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article imageOp-Ed: Microsoft argues Xbox One is tax-deductible

By Marvin Dumon     Jul 11, 2013 in Entertainment
Filing a 1099-MISC form with the Internal Revenue Service (IRS) can be a simple process for most independent contractors. However, many individuals and small businesses may not be taking full advantage of expenses eligible for tax deductions.
This week, Microsoft’s small business blog argued that the new Xbox One is a tax-deductible expense because the game console enables users to conduct work through a variety of applications such as video conferencing, web browsing, cloud storage, and other office apps.
“The Xbox One, priced at $499, is an affordable option for small business owners as there are many features built into the console that could help it rival even the most modest of video conferencing and networking platforms,” says Microsoft representative Marques Lyons. “With the processing power, snap mode, and connection to a large screen, that the Xbox One has, this device is capable of going from the 'break room' to the 'board room'.”
One fitness writer writes off his gym membership, running shoes, and cycling equipment as business expenses. Most freelancers – especially graphics professionals, writers, editors, audio/visual engineers – can use a home office deduction if an individual’s home is the main place where one does business.
Business Expenses
Independent contractors can deduct certain expenses on their IRS 1099-MISC form. Money that freelancers have spent on products, equipment, and services as part of their craft are deductible expenses.
Here are a few examples.
Home office supplies. Do you find yourself printing content from your printer, stapling and paper clipping pages together, or mailing items? Deducting printer ink, paper, staples, folders, stamps, and envelopes are allowable since these items are usually necessary to operate a business.
“Keeping good records helps you to find particular transactions that occurred throughout the year,” says Erich Ruth of 1099fire.com, a tax software firm based in Arizona. “Payers tend to forget independent contractors and that's the main problem with [IRS] forms. If you pay someone $600 or more in services during the calendar year, then you have to send them a 1099.”
Some freelancers don’t bother recording their work-related mileage and fuel expenses, but the lack of diligence typically costs them when it comes to dealing with Uncle Sam and the taxman.
Here’s a takeaway.
Did you drive your vehicle to attend a meeting with a client in the last fiscal year? Perhaps you passed around flyers as part of your marketing efforts. Independent contractors and small business owners should record their work-related mileage. Additionally, receipts from the gas station can help reduce your tax bill.
Reporting Requirements
Other deductible items include utilities and other bills, such as Wi-Fi and Internet connection, cellphone bills, and electricity. Independent contractors may be able to deduct a subscription to a service that allows them to remotely access their work computer while traveling.
In recent years, the IRS has progressively sought more information from American taxpayers. Critics in the U.S. congress, including House Republicans, are calling for a reduction in the IRS’ budget by as much as 24 percent.
“The new forms and new information required always throws people [off],” says Erich Ruth of 1099fire.com. “Consider IRS Form 1099-K. It’s really a new form. This tax year [2013], businesses must also report 'number of payment transactions'. In the past, that was optional and many companies just didn’t have that information. The new form requires that information. When January 2014 rolls around, I know many businesses will [be scrambling] trying to get that information.”
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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