If you follow me on Periscope (if you don’t, you should), you will know that I went on a small rant about taxes and deductions a few days back. I had a ton of people ask me to write out my rant so they can reference to it in the future. Since I am a people pleaser by nature, I have decided to do just that.
*Disclaimer – I am not a tax professional, nor do I ever want to be. Please consult with your CPA to make sure you have the right documentation for the IRS. The last thing you want to do is mess around with the federal government. Do your homework and double check all the fact. In fact, I would print this out and take it with you to your appointment with your accountant. It would never hurt to be over prepared instead of under prepared.
- Sales Tax – If you are someone who forgot to take in your reseller permit when you went shopping, there is still hope for you to get some of that money back. If you live in a state that doesn’t collect sales tax, you might also be in luck. In 2013 and 2014, the federal government allowed those whom paid sales tax to itemize it on their tax return. There is even a nifty little calculator for you to use on the IRS website (click here to get to it).
- Item Donations – Do you have a box (or twelve) or items that were damaged and you can no longer sell? Instead of taking up room in your garage, you can actually take these items to Goodwill (or another thrift store) and use the value as a tax deduction. Simply ask for a receipt at the time you drop off the goods and make sure to bring that with you when you get your taxes done.
- Home Office – If you are like me, you have a room in your house that is solely dedicated to Amazon inventory and my selling activities. If you have a room like this, you are actually able to take a percentage of your mortgage (or rent), utilities, and costs of improvements out on your taxes. Your tax professional will help you determine the exact amount, but make sure to measure your room to make it a little easier.
- Education – There are a lot of great educational resources out there for us sellers. If you purchase a course (like Online Sourcing Made Easy or Slamazon Private Label) or a book (like The Reseller’s Guide to Board Games or The Reseller’s Guide to a Year in FBA), you can actually deduct that from your overall income. That makes this a perfect time to invest in yourself and your education.
- Software – If you are a user of a software like Inventory Labs or OAXRay, you can actually deduct the entire cost of these services off your taxes. Even better, you can go ahead and purchase next year’s subscription and have a double hit 🙂
- Charitable Gifts – You all know that I love to give to charity, so this one should be a no brainer. Gifts to non-profit organizations are a great way to reduce your tax burden and help others in the process.
- Mileage – This one seems obvious, but I’m telling you that this is one of my biggest deductions of the year. Keep a little notebook in your car and start tracking your milage every time you source. If you have forgot to that this year, go back to your receipts and start figuring it out.
- Lists – If you visit us regularly on Gumroad for our lists, don’t forget that those are a business expense. So make sure to stock up before December 31 so that you can have great products to source and save some on your taxes.
- Subscriptions – If you are member of our List Club or the Make Green in 2016 group, make sure to take your receipts for those to your accountant. You might also want to keep an eye out for new releases over the next year so that you can get the most bang for your buck.
- Retirement contributions – This is one that you will have to talk over with your CPA and/or your financial advisor. There are specific types of funds that you can start as a small business owner that can help you save for retirement and save on taxes.
- Insurance Premiums – If you are self employed (full time) and provide you and your family with insurance, you might be entitled to a deduction for the amount you paid as a premium. Keep this in mind as you make your choices for health care coverage for the new year.
- Travel, Meals, Entertainment, and Gifts – You know that cheeseburger you had while you were out sourcing? You can actually ride off 50% of it on your taxes. Travel to and from conferences can also be deducted and even your hotel room. Giving your UPS man a gift this holiday season? If so, keep the receipt and bring that along with all of your pick up charges when you file your taxes.
Now that you have a decent start on what to look for, make sure to collect (and organize) your receipts for this year and next. It might take a little bit of time, but you will be so thankful when you have to go through it all 🙂
If you have an Android phone, purchase a year’s subscription to the app MileIQ. It keeps track of all your miles AUTOMATICALLY!
What is a reseller permit?
Actually, you can only write off 50% of meals if you are staying away from home overnight on business. If you are out sourcing for the day, meals are not at all deductible. See “Small Time Operator” by Bernard Kamoroff or “IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses.” Both make this clear.