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Merlo
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can an independent distributor for a product have the ...

Resolved Question:

can an independent distributor for a product have the benefits of a home based buisness for tax deductions
Submitted: 6 years ago.
Category: Tax
Expert:  Merlo replied 6 years ago.

Hello gregory,

If you use a portion of your home for business purposes, you may be able to take a home office deduction whether you are self-employed or an employee. Expenses that you may be able to deduct for business use of the home may include the business portion of real estate taxes, mortgage interest, rent, utilities, insurance, depreciation, painting and repairs.

You can claim this deduction for the business use of a part of your home only if you use that part of your home regularly and exclusively as your principal place of business for your trade or business or as a place to meet or deal with your clients in the normal course of business.

Generally, the amount you can deduct depends on the percentage of your home that you used for business. If you use a separate structure not attached to your home for an exclusive and regular part of your business, you can deduct expenses related to it.

If this answer was helpful, kindly press the "Accept" button. Positive feedback is also appreciated.

Thanks, XXXXX XXXXX me know if you have more questions.

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Merlo and other Tax Specialists are ready to help you
Customer: replied 6 years ago.
So is an independent distributorship viewed the same as any other homebased buisness for tax deductions. California
Expert:  Merlo replied 6 years ago.

Hello again gregory,

Can you tell me what you mean by an independent distributorship? Also, are you paid as an employee or an independent contractor?

Customer: replied 6 years ago.
I am an Ind. Distib. for a line of health products so, I purchase from them at distributor price and then sell to my customers at retail. I am paid as an independent contractor I guess? They ship to my clients if ordered online from my website and then send me profit(retail minus wholesale)
Expert:  Merlo replied 6 years ago.

Hello again gregory,

Yes, then you are classified as an independent contractor. The money you make from this company has no tax withheld, and at the end of the year, they should send you a 1099 Form to report your total earnings for the year, although if your earnings are less than $600 for one year, then they are not required to report them.

You will report this income on Schedule C as a self employed person, even if you have additional income from a regular job. On Schedule C you would report the earnings from this company, and you would also deduct any expenses you had in connection with this business. Those deductions could most certainly include a deduction for the business use of a portion of your home, as long as that part of your home was strictly used in relation to your business. For most people this usually means having one room that you have dedicated for your office use. (You could not have a computer in a room that you also used for your bedroom and classify that as business space).

As an independent contractor you can deduct other expenses related to this business, such as depreciation on your computer, office supplies, software you purchased in connection with maintaining your website, cost you paid for website design, etc.

After deducting your expenses, you will then be liable for federal and state income taxes on the net income, and also employment taxes (social security and medicare).

If this was helpful, please press the Accept key. Positive feedback is also appreciated.

Thanks and let me know if you have more questions.

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Merlo
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25+ years tax consulting. Specializing in returns for US citizens living abroad