Visitor III

Out of Pocket Expenses - Self Employment

Rcvd the comment below but have more questions.  We entered his mileage and car information under the section titled Employment Expenses (Job-Related Expenses).  I'm assuming that is the correct section to use.  My son kept track of his miles but in the section where it ask for mileage I only had mileage for the first 2 blanks (we entered 10,000 "Total Miles Driven for All Purposes", 2362 "Miles driven for job", 0 for "Commuting Miles", and 0 for "Round Trip  Average Daily Commute".)  Is it going to cause problems not entering anything for commuting miles and round trip avg daily commute?

 

Carl commented on your question:

Is there a certain amount of out of pocket expenses one must have to make money due to IRS go down?

All those expenses are valid, and are claimed on the SCH C. In the program that would be in the Business Income & Expenses (SCH C) section of the program, under the Personal Income tab.
For the vehicle, assuming he works out of his home or if in college, his dorm room is the "official" home base of the business, all vehicle expenses are claimed in the Business Vehicle Expenses section. Note that if the vehicle is not 100% business use (I'm sure it's not) then he needs to take the "per-mile" deduction. Otherwise, it's just not possible to prove how many drops of gas were used for business, vs personal use.
Keep in mind also that if t he business income is more than $400, then in addition to regular income tax, he will also pay the additional 12.6% self-employment tax. That's basically the employer side contribution to his Medicare and social security account
5 Comments
TurboTax Specialist

Out of Pocket Expenses - Self Employment

The commuting mileage is there to help calculate and make it clear that you cannot deduct commuting or personal mileage.  The actual business use calculation excludes them - so as long as the total miles and miles driven for business purposes is correct, then the business use percentage will be correct.

 

However, you may not have entered this in the correct section of the program depending on his type of employment.  If he was a W2 employee with vehicle expense, then you are in the correct spot with the Employment Expenses section.  

 

However, if he was a 1099-MISC or self-employed, then these expenses are not entered under Employment Expenses.  They should be entered in the Business Income and Expenses section of the program for Schedule C.  When you go through the expenses, there will be a Vehicle Expenses section.

TurboTax Specialist

Out of Pocket Expenses - Self Employment

Commuting miles are not deductible, so yes you need to enter a number for those fields.

Visitor III

Out of Pocket Expenses - Self Employment

But he doesn't have any commuting miles.  He is a FT student at college and works as a DJ at a bar and also works for a guy who does DJing at weddings so his mileage he kept track of is those driving to and from the weddings.  He doesn't have any mileage for the DJing at the bar.  And I wouldn't think he would have any Round Trip Daily Commute miles either.

Visitor III

Out of Pocket Expenses - Self Employment

I have found what the section you are referring to and yes I had it entered under the wrong section.  One question though, my son bought music to play at the bar which he downloads to his laptop.  Would that be considered supply expenses on the Enter Your Business Expenses page?  Also, would the commute miles be the same as the miles entered as Miles Driven for Job?  He doesn't have a regular place of employment.

Visitor III

Out of Pocket Expenses - Self Employment

Or would the music he bought go under Business Expenses Not Yet Report?