
4. web hosting
5. your pc
6. your internet access
7. a second phone line, if you have one just for business
8. ditto for fax
9. possibly a portion of your home or rent for business use (talk to an accountant for sure, this one is tricky).

Basically anything you need to run your business is a writeoff.

Damn! Thanks Chris for that list. This makes me a lot more happy now! lol. I have a few sites in the pipeline that I'm trying to get going (yeah I've been saying that for how long now??) I'm definitely not rich, and my wife has not completely taken to the fact that you can actually make money at this web publishing game. So I can't really drop 4 grand on some custom script that I don't even know will produce revenue...but since I can write it off on taxes as a business expense, that makes it's a little better.

[Bleys]

Just remember about issuing a 1099 to your programmers where appropriate. :)

[deronsizemore]

Just remember about issuing a 1099 to your programmers where appropriate. :)

Ah, yeah. Where do you get the 1099 forms from?

Also, when you write something off on taxes...such as 1,000 for someone to do some programming work, does that mean you'll get all of that 1,000 back when you get your tax return? How does that work?


Sorry for the totally newb questions... :)

[Chris]

No no.

Do you know the difference between net & gross?

Gross is your total income, every dollar you take in.

Net is total income - total expenses.

You are taxed on your net income.

So if you made $100000 & had $20000 in expenses your net income will be $80000 and you'll pay taxes on $80000.

It'd be nice if you could take your writeoffs and count them to your tax bill, but its not that easy. Really you just end up saving whatever your tax rate is. So if your tax rate is 30% and you writeoff $1k you saved $300 off your tax bill.

[deronsizemore]

No no.

Do you know the difference between net & gross?

Gross is your total income, every dollar you take in.

Net is total income - total expenses.

You are taxed on your net income.

So if you made $100000 & had $20000 in expenses your net income will be $80000 and you'll pay taxes on $80000.

It'd be nice if you could take your writeoffs and count them to your tax bill, but its not that easy. Really you just end up saving whatever your tax rate is. So if your tax rate is 30% and you writeoff $1k you saved $300 off your tax bill.

Oh I got ya now. Makes me wish I payed A LOT more attention in those boring Finance classes in college.

[Bleys]

Where to get 1099 forms: www.irs.gov ... ;)

It might help to talk to tax professional and sort some of this stuff out. It can get confusing. I pay someone to do my taxes. :D

[deronsizemore]

Where to get 1099 forms: www.irs.gov ... ;)

It might help to talk to tax professional and sort some of this stuff out. It can get confusing. I pay someone to do my taxes. :D


Yeah I pay someone also. They actually got me a bigger return this year because of write off's. That is more or less what got me on this subject in the first place.