Business Relocation Expenses

If you are relocating your business to another country, state or even just a different part of the country, there may be some ways that you can deduct your business relocation expenses. The first step is to determine how much the move will cost you in terms of both time and money. This may be your first piece of advice when it comes to the subject of deductions.

Start by estimating the direct and indirect costs that you will incur as you move your business to the new location. These include utility bills, transportation and other expenses that are related to the move. These are not your only expenses. You need to also consider indirect costs such as your investment in the new location and its affect on your future revenue from that location. These expenses may be tax deductible depending on the tax rules applicable in your particular state.

What Expenses are Deductible?

Now that you know what kind of expenses are deductible, you must determine which deductions are available to you. There are several categories of deductions that you can claim for this move. You must choose the ones that will be the most beneficial to you and will ultimately result in the highest savings. If you are not sure which deductions you can take, an experienced professional can help you make the right choices.

Business Depreciation

Business depreciation is one of the most popular deductions. This deduction allows you to depreciate your property over a period of time. You may be eligible to reduce your capital gains tax (CGT) at the same time. You may also be eligible to claim depreciation based on an increase in the fair market value of the property or improvement that you have made to your residence. If you use any personal or computer skills in the business-related improvement, you may also qualify for a deduction.

Employment Expenses & Others

Some other deductions that you may be eligible for include: Employment expenses, charitable contributions, mortgage interest, property taxes and some casualty losses. Business Liens are claims that you may also be eligible for if you hold more than one lien. Business Real Property Tax Deduction claims may also be eligible for if you have used a portion of your residence for business purposes.

Insurance Cost

Your insurance costs are deductible expenses. If you have your own insurance policy, the policy may include in your tax deductible expenses. The policy is a qualified written order (RPO) when you finish all the necessary documents and signing your policy. RPOs are considered tax deductible if you are properly classified as a dependent of yours and if your insurable interest is maintained on your own insurance policy. Business Insurance may also be claimed as a tax deductible expense.

Emergency Expenses

If you have to relocate for reasons related to emergencies, you may also claim emergency expenses. Excavation fees, replacement cost, transportation and storage charges and utilities are considering deductible expenses. However, if your relocation is due to an emergency, you should get in touch with a Relocation Expense Determination Service (REIDS). REIDS provides assistance to taxpayers who need assistance with tax claims. You will need to provide proof of your emergency. The tax deduction has limit to the amount that is eligible for and used as relief.

Conclusion

The above mentioned are some of the common exemptions that may be claimed as tax-deductible business relocation expenses. If you are unsure about any tax deduction, it is advisable to consult a qualified tax professional. There are many tax professionals and accounting firms who offer tax advice and assistance to individuals and companies who are planning to relocate or increase their business presence in a new or different location. They can assist in preparing your business tax return and advise you on the various tax breaks available to you. You may also seek their advice on business loans and grants that may be available to you.

Many people believe that a tax deduction works clothes as clothing is items that are used every day. It could be used as a coat, tie, blouse, pants, or jeans. It could also be used as an occasional and emergency dress. But if it is new clothing purchased at a tax-free outlet then it is no tax deduction for work clothes. It means clothing that was purchased and used for a tax deduction.

There are many tax deductions available for every type of tax paid. Some tax deductions are excluded for tax reasons and some tax deductions are only applicable on itemized tax returns. Items that fall under the exclusions include interest paid, expenses paid, capital gains, and state and local taxes. If you claim any of these exclusions on your federal tax return, the tax deduction will not apply to clothing worn while working. It will only apply to clothing purchased and worn while away from home.

Tax Deduction on Clothes

Professional Clothes

One example is the tax deduction for clothes for police officers. Although they are not tax deductions, they qualify as regular clothing tax deductions. Because they were purchased for their official duty. This is considered an expense deduction. For most police officers this tax deduction can be very significant.

Uniforms

A clothing-tax deduction that is considered a business tax deduction is determined by determining the gross revenue loss incurred. And adding the appropriate tax deductibles. A tax-deductible business expense includes the total of all expenses, including transportation, business expenses incurred such as meals, supplies, postage, and others. These expenses are deductible if they can be proven to be related to the performance of your job. Clothing expenses such as uniforms can be deducted if they are custom made if the uniform can be altered, if it is branded and if the uniform serves an important purpose. However, uniforms that are regular clothing items can’t be deducted as tax deductibles.

Exceptions

There are two exceptions to this general principle. The first is if you are traveling in your private car, which is called a tax-deductible business trip. The second is if you are traveling in a private vehicle that is chartered by a church, state, or national charity. Even though traveling in these tax deductibles can be good business sense, it’s still not wise to use your tax deductibles for personal expenses.

Tax Deductions by Buying Quality Clothing Item

One of the easiest ways to save on tax deductions is to buy quality clothing items. Good quality clothing items are expensive and if you purchase them in bulk you will be able to get a good discount. You don’t even have to look very hard to find good quality clothing tax deductibles. One excellent way to save tax dimes is to buy in bulk. There are many retail stores out there that specialize in clothing items that can be purchased in large quantities. You can also make purchases from government agencies and institutions, as they are usually on duty free and can be absolutely tax deductible.

Clothing should be chosen with care. Try to avoid clothes that have low-slung collars or other unattractive aspects that will be considered tax dimes. It might be tempting to purchase something in bulk and then resell it, but you will be better off buying low-cost items and adding them to your collection to be sold later. Also, be careful to choose clothing items that are appropriate to the place where you will be wearing them. If you are going to wear a white shirt at your daughter’s soccer practice, don’t choose a white t-shirt to wear to an accounting meeting. If you are trying to save on tax deductions, it’s important to pay attention to detail and select clothing that will help you succeed in whatever position you are trying to get into.

Conclusion

One final note. It’s important that before you begin trying to find clothing tax deduction that you read up on your tax laws. Sometimes certain types of clothing are not tax-deductible depending on where they were manufactured. For example, there is clothing that is manufactured in one country and shipped to another country that is tax-deductible in the country where it was shipped.

With the 2021 Financial Year coming to an end in 3 months it is never too late to get started on compiling your work-related expenses. You would like to claim for your Tax Agent at R T Accounting & Taxation Services to review and lodge your tax return. Here is the list of potential tax deductions you should be keeping an eye on whilst compiling your list.

How do Tax Deductions Work?

First, it is important to understand the role tax deductions play in reducing your taxable income. When lodging a tax return, you can claim deductions for expenses incurred in earning your assessable income. These deductions are known as “work related deductions”.

To be able to claim these work-related deductions you will need the following:

• A record to prove the expense was paid.
• Proof that you have spent the money yourself.
• You have not been reimbursed this expense by your employer.
• Correlation between this expense and the role you are in.

It is also understandable that sometimes you can jumble up expenses between private and work. So it is important to apportion the deduction you would like to claim for the work-related part of the cost.

Different Types of Tax Deductions You Can Claim

Work-Related Car & Travel Expenses

We are starting this off with potentially the most intricate part of work-related expenses, the work-related car and travel expenses. The key point to note is that you must keep records as this will make it easier for both yourself and your tax agent at R T Accounting & Taxation Services.

If you use your car for work, you can claim the work-related travel expenses for the portion you use your car for to earn your assessable income. There are two methods that we can use to calculate this amount deductible:

• Cents per kilometre method, currently at 68 cents per kilometre travelled, and capped at 5000kms or $3400. We have found most clients prefer to use this method. As the dollar amount encompasses all work-related car expenses without the need to keep a detailed logbook. Also, unless you are in a role that requires you to be on the road every day of the week, most taxpayers will not travel 5000km in a Financial Year for business purposes.
• Logbook method, where you record every expense incurred with your car for 3 months and calculate a business use percentage from there. This option is more favourable for tradespeople and salespeople as they travel for more than 5000km a year, for work purposes. This method is more complicated so do not be afraid to come to visit us in the Eastern Suburbs to see which method is best for you.

Travel between work and home daily is not tax deductible as this is still considered private travel.

Work Related Clothing and Laundry Expenses

Another work-related expense most popular with tradespeople. If your employer has a dress policy that is not readily available to you outside your workplace then you can potentially be in line for tax deductions.

Clothing and protective clothing can only be claimed if you require it for your occupation. For example, a generic suit pant combo is not claimable as a work-related expense if your employer’s logo is not on the suit or if wearing a suit does not fit inside your employer’s uniform policy (often listed in your employment contract). You can also claim clothing and footwear you use to protect yourself from on-the-job injury or illness. For example, steel-capped boots for tradesmen or sun cream for teachers on playground duty.

Work from Home Deductions

With many roles still not returning to an office, Work from Home Deductions will play an important role in getting yourself a hefty refund come tax time. If you work from home, some portion of the home office expenses is claimable. In a perfect world, you should have a separate study room in which you carry out your work-related activities. However, if you are using the living room or your bedroom to work, you can only claim expenses for the hours you had exclusive use of the area for work.

Like work-related car and travel expenses, keeping a clean and accurate record of your home office expenses is crucial. If you are not given a work computer to work from home then the cost of the computer is deductible along with any associated electrical charges. This is why it is easier to calculate if you work from a separate study room.

Beware that equipment you would like to purchase that costs more than $300 will need to be depreciated over the asset’s useless life.

Mobile Phone Use

Communication has been more vital with the workforce working from home, and so work-related phone usage has been increasing. The good news is that, if you use your own phone for work purposes, you are entitled to claim tax deductions. If you paid for it and can prove that you have spent the money yourself and were not reimbursed for it by your employer. If you use a single phone for work and private use, then you will need to work out which percentage was used for work-related purposes only.

A simple way to calculate this would be to keep a spreadsheet over a 4-week period. And allocate your calls as work and private. You can then round this up to a full-year expense.

Memberships, Subscriptions & Union Fees

Do you trade shares on the ASX? And purchase a subscription to the Australian Financial Review to keep updated on any news and movements in the share market? This subscription cost would be tax deductible as it is helping you gain your assessable income.

If you work in retail, those trade union fees are deducted from your pay. Each pay cycle is also claimable in your tax return. These union fees are often reported by your employer to the ATO, and we can pick this up on our system.

Gifts & Donations

Gifts & Donations can be claimed if the organisation you are donating to is a deductible gift recipient. A receipt of proof of donation must also be kept claiming the deduction.

Self-Education Expenses

Self-education expenses can be claimed if your study is directly linked to your work. The course you undertake must lead to a formal qualification that meets the below criteria:

• the course must maintain/improve skills and knowledge required in your current job.
• result in or is likely to, an increase in your income.

You cannot claim self-education expenses that does not have a significant enough connection to your current employment. You can claim the following expenses in relation to your self-education:

• accommodation and meals (if away from home overnight)
• computer
• course or tuition fees
• decline in value for depreciating assets (cost exceeds $300)
• purchase of equipment or technical instruments costing $300 or less
• bus/train fares
• home office running costs.
• internet usage (excluding connection fees)
• parking fees (only for work-related claims)
• phone calls
• stationery
• student union fees
• student services and amenities fees
• textbooks
• trade, professional, or academic journals
• travel to-and-from place of education (only for work-related claims)

If an expense is partly for your self-education and partly for other purposes, you can only claim the amount that relates to your self-education as a deduction.

Cost of Managing Tax Affairs

If in the previous year you were wise enough to come see us or any other tax agent to lodge your return, you can claim the deduction for the fees the tax agent charged you along with any associated travel costs in getting to and from your tax agent.

Finally, it is important to prove your work-related purchases, via receipts and corresponding bank statements. As well as prove that it is an item or service used for work-related purposes. If in doubt, do not hesitate to get in touch with the tax specialists in the Eastern Suburbs at R T Accounting & Taxation Services and we will be able to help you out.