What Cost Do I Put in for Taxes?

[akrebecca]

Almost done entering all my info into P3 in preparation for filing my taxes. Got a question that I did not think of last year. I think I know the answer but want to doublecheck. Tried looking on CS but I don't think I am coming up with the right words. Any way...here it goes.

When I am entering the cost of an item under supplies, do I put what I paid for it or the value? For example, I purchased some copy paper from Ye Olde Corner Store. The value is $3 but I paid $1.50 because it was on sale & I had a coupon. Do I put in $1.50 or $3?

 

[pctharper]

You would have to put what you actually paid since that was your true expense.

 

[akrebecca]

That is what I was leaning towards. But since I took a couple accouting classes some years ago, the whole depreciation thing kept popping up. For the IRS they only care about the itmes that cost $$$ when it comes to depreciation-right? For example. my computer is being depreciated over a number of years and the cost shows up on IRS Form Idon'trememberwhat.

 

[mommyhugz1978]

My best advice is consult with your tax advisor becasue IRS laws for this year's tax's have change significantly.

 

[Sheila]

Paper does not loose it's value and does not depreciate. You should log what you actually paid.

You can not make the depreciation decisions. When you do your Schedule C, just follow the directions and it will walk you through the process on what you can & can not claim. When in doubt, always make the error in THEIR favor, never YOUR favor. If you are ever audited, you want them paying you more money, not you paying them more money.

I agree, if you don't feel comfortable doing it yourself, take it to a tax professional. And I'm talking someone who's been doing this for years. Not this season's hired help at H&R Block.