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My spouse can deduct business expenses, why can’t I?

“My spouse is self-employed and I have an employer. Why can my spouse deduct business expenses on our tax return and I cannot?”

We hear this question a lot. Simply put, the tax deductions that a business (or self-employed individual) can take are generous. Any expenditure that has a legitimate business purpose used to strengthen or promote the business is generally deductible. If you are an employee that incurs business expenses, it is generally the responsibility of your employer to reimburse you for those expenses, not the federal or state governments.

Employees generally fill out an “expense report”. The employer approves it and commonly reimburses the employee on a monthly or semi-monthly basis. Also, if you put these expenses on your own personal credit card, you can keep the miles or the points attributable to these expenses. Not only are you reimbursed, but you can make a small profit!

There are exceptions where an employee can deduct business expenses. If you incur a large amount of expenses on behalf of your employer and he or she declines to reimburse you, you can deduct certain qualifying expenses from your taxes if they exceed 2% of your Adjusted Gross Income.

If this happens, or if your personal tax return becomes more complicated, give us a call and we’ll handle it!

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