Tax Tribe

The Car and Truck Expense Deduction can be an exciting and useful deduction for micro-business owners. But it also comes with some pretty stringent substantiation requirements. Records You’ll Need Under Either Method For either method, you need a contemporaneous mileage log . Contemporaneous simply means you’re recording the information at or near the time the trip occurs , rather than trying to reconstruct your travels months or years later. Your mileage log should establish several important pieces of information: The date of the trip Where you went The business purpose of the trip The number of business miles driven And while the mileage log is your primary record, I also recommend keeping documentation that further supports the trip. Let’s Look at a Real-World Example Imagine you’re a podcaster, and you agree to guest co-host another podcast as a way to bring more visibility to your own show. You and the other host confirm that you’ll record the episode at t...

 The car and truck expense deduction allows business owners to deduct certain costs associated with operating a vehicle for business purposes. What Constitutes a Business Purpose? Business purposes can include activities such as: Getting from one workplace to another Visiting clients or customers Going to a business meeting away from your regular workplace While it may be exciting to think about all the trips that could potentially qualify for this deduction, it’s important to distinguish business transportation from commuting . Generally, driving between your home and your regular place of business is considered commuting, which is personal travel and does not constitute business transportation. However, once you’ve determined that the trip has a legitimate business purpose, here’s the juicy part: there are two methods for calculating this deduction: the standard mileage rate or actual expenses . The Standard Mileage Rate The standard mileage rate allows you to deduct a flat a...

Every business owner knows that you need to spend money to make money, but spending money is only the beginning. You also need to know when the expense can be deducted, whether it actually qualifies as a business expense, and how it should be categorized for tax purposes . In our last three articles, we talked about why recordkeeping matters, what records you should keep, and how long you should keep them. Now, we’re going to build on that foundation by looking at the expenses those records support. We’ll cover: When expenses are deducted under the cash versus the accrual method What makes an expense ordinary and necessary How to handle expenses that are partly business and partly personal Capital expenses Cost of Goods Sold, or COGS If the terms capital expenses and Cost of Goods Sold terrify you, don’t panic. We’re about to dispel some of the mystery behind these categories so you can take advantage of all the legal deductions you’re entitled to and keep more money in your pocket. So...

Good record-keeping does more than keep your business organized. It helps you accurately report and substantiate the income, expenses, and deductions on your tax returns; but, how long are you supposed to keep those records for? For many business owners, the answer depends on the type of record involved. The Three-Year Rule For most taxpayers, the IRS generally has three years after a return is filed to assess additional taxes. So, if you're talking about ordinary records supporting income and deductions, three years will often get you through the normal statute of limitations. But, as is so often the case with taxes, there are exceptions. The Four-Year Rule If you have employees, you generally need to keep your employment tax records, such as records showing wages paid and taxes withheld, for at least four years. The Six-Year Rule The IRS can generally go back six years if you omitted income that should have been reported and the amount omitted is more than 25 percent of the gros...

A look at what the Fifth Circuit’s new limited-partner standard could mean for self-employment tax. Some people think tax is boring. To me, it is an ongoing telenovela: competing interpretations, unexpected reversals, appellate drama, and just when you think you understand where the story is going, somebody files for rehearing. The latest example is K Alain, L.L.L.P. v. Commissioner , decided by the Fifth Circuit on August 12, 2026. At the center of the case is a surprisingly simple question: What exactly is a “limited partner”? That may seem like something the Internal Revenue Code would define. It does not. And that omission has turned into a heated debate over self-employment tax. The Problem Ordinarily, a partner’s share of income from a partnership’s trade or business is included in net earnings from self-employment. But Section 1402(a)(13) creates an exception: a limited partner’s  share of partnership profits is generally excluded from self-employment income. The problem is ...

In the last article, we talked about why good record-keeping matters. Today, we’re going to talk about what kinds of records you should keep . The good news is that you don't need to save every scrap of paper you've ever come across. What you do need is a record-keeping system that clearly documents three things: Money coming into the business Money going out of the business Assets owned by the business Let’s break those down. Income Records Let’s pretend you have a podcast, and you’re doing so well that a company sponsors an episode and you begin earning advertising revenue. Then, bam!, listeners start purchasing your products. Depending on the nature and amount of those payments, you may receive an information return such as a Form 1099. If you have never heard of a Form 1099, that is okay. A 1099 is somewhat similar to a W-2 in that it reports money paid to you. The difference is that, with certain types of 1099 income, you are generally being paid as an independent contra...