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Old 01-12-2011, 06:53 AM
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My4SunshineGirlsNY My4SunshineGirlsNY is offline
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Default Mortgage/Taxes, Vehicle Insurance

As I sit brainstorming of deductions I could have missed, I don't understand what I can take for my Mortgage payment or anything tied to it such as school/land taxes or interest. I was only in business for 4 months last year and when I mentioned depreciation of my home, my accountant said I shouldn't get into that because it gets hairy if I ever sell my home. I don't plan on selling my home so I would like to know more about this before I file this year. What can I claim that is mortgage related??

Also, I take the standard deduction for my mileage...can I claim anything else in addition to this? Such as my car payment or vehicle insurance? I use my van daily for daycare kids. I don't want to miss anything so if I can get someone to clarify what I can claim in regards to these 2 things, I would appreciate it. thank you.
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Old 01-12-2011, 06:23 PM
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Default Mortgage interest

When you own a home you can claim the time-space percentage of your mortgage interest on Form 8829. You don't deduct your mortgage payment. But you should depreciate your home!!! An accountant who tells you not to depreciate your home is hurting you. Here's why:

Let's say you are entitled to claim $1,000 a year in home depreciation and you are in business for 6 years before you quit. 5 years later you sell your home. Over the 6 years you were in business you claimed $6,000 in depreciation. You will owe tax on this $6,000 when you sell your home. But if you didn't depreciate your home you will still owe tax on the $6,000! The IRS rules says that if you are entitled to claim depreciation on your home you will be treated as if you did depreciate your home! So, your tax accountant's advice is terrible because you can't avoid this tax later.

If you use the standard mileage rate you can also deduct parking expenses (for your business trips), tolls, as well as the business portion of car loan interest and car property tax. Not all states charge property tax when you renew your car registration. Look on your statement to see if there is a tax. Many providers and tax preparers miss these deductions. The business portion is arrived at by dividing your business miles by the total number of miles your car was driven.
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Old 01-13-2011, 06:43 AM
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Thank you Tom...so I can't calim any percentage of my van payment? Also, I use Minute Menu and there is a category for Vehicle insurance, not sure if I can claim that?? I have your book and really need to finish reading it (haven't made it too far as I'm always busy with something!). Maybe I can read while the daycare boys are napping today. One can hope!

Last edited by My4SunshineGirlsNY; 01-13-2011 at 09:08 AM. Reason: Adding a question
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Old 01-13-2011, 11:12 AM
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Default car Expenses

No, you can't claim a percentage of your van payment, but you can claim a percentage of the loan interest. If you use the actual expenses method of claiming car expenses you can claim depreciation on the van. You can't claim vehicle insurance unless you use the actual expenses method (not the standard mileage method).
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