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Our New York City Tax Accountants and CPA office provides New York State business tax information and New York City freelance tax information to assist our clients. If you need assistance, please contact our firm.

Now that we are getting down to the wire for filing individual taxes and New York businesses structured as LLCs and corporations, it’s key to know the basics so you can tackle your taxes in a timely manner. The following list of 2017 tax FAQs can help you tame the most common points of confusion:

Generally speaking, what deductions can I claim? As a freelancer or self-employed business owner, you can deduct any expense that is used in the service of your business. This includes, but is not limited to:

  • Office supplies
  • Rental expense of an office space
  • Travel expenses (airfare, hotel, taxis, parking, public transportation)
  • Marketing materials (business cards, brochures, online ads)
  • Computer software (i.e. Microsoft Office, Adobe Suite)
  • Professional fees (lawyer, accountant, bookkeeper)
  • Health insurance premiums (Use page 1 on your 1040 or Schedule A, not Schedule C.)
  • Meals (You can claim 50% of the expense for meals you eat when away from home for work purposes or when entertaining a client as long as a substantive business discussion is involved)

To claim these deductions, you must both allocate the expenses accordingly and have the documentation/receipts to substantiate them. For example, if you work at home and use an internet service for business and personal use, you need to determine the percentage you use for each. You can then deduct the percentage of the total cost used for your business.

When do I report income that was earned in a different year than it was paid? Most freelancers and some businesses use cash basis accounting, meaning that income is reported in the year it was paid, not the year it was earned. So if you finished a project for a client in December, 2016, but weren’t paid until January, 2017. You would report the income as 2017 income.

How do I deduct mileage? As of 2017, you’re eligible to deduct up to 53.5 cents per mile for business-related trips. The most efficient way to deduct this mileage is to keep a log of your total mileage, annotating each trip with the date, destination, and trip purpose. You can also deduct the cost of gas.

I just bought a new laptop for business-related purposes (mostly)! Can I write off the full cost? To the extent that your laptop is used for business you can write off.  Most freelancers and business owners get to depreciate their equipment over five years (computers, camera equipment, fax machines, etc.) or seven years, depending on the life of the item. Some qualifying businesses can also take an exception that allows them to write off the entire cost of the product in the first year.

What is the difference between depreciation and amortization for tax purposes? Depreciation is a reduction in the value of a tangible asset (i.e. a computer) with the passage of time, due in particular to wear and tear. The IRS requires you to allocate cost of this equipment over a certain number of years; it can’t be expensed immediately. Small businesses can accelerate this write off, with some IRS-stipulated caveats. Amortization is the paying off of debt for intangible assets (i.e. housing or auto loans, research and development) with a fixed repayment schedule in regular installments over a period of time.

New York City business taxes are a specialty of our Manhattan CPAs. Please let us know if we can help you with freelance taxes or corporate taxes in New York State or New York City.