It's tax time, and it's making me crazy.

[Jim Oaks]

In our last house I had a room specifically for business and deducted that percentage on my taxes for a home office.

With the new house, I have a finished office downstairs. Simple. But, I have (2) garages. (1) is attached to the garage which is for personal use, the other is a (4) car garage that I use solely to store and work on the trucks as part of my online business. That garage even has it's own electric meter.

Figuring the office is easy. You just figure out the % of the house you're using. I can't figure out how to add in the (4) car garage.

Obviously I can claim all of the garages electric bill, but I can't figure out how to claim that portion of the mortgage payment. The only idea I can come up with is to add the square footage of the shop to the house and then deduct it.

IRS Publication 587 isn't any help.

 

[--weezl--]

i would do the total square footage of the garages+ total square footage of the house, minus the total square footage of your house that you use only for personal use, and the garage for personal vehicles, the remainder would be the total square footage used for business... then get a percentage using that number...

but i may not be the best guy to ask about taxes, i got audited last year and it cost me about $500 i still owe revenue canada (taxman)

 

[LearjetMinako]

i would do the total square footage of the garages+ total square footage of the house, minus the total square footage of your house that you use only for personal use, and the garage for personal vehicles, the remainder would be the total square footage used for business... then get a percentage using that number...

Thats what I'm thinking too.

 

[adsm08]

Weezl's idea is good. The only thing I question about it is that the garage in question is a structure separate from the house.

You may be better off (and more correct) to have the property appraised, with separate lines for the house, land, and garage and claim the value of the garage.

I actually know the guy who is the top accountant for Rite-Aid Corp. I'll shot him a message and see what he thinks.

 

[--weezl--]

i would definatly consult with an expert for sure... but it would seem to me that square footage being used for business is square footage being used for business...

that being said though, garage square footage isn't included in a home's is it? which would mean that everyone who does the "my house is this big and i use this much of it for work" is over charging (percentage wise) because they aren't taking into consideration the garage...

i don't know...


something you might be able to do is you (the person, Jim Oaks) charge your company (Jim Oaks Inc [or what ever it may be]) rent for the space of your office and garage, at fair market value of commercial space of the same type of deal, and write your company an invoice for such, though you would then have to declare that as a financial income on your personal income tax, i would think...

 

[Surrey]

I would suggest going into the bank who has your mortgage and ask their opinion on the matter.

 

['99 EB Explorer]

lol...this is why i have an accountant do all my finances for me. She charges $30 to do my annual taxes, and she's also taking care of some other stuff for me right now free of charge.

I remember the first time I looked at tax stuff....i put it back down immediately and called an accountant.

Good luck with your taxes this year jim.

 

[shane96ranger]

something you might be able to do is you (the person, Jim Oaks) charge your company (Jim Oaks Inc [or what ever it may be]) rent for the space of your office and garage, at fair market value of commercial space of the same type of deal, and write your company an invoice for such, though you would then have to declare that as a financial income on your personal income tax, i would think...

You can do this, but you should actually show an exchange of money into separate accounts in case there is an audit. I would do this for your 2011 taxes if you don't have something like this going on already.

I know a guy who owns a company under one name, and the equipment under another name. He leases the equipment to the company for tax purposes.

ADDED: I usually call the IRS every year for one thing or another because it is DAMN confusing, even using software that is supposed to do it for you. My wife is paid from her work as a consultant via 1099. Being paid like this we can claim her as self-employed. It's a PITA filing this way, but I get to deduct the percentage of the utilities that it takes to run her office.

There are a lot of things you can deduct being self-employed that I don't though because it's just too big of a hassle to keep track of all year in exchange for a couple hundred dollars. I don't keep track of business miles, office supplies, equipment repairs, etc.

 

[Jim Oaks]

The ambulance company Vanessa works for has everything seperated as different companies.

The building is rented to the ambulance company by the rental company, and the ambulance company pays the dispatching company to dispatch, even though their all owned by the same guy.

I don't see any tax benefit from it because you claim it as expense from one and income for another.

I do see it as more of a liability protection though. If someone sues the ambulance company, they can't go after the bulding because it's a completely different company.

I thought of renting my garage to my business, but on the taxes I don't see the benefit because I'll claim it for a deduction, and then put it right back on as income.

 

[shane96ranger]

Yeah, I see what you mean. I'll have to inquire as to the exact reasoning. I've always assumed it was to keep the separate entities in a lower tax bracket, but may be wrong. I do know you can claim depreciation on machines used for the business.

 

[--weezl--]

i was going to say the same thing as shane, splitting the income probably drops it into a lower tax bracket, but you would have to have separate business licenses to do that... for yourself Jim, the biggest benefit i see to renting the garage to yourself is it makes it easier to write off say 10 000$ per year as a business expense for the garage...

Shane, in canada you don't have to count your miles for business, you can just estimate how much you drive for personal, and how much you drive for business, but you have to be able to show your work as for why that's how much you drove for business, and it has to be convincing... which isn't hard to do... for instance, if you have a regular business location you drive to 3 times a week for supplies or such, and it's 3 times a week every week, and it's 10 miles away, you can justify 3120miles per year for that, as it's round trip 20 miles x 3 times per week x 52 weeks in a year, then add in an additional 10 or 20% for miscellaneous driving, revenue canada wouldn't think twice about accepting that

 

[shane96ranger]

i was going to say the same thing as shane, splitting the income probably drops it into a lower tax bracket, but you would have to have separate business licenses to do that... for yourself Jim, the biggest benefit i see to renting the garage to yourself is it makes it easier to write off say 10 000$ per year as a business expense for the garage...

Shane, in canada you don't have to count your miles for business, you can just estimate how much you drive for personal, and how much you drive for business, but you have to be able to show your work as for why that's how much you drove for business, and it has to be convincing... which isn't hard to do... for instance, if you have a regular business location you drive to 3 times a week for supplies or such, and it's 3 times a week every week, and it's 10 miles away, you can justify 3120miles per year for that, as it's round trip 20 miles x 3 times per week x 52 weeks in a year, then add in an additional 10 or 20% for miscellaneous driving, revenue canada wouldn't think twice about accepting that

Here they give you an amount per mile. I've never claimed it on my taxes, but I do turn in my mileage at my job when I do something in my vehicle for them. I have to turn in documentation to be reimbursed and I think it was 50 cents per mile in 2010. Anyway, this leads me to believe I should have been documenting it to be reimbursed. I believe self employed can also claim mileage to go to doctors visits and to the pharmacy (I'm not sure if this is at 50 cents though).

I guess I could always just generate a log for her.

 

[IRKillroy]

you should base it on two things,

the cost of the Garage (estimate, you insurance company can help you as in order to insure it they will have a calculator on what the going rate to replace it would cost) and the value of just the property (your registrar should have this info) and break down the the amount of land you use.

 

[--weezl--]

Here they give you an amount per mile. I've never claimed it on my taxes, but I do turn in my mileage at my job when I do something in my vehicle for them. I have to turn in documentation to be reimbursed and I think it was 50 cents per mile in 2010. Anyway, this leads me to believe I should have been documenting it to be reimbursed. I believe self employed can also claim mileage to go to doctors visits and to the pharmacy (I'm not sure if this is at 50 cents though).

I guess I could always just generate a log for her.

ahh see that's different than up here... it's just a business loss, and canada also has a form that you get yoru boss to sign that basically says you are required to provide supplies for work, including a vehicle, which you can then write off, back when i was doing security and loss prevention, i wrote off gloves, handcuffs, handcuff cases, handcuff keys, knifes (safety knives) my car's mileage, i even wrote off jackets that got damaged in scuffles (i never wore a uniform)

 

[shane96ranger]

Here they give you an amount per mile. I've never claimed it on my taxes, but I do turn in my mileage at my job when I do something in my vehicle for them. I have to turn in documentation to be reimbursed and I think it was 50 cents per mile in 2010. Anyway, this leads me to believe I should have been documenting it to be reimbursed. I believe self employed can also claim mileage to go to doctors visits and to the pharmacy (I'm not sure if this is at 50 cents though).

I guess I could always just generate a log for her.

After reading this, I can see I had been up late when I typed this, LOL. I meant to say that if I do use my truck for company purposes, I document the mileage it took to do so. At any time I can turn that in to my employer and they will reimburse me right then (or within a day). Then they turn it in for their taxes. This is the reasoning the IRS posts the "business mileage rate" at the beginning of each year; so employers can reimburse employees throughout the year. I also have the option of claiming it on my own taxes though.....this is something my boss does.

If anyone is interested here are the figures for 2010:

* 50 cents per mile for business miles driven
* 16.5 cents per mile driven for medical or moving purposes
* 14 cents per mile driven in service of charitable organizations

Here's the deductions for 2011:

* 51 cents per mile for business miles driven
* 19 cents per mile driven for medical or moving purposes
* 14 cents per mile driven in service of charitable organizations

So the medical deduction IS different.