FORTUNE Small Business:

What can self-employed workers deduct?

Work clothes, supplies and medical expenses - finding the write-offs

Subscribe to Top Stories
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)

tax_return.ce.03.jpg
Ask FSB
Get small-business intelligence from the experts. Here's a chance for YOU to ask your pressing small-business questions, and FSB editors will help you get answers from the appropriate experts.
Your name:
* Your e-mail address:
* Your city:
* Your state:
* Your daytime phone #:
* Your questions:

(FORTUNE Small Business) -- Dear FSB: My husband is a self-employed construction worker. How can I determine what tax deductions we can take off? Our tax preparer mentioned work clothes and supplies? Can we use our medical receipts as a business deduction or can we only deduct insurance premiums?

- Tiffany, Holcomb, Mo.

Dear Tiffany: You are asking the right questions - determining what work expenses are deductible for the self-employed isn't easy and you should not just rely on a tax preparer. Do your own research as well.

There are several IRS publications that can help make filing your taxes easier. Thomas D. Klein, CPA and Professor of Accounting and Taxation at the University of Arizona, Eller College of Management, suggests you read Form 1518, "IRS Tax Calendar for Small Businesses and Self-Employed" and Form 535 "Business Expenses". Both documents are available at IRS.gov and are written in layman's terms.

Mark Nash, Partner, Private Company Services for PriceWaterHouseCoopers agrees that the IRS resources are a helpful, and suggests the next step is going to your tax professional with specific questions.

"A family's tax professional is the best resource to turn to because she is most familiar with the particular needs," Nash says.

To determine whether your husband's work apparel and supplies are tax deductible, ask yourself if items like steel-toed boots and work shirts can be worn outside working hours. If the answer is yes then they aren't tax deductible. If you have trouble answering, consider these examples from tax experts:

"A sales associate for a retail apparel company generally cannot deduct the clothes that he purchases for work because they can also be worn, whether they are or not, in non-work related situations," Klein says.

"If clothing items feature a company logo or colors, they are tax deductible because the worker isn't likely to wear those items off hours," Nash says. "A painter's plain white shirt and pants are not deductible, nor is a winter coat, because all may be worn off hours."

One hundred percent of the cost of medical insurance premiums are deductible for self-employed workers and their dependents, unless the self-employed individual's spouse is covered under a subsidized employment plan.

For example, If the wife is employed by a company, the husband will not be allowed to deduct medical expenses because he would be eligible for health insurance coverage under the employer's plan.

Klein says that other medical expenses - doctor's visits, prescriptions and the like - are self-employment expenses that are only tax-deductible if the taxpayer itemizes them and then only to the extent that they exceed 7.5% of the taxpayer's adjusted gross income, or the income amount before taking into consideration the standard deduction, itemized deductions and personal exemptions. He suggests checking the list of expenditures that qualify as medical expenses at the IRS website, IRS Topic 502 "Medical and Dental Expenses."  To top of page

Photo Galleries
Top-paying jobs Orthopedic surgeons take home a median $410,000 in salary and bonus annually. What other great careers from CNNMoney and PayScale.com's list of Best Jobs in America offer hefty paychecks? More
Fastest-growing jobs Demand for IT security consultants are projected to grow a solid 37% between 2012 and 2022. What other careers on CNNMoney and PayScale.com's list of America's best jobs will see big opportunities? More
Best Jobs in America CNNMoney/PayScale's top 100 careers with big growth, great pay and satisfying work. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2015 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2015. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2015 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2015 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2015. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2015 and/or its affiliates.