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Tax Tips

As an independent contractor it is up to you to identify all business expenses in order to maximize your bottom line.

Ok, if you’re thinking to yourself, “Shari, you’re a court reporter … what do you know about taxes?” You are absolutely right. I am a court reporter, and you should not look to me for tax advice. I strongly recommend working with a qualified accountant to help you complete your returns. That being said, I do have a good working knowledge of how business expenses work, and you should too.

Let’s start with some basics. The IRS permits you to deduct business expenses. Generally, to be deductible, a business expense must be both “ordinary and necessary.” An ordinary expense means one that is usual the court reporting industry, and a necessary expense is one that is helpful and appropriate in the industry.Listed below are three areas you should consider to make sure you’re maximizing your deductions.

Automobile Expenses: As a court reporter, odds are you use your car to get to and from your jobs. You have two choices for deducting your automobile expense. You can deduct either the mileage itself, or you can deduct what is called the “actual-expense” approach. Under this approach you will add up all of the costs of operating your car for the year. These expenses for your car would include gas, insurance, maintenance, and depreciation. If you have leased a car, then that expense is also deductible.
Home Office: Do you have a home office? If so, the part of your home which you use to run your business may qualify for a “home office” deduction. Under the “home office” deduction, you may be able to deduct portions of your mortgage interest (or rent),
depreciation, utility bills, insurance costs, cleaning, and repairs. Keep in mind that there are strict criteria you must meet in order to take advantage of the home office deduction.
Entertainment and Travel: You will also be able to deduct reasonable travel and entertainment costs so long as the costs relate directly to business. The question to ask is whether business took place or was discussed during the entertainment? Travel expenses that were incurred are also deductible. These may include airfare, bus or train fare, taxi fare, or any other reasonable transportation mode.

In our work, we, as court reporters, are keepers of the record. When it comes to keeping your receipts, you should also be keepers of the record. Your receipts are evidence of your expenses and without them you'll never be able to accurately calculate your deductions.

So remember, if you start now you'll be able to get your records in order by the end of year, and that will help you maximize the bottom line!