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Ordinary and Necessary (tax)

  • 1.  Ordinary and Necessary (tax)

    Registered Piano Technician
    Posted 01-15-2017 19:16
    As tax season rolls around again I find myself asking what kind of things are "ordinary and necessary" to run my business that can be written off for tax deductions. (For definitions of "ordinary and necessary" see The IRS Meaning of Ordinary and Necessary Business Expenses.  TLDR version: An ordinary expense is one that is common and accepted in your trade or business.  A necessary expense is one that is helpful and appropriate for your trade or business.  An expense does not have to be indispensable to be considered necessary.)

    Aside from the obvious stuff like tools, mileage, advertising, etc., I've been thinking about stuff I use to keep my own body in shape so I can continue my trade. For instance, I know that professional athletes can write off everything from exercise equipment to dietary supplements to professional massages. So am I allowed to deduct the foam roller and elastic exercise bands that help me keep my shoulders and back in shape? Other examples might include ear plugs (or hearing aids as the case may be), chiropractic/massage for back/shoulder pain, medical expenses for conditions resulting from piano work, preventative maintenance (swimming, yoga, whatever), shoe inserts (standing for long periods), a special mattress to mitigate back pain, or a lumbar cushion for those long commutes. I obviously don't do all those things, but I do wonder. 

    To get a feel for what is "ordinary" I would like to ask the community: what are some of the things you do to take care of yourselves and stay in shape for the daily grind? 

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    Anthony Willey
    Shoreline WA
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  • 2.  RE: Ordinary and Necessary (tax)

    Registered Piano Technician
    Posted 01-15-2017 19:39
    Anthony

    It would best if you asked your accountant about this. Some of the things you listed might be deductible, but some, like actual medical expenses, cannot be deducted on Schedule C.

    But you bring up an interesting question regarding clubs, yoga, etc. I asked my son, who is a CPA, if I can deduct my membership at the YMCA because I get business from the guys I play racquetball with, and when my car, which has a sign advertising my business, is parked in the parking lot, I get calls. He said no. But now I need to ask him if I can deduct my membership because playing racquetball keeps me in shape. And when I'm in better shape, I can continue to make a living.

    I'll let you know.  

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    Willem "Wim" Blees, RPT
    Mililani, HI 96789
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  • 3.  RE: Ordinary and Necessary (tax)

    Registered Piano Technician
    Posted 01-15-2017 20:12
    I doubt that nutritional supplements, health clubs, and so on, are going to be deductible on Schedule C. You might as well deduct your grocery bills, since if you don't eat you can't tune pianos.

    There is one place to deduct food: there is a per diem amount for when you are out of town for more than a day, which varies according to where you spent the time. (i.e., restaurants will cost more in one place than another.) The rule is that you can deduct half the per diem for the day when you leave home and the day you return home, and the full per diem for days spent entirely away from home.

    Publication 463, "travel", look under "meals."

    https://www.irs.gov/publications/p463/ch01.html

    I use this every year, since I spend four days on the coast when I tune for the Yachats Festival.

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    Susan Kline
    Philomath, Oregon
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  • 4.  RE: Ordinary and Necessary (tax)

    Registered Piano Technician
    Posted 01-16-2017 01:30
    Aside from the obvious stuff like tools, mileage, advertising, etc., I've been thinking about stuff I use to keep my own body in shape so I can continue my trade. For instance, I know that professional athletes can write off everything from exercise equipment to dietary supplements to professional massages. So am I allowed to deduct the foam roller and elastic exercise bands that help me keep my shoulders and back in shape? Other examples might include ear plugs (or hearing aids as the case may be), chiropractic/massage for back/shoulder pain, medical expenses for conditions resulting from piano work, preventative maintenance (swimming, yoga, whatever), shoe inserts (standing for long periods), a special mattress to mitigate back pain, or a lumbar cushion for those long commutes. I obviously don't do all those things, but I do wonder.  To get a feel for what is "ordinary" I would like to ask the community: what are some of the things you do to take care of yourselves and stay in shape for the daily grind? 

    Anthony

    I asked my son to explain a few things, and with his help, here is what I can tell you. 

    Regarding the foam rollers and elastic exercise bands, you can deduct them if you have a doctors order telling you you need the. Ear plugs could be deducted, as well as visits to the chiropractor. I deduct my visits to a physical therapist, even though they were not ordered by a doctor. But the shoe inserts, special mattress, or the lumbar cushion for those long commutes, again, only if your doctor ordered them.

    The bottom line is, if a doctor ordered anything related to staying healthy to do your work, you can deduct them. But anything you do on your own, including paying for membership at a gym, or equipment you buy to help you stay in shape, are not.
     

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    Willem "Wim" Blees, RPT
    Mililani, HI 96789
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  • 5.  RE: Ordinary and Necessary (tax)

    Registered Piano Technician
    Posted 01-26-2017 11:46
    Willem, Thanks for this. That makes a lot of sense about the doctor's orders. I think that's the same criteria for writing off medical expenses (like the hot tub that I think somebody mentioned in another comment). I would feel safe writing off the foam roller and exercise bands, as they were specifically recommended to me by two chiropractors...not quite doctors, but for a $20 expense, close enough.

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    Anthony Willey
    Shoreline WA
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  • 6.  RE: Ordinary and Necessary (tax)

    Posted 01-16-2017 01:57
    TAX! Here in the UK the Government has made it possible to 'do' one's Assessment 'on-line'. They ask all the pertinent questions and you provide the pertinent answers. Doesn't this same system occur in the U.S?
    Michael   UK





  • 7.  RE: Ordinary and Necessary (tax)

    Registered Piano Technician
    Posted 01-16-2017 02:41
    Michael

    No, the federal government does not have that set up. We do have private tax prepares that will do your taxes, but you have to give them information. The closet thing we have to doing taxes yourself are tax programs for your computer that automatically figure what you owe. But you still have to sign a form, and send it to the government with your check, or ask for a refund.

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    Willem "Wim" Blees, RPT
    Mililani, HI 96789
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  • 8.  RE: Ordinary and Necessary (tax)

    Posted 01-17-2017 04:40
    Willem - oh dear! Maybe with so vast a change in the Government Administration happening in the U.S. the new Government can be convinced to follow the UK Government in this respect.
    If you go on-line to: www.gateway.gov.uk all the information is there. The IRS people are extremely helpful I have found.
    Michael    UK





  • 9.  RE: Ordinary and Necessary (tax)

    Registered Piano Technician
    Posted 01-17-2017 12:46
    Michael

    Unfortunately, the tax preparing business is so huge in the USA, eliminating that would never fly.

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    Willem "Wim" Blees, RPT
    Mililani, HI 96789
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  • 10.  RE: Ordinary and Necessary (tax)

    Registered Piano Technician
    Posted 01-17-2017 16:52
    To Michael-

    There are many many forms that may or may not be filled out, and a very long instructions booklet that you can download in a .pdf from IRS.gov. to help you determine which forms are for you, and how to fill them out properly. And if you make a mistake, you are responsible for amending the mistake and resubmitting your taxes, unless they catch it on their side because they it benefits them. Programs like Turbo Tax are a big help, and I've heard of at least one case where a person benefited from using it over the course of several years because it has the ability to balance what you pay or collect based on years of collected data (i.e. With how your retirement investments perform, etc.)

    For those of you asking about health related tax deductions, I know of one instance where a contractor/carpenter had some really bad back pain, and the best thing to help it was a hot tub. So the doctor wrote a prescription for a hot tub to help with occupational injury, and it qualifies as a tax deductible business expense.
    I go to week long stonemasonry or timberframing workshops, and always book a cottage with a hot tub, since I probably would not be able to function otherwise. I had some crippling sciatic pain after repeatedly lifting an action in a small space this winter so maybe I should look into it for myself. I went to a local pool for a swim and a schvitz in the hot tub and boy did it help!

    Cheers




  • 11.  RE: Ordinary and Necessary (tax)

    Registered Piano Technician
    Posted 01-18-2017 00:46

    One of the absurdities regarding IRS in the USA is that getting advice from an IRS adviser comes with no guarantee that it is correct and will survive audit by IRS tax officers. And all the tax simplification rhetoric from politicians is a lie because now that computers do all the tax preparation none of the politicians really care anymore. Legislators can slip tax benefits into some bills for wealthy Trusts, Corporations and Foundations that in truth only apply to one tax filer and no one will notice.

    The complaints about high corporate rates compared to other industrialized economies is bullshit because almost no corporations pay at that rate due to the highly complex tax avoidance strategies the complex tax code offers. The present day real corporate tax rate is at a historical low.

    Robots take our jobs and don't pay into social security. The simplest way to fix the social security system is to eliminate the distinction between earned and unearned income as regards FICA tax application and cut the total rate about in half. That would mean at least the robots who are taking all our jobs would fund social security and relieve the tax burden on younger people.



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    Edward McMorrow
    Edmonds WA
    425-299-3431
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  • 12.  RE: Ordinary and Necessary (tax)

    Posted 01-18-2017 07:01
    To Willem and Elizabeth - and anyone interested in Tax matters (Globally!)

    It would seem the UK Tax Assessment is very efficient. The on-line Self Assessment is particularly good - NO paperwork, NO postage costs, No expensive Accountants - it's all done on-line with pro-forma documents provided on-line by the government. There are many pages and if what you say doesn't agree with the Tax Office understanding, they will stop you right there until you fill in the information which does agree - then off you go again. I have done this for years now. I used to have a Certified Accountant and send all my paperwork to her in London - but with the new (it was then) system of on-line Self Assessment a Certified Accountant and all the Tax Forms of earlier times became unnecessary. This year I managed to get a Tax Refund of over £1000 for my wife! I know you have Federal Taxes and whatever else, which means you are taxed by more than one Tax Authority but it seems to me that if this Self Assessment on-line can be done in this country it has to be possible in the U.S. Think of the time and postage and anxiety you all go through - a thing which for us Brits is a thing of the past. 
    But then we have BREXIT . . . but that's something yet again . . .  Hoping we can set up some scheme between U.K. and U.S. as soon as this is all over.    Michael  UK





  • 13.  RE: Ordinary and Necessary (tax)

    Registered Piano Technician
    Posted 01-18-2017 12:59
    We can file online, and the refunds are sent directly to our accounts, but the tax code is incredibly complex, which mostly benefits those with very high incomes, for whom the substantial fees they pay tax specialist accountants is a lot less than their gains from tax avoidance.

    There's plenty of desire for simplification, but every attempt at it meets resistance from lobbyists representing the very rich, plus most "simplification" somehow results in an even more complicated system. The state returns lean heavily on one's already completed Federal return, so filling them out isn't all that hard. The individual IRS employees I've dealt with have been decent and very fair, which must be hard given the abuse they probably receive from much of the public. They're given a nearly impossible task and their pay is not very adequate. During the last shut-down of the government (courtesy of the GOP) I learned that a lot of federal employees make so little they qualify for food stamps.

    To truly simplify the U.S. tax code would probably require scrapping it entirely and beginning again from scratch -- but then there would be the very messy transition. All the time and effort would take money, which Congress would not approve. I've heard about a book detailing the inevitable collapse of complicated empires. In the end they fall from their own weight and complexity. By the time the Roman Empire fell, every third working day was an official holiday, because once one was added, no one could take it away again.

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    Susan Kline
    Philomath, Oregon
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  • 14.  RE: Ordinary and Necessary (tax)

    Posted 01-19-2017 15:39

    To truly simplify the U.S. tax code would probably require scrapping it entirely and beginning again from scratch -- but then there would be the very messy transition. All the time and effort would take money, which Congress would not approve. I've heard about a book detailing the inevitable collapse of complicated empires. In the end they fall from their own weight and complexity. By the time the Roman Empire fell, every third working day was an official holiday, because once one was added, no one could take it away again.<br>
    Susan Kline,  4 hours ago

    <quotebtn>And simplifying the tax code really needs to happen. When a nation has a tax code the average intelligent person cannot understand, it needs to go. I would venture to say not even our representatives or president understand the tax code fully.

    Much simpler would be a national sales tax. Clothes are taxed, food is taxed, piano tunings are taxed, car purchases are taxed, etc. Then everyone would pay taxes. And we wouldn't have to keep records for business deductions. No more worrying about mileage, parts, tools, etc. unless we want to do that for accounting reasons. The IRS would become a machine for ensuring the proper taxes are collected and paid. Nobody would ever need to file another complicated tax return. 

    This will never happen unless enough people on both sides demand it. As you mentioned, the lobbyists (on both sides) want to keep it complex because it is easier to hide graft and other political corruption in tax code. 

    Please pardon my brief foray into politics. I hope this is not even seen as "political", but as common sense stuff that anyone could support. I am neither a D nor an R, and do not trust either party. I hope "we the people" can eventually start seeing that both Democrats and Republicans are mostly in politics for personal power and gain and then send them home to live in the mess they have made.</quotebtn>

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    John Formsma, RPT
    New Albany MS
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