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Question
If you run a tow company from your home and have a garage and office. What expenses can you write off?
AI accountant’s answer:

Absolutely, running a tow company from your home means you can write off a number of expenses related to your business. Here's a quick rundown:

1. **Home Office Deduction**: If you use part of your home exclusively and regularly for your business, you can claim a home office deduction. This can include a portion of your rent or mortgage, utilities, and home insurance. The amount you can deduct is based on the percentage of your home that's used for business.

2. **Garage Expenses**: If you use your garage for storing your tow trucks or for any business-related activities, you can also include this in your home office deduction.

3. **Vehicle Expenses**: You can deduct expenses related to your tow trucks, including gas, repairs, insurance, and depreciation. You have two options here: you can either deduct your actual expenses, or use the standard mileage rate (which also factors in depreciation).

4. **Office Expenses**: You can write off the cost of office supplies, computer equipment, software, and anything else you need to run your business.

5. **Insurance**: Business insurance premiums are deductible. If you have a policy that covers both your business and your home, you'll need to allocate the cost between the two and only deduct the business portion.

6. **Depreciation**: If you've purchased equipment for your business, like tow trucks or office furniture, you can deduct a portion of the cost each year over the item's useful life. This is known as depreciation.

7. **Self-Employment Taxes**: As a self-employed person, you're responsible for paying both the employer and employee portions of Social Security and Medicare taxes. However, you can deduct the employer portion of these taxes.

Remember, to claim these deductions, you need to keep detailed records of all your expenses. And the expenses must be both ordinary (common in your line of business) and necessary (helpful and appropriate for your business).

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