What Tax Deductions Can a Direct Sales Person Take?
A person who sells goods directly from home or business is considered a direct seller. Direct sellers include newspaper and shopping guide carriers and independent contractors, who are considered self-employed.
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Overhead Expenses
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Inventory-related expenses such as the cost of goods sold (CGS), the portion of your home used to store inventory and rent paid for a place to conduct business are tax-deductible. Insurance and utilities such as electric, gas, heating oil and water are also tax deductible. A home office deduction can be taken for the business use of your home; however this deduction is subject to exclusive use for business.
Travel Expenses
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A standard mileage rate of 50 cents per mile (as of 2010) or actual vehicle expenses (gas, oil, maintenance, repairs, vehicle taxes, licenses, depreciation) are tax-deductible expenses. Travel expenses (lodging, tolls, incidentals, tolls, parking fees, airfares, bus fares, taxi, limousine) for trips to trade shows, training, delivery and shipments can be deducted as well.
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Fees and Supplies
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Fees paid for training, start-up kits, advertising, accounting, professional magazines, legal advice, business permits, professional licenses and banking are tax-deductible expenses. Shipping fees, freight charges, shipping supplies (boxes, tape, packaging, labels, stamps) and office supplies needed to run the business are also tax-deductible.
Equipment and Taxess
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Excise taxes, property taxes, real estate taxes, local and state income taxes, Social Security and Medicare tax paid for employee wages are tax-deductible expenses. Finally, depreciation of office equipment and furniture are tax-deductible.
Considerations
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Only the business portion of the home can be deducted. Utilities must be prorated according to the square footage of the home used for business.
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