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BK-CPA
BK-CPA, Certified Public Accountant (CPA)
Category: Tax
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Experience:  Owner of a CPA firm
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I work in a factory 5 days a week, Ive always wanted to start

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I work in a factory 5 days a week, I've always wanted to start my own business restoring cars, I've been buying tools, shop equiptment, shop, transport vehicles, I do small jobs on the weekends with these tools, equiptment, shop. Can I write off any of this equiptment on the taxes I pay from my factory job, as I don't earn enough from the auto repair yet to do it full time, I live and work in Oregon. Thanks
Submitted: 4 years ago.
Category: Tax
Expert:  BK-CPA replied 4 years ago.

I can tell then that the auto repair income isn't being reported to the IRS, but hopefully you get to the point where you are making money.

 

The auto repair income, no matter how small, should get reported to the IRS. The tools would serve as a deduction then.

 

The tools aren't used for your factory job, and would be subject to a partial phaseout, assuming you even itemized as opposed to taking the standard deduction, if trying to deduct these as an employee expense.

 

You're best bet is to wait until you start claiming your car restoring work on Schedule C. Then your deductions for tools and equipment will not only get deducted 100%, but you'll also be able to offset the resulting self-employment tax (self-employment tax comes to 15.3% of self-employment income, and is in addition to income tax).

 

Please hit the accept button if you found this answer helpful. Thank you for your question.



Edited by BK-CPA on 5/4/2010 at 1:09 AM EST
BK-CPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 793
Experience: Owner of a CPA firm
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