Self-Employed Advertising Expense Deduction

By | December 17, 2014

Here are some useful references for self-employed persons. It is essential to keep very accurate records

Publication 334 is the 2013 Tax Guide for Small Business, and provides a general business overview.

Publication 535 for 2013 goes into detail about Business Expenses. Make “ordinary and necessary” your watchwords.

Can I claim the advertising expenses as a deduction?


Advertising expenses are covered in this IRS publication:

Advertising expenses. You generally can deduct reasonable advertising expenses that are directly related to your business activities. Generally, you cannot deduct amounts paid to influence legislation (i.e., lobbying). See Lobbying expenses, later.

You can usually deduct as a business expense the cost of institutional or goodwill advertising to keep your name before the public if it relates to business you reasonably expect to gain in the future. For example, the cost of advertising that encourages people to contribute to the Red Cross, to buy U.S. Savings Bonds, or to participate in similar causes is usually deductible.


Self-Employed Advertising Expense Deduction

Publication 587 for 2013 is the guide for Business Use of Your Home.

Publication 505 is the 2014 reference for calculating and making Estimated Tax Payments, beginning on page 23. Managing your estimated tax payments takes discipline. If you have any withholding from wages, it is treated as tax paid throughout the year.

Form 1040-ES is used to compute your quarterly Estimated Tax liability, and to make estimated tax payments by mail for tax year 2014 if you choose that path.

IRS Direct Pay is a free and simple method to make ES payments online. EFTPS is a good option as well.

Your income tax return is not easy, so no Form 1040EZ or 1040A for you.

Schedule C for 2014 is where you report your income and expenses from the business, and determine the profit or loss. This schedule is attached to Form 1040.

Schedule SE for 2014 is where you compute your Self Employment tax liability, and is also attached to the Form 1040. The rough number for self-employment tax is 15.3% of your net earnings (income less expenses, see Schedule C above). This is in addition toyour income tax liability based on your total income for the year. One-half of your self-employment tax liability is a deduction, which reduces your taxable income.

The 2014 publications and 2015 Form 1040-ES should be available online after 1/2/2015.

You may have state and local income and / or business tax filing requirements as well.