Today TaxMama hears from Matt in the Tax Quips Forum, who has the right idea. “I have started a side business doing yard work. I am trying to determine the best way to save to pay my taxes. I have a checking account that is just for the side business. I deposit all the money I am paid for yard work directly into this account. I also use only this account to pay for fuel, repairs, equipment, etc. (business expenses). I need to use some money from my business for personal expenses. I plan to write myself a check from the business checking account, and then deposit that into my personal checking. I also plan to take 25% of the check I write to myself and put it in a savings account that is just for my taxes. Should I being doing this, or do I have to set aside 25% of everything I deposit into the business checking account into a savings account for taxes?”

Today TaxMama hears from K Syl in the TaxQuips Forum, who has a fun idea.  “I have an Internet marketing business – a blog on comic books. The blog will have links for ordering comics to generate income on the blog and Pay Per Click ads. Large portions of the site will be devoted to reviewing many of the comics I purchase. Because of that, would I be able to legitimately write off my comic book purchases on my taxes?”

 Courtesy of IRS http://www.irs.gov/pub/irs-drop/a-11-40.pdf

The following standard mileage rates will apply:

• January 1 – June 30:  51 cents per mile for business miles driven
  • July 1 – December 31:  55.5 cents per mile for business miles driven
• January 1 – June 30: 19 cents per mile driven for medical or moving purposes
  •  July 1 – December 31:  23.5  cents per mile driven for medical or moving purposes
• January 1 – December 31: 14 cents per mile driven in service of charitable organizations.
  • This can only be changed by an Act of Congress. So it rarely changes 

These rates apply to the use of cars, vans, pickups, or panel trucks.

 Today TaxMama hears from Scott in the TaxQuips Forum with this question.  “How long would you have to keep a business vehicle to take advantage of bonus depreciation deductions? What if I sold a new business use vehicle after three years, are there penalties?

Today TaxMama hears from Mimi in the TaxQuips Forum who tells us. “My husband coaches my son’s Little League and travel basketball team.  Occasionally, he buys equipment for the team’s use and hosts an after-season party, complete with pizza, cake and beverage.  Some of these expenses are not reimbursed by the league.  Are these deductible?  How about gas mileage to check on the fields or going to games and practices?” 

Today TaxMama hears from Doug in the TaxQuips Forum who is arguing with his work buddies. “We are a group of field technicians that work entirely out of our home and have no local office to report to. We drive directly from our home to a customer site, and the visit usually is completed that day but can run into several visits over the course of a few days or weeks.” They get reimbursed at the rate of $500 per month and 23 cents per mile. How are they supposed to report the reimbursements and deductions?

Today TaxMama hears from Pam in the TaxQuips Forum, with a good question. “1 purchased 1 new vehicle in 2010 that is used for both of my businesses (Sch C). How do I allocate the new vehicle Sec 179 deprecation expense to both businesses?”