Tax question for independent contractors (fees, insurance, profit, write off)
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I picked up an RV and plan to move around for my marketing blogging/digital design business. (Is nice way to look at different places to live as I'm currently miserable in the economically depressed hometown.) To keep things profitable, I will probably need to take on more types of work like office work. Is it possible to write off travel & housing expenses if I am working in different kinds of work?
Honestly this is a tax question for your accountant. Being that it is a motor vehicle it goes under capital gains; there is deprecation, gas & maintenance costs, insurance and registration write offs.....
I'm voting no on all three--the RV isn't a requirement of the job of blogging and digital design as I see it, and moving around would be a personal choice--so no deductions for travel or housing expenses.
Definitely talk to a tax professional before you start all this so everything is clarified.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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I had a business for 16 years and having done taxes during that time, I can tell you that the IRS will scrutinize vehicle use and also home business deductions. You are talking about combining the two, making it a very easy target for an audit. In your plan, the RV is your home, your office, and your vehicle. Talk to a tax professional, but in my opinion, you will be able to deduct a specific portion of the RV where you work (office) only, and the cost of maintenance and gas (mileage) only for getting from one customer to the next. All of this requires very careful documentation including odometer readings, receipts, and copies of invoices proving a business meeting at each location where you deducted the mileage.
Wow. Don't know. My guess is that you can deduct a percentage, like you can deduct a percentage of your house expenses, but not the whole house, for an at home business. Home office can't contain anything but business materials and no recreational use of home office computers. That's going to be hard to do in an RV.
Also, attention of IRS is drawn like a beacon to anyone deducting a home office. Save receipts and document every penny and every mile. IRS might want to see it all. There is no problem with being audited as long as you have never cheated on your taxes and if you can document every expense, but you have to be prepared to prove every deduction.
On the other hand, I am allowed to deduct mileage for business travel and maybe hotel expenses if it is 100% business related. I can deduct business related restaurant expense, under some circumstances. You might possibly be allowed to deduct campground fees, and some restaurants, but not meals eaten in the RV.
You really need to consult with a very good quality certified public accountant who specializes in business taxes.
If you do it, get a full wrap for your RV that gives your business name and contact information, like a billboard. Then there will be a bit of advertising deduction for the RV.
Additional thought: you aren't going to be able to deduct any of it if what you do can all be done online, because there is no justification for traveling in that business. You are going to have to be doing something where you physically must be at the new location.
My kid was working at home and I did research on this, I think home deduction is easier now, but I think something like $300 or 300 square feet. And you must make sure you only use it for business.
You can deduct travel expense, but I think you might need a home location like a real address for IRS.
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