October 2011

Lisa Kind - Editor

Esthetic Endeavors | by Judith Culp

Taxes? Don't Forget the Deductions

In any economy, good or bad, no one wants to pay more in taxes than they are required to.

Many people do pay extra taxes because they either do not keep good records or do not take advantage of the tax deductions available to them.

Here are some tips for estheticians, or other beauty professionals that are good to remember. If you have questions on any of these tips consult with your licensed tax advisor.

In our work, it pays to look professional. So establish a dress code and wear some sort of a snappy looking uniform. Unlike your street clothes, these clothes are tax deductible. My staff has used uniforms for years now and they look great and still allow for personal taste choices.

Postgraduate or continuing education that will enhance your profession is all tax deductible. This would include trade shows, specialty clinics or other post-graduate training. If travel is required, then auto expenses, train, bus or plane fares are deductible. Lodging is deductible. Keep records of ALL travel expenses.

While you are traveling for education, visit a salon or spa and see what there is to be learned. How well does your facility measure up against them? There is always something you can learn. Keep a log of where you went, time and costs involved.

Look for opportunities to network. The professional contacts you make when you are traveling may later turn into people you will contact for other business reasons. You may find a new supplier, new equipment, new products or maybe a new best friend.

Often there are times when we end up doing work while we are supposed to be on vacation. What do you do in those circumstances? The latest reports say the line is blurry on what you can deduct from taxes when work and vacation overlap. For owners of business or consultants in today's world we really cannot leave work behind. The good news is the time you spend checking out messages and responding to issues, time spent reading reports or doing conference calls may make part of your travel expenses a tax deduction.

If you take a pure business trip, the rules are very clear. Airfare, hotel charges, rental cars, taxis and other business expenses are 100 percent tax deductible. Up to 50 percent of meals are deductible. If you are traveling with a spouse, their expenses are not deductible.

If you take a business trip and add on some time for vacation the airfare and business portion are deductible as long as the trip is primarily for business and the trip is within the USA. International travel requires the airfare to be prorated based on the number of business days in relation to the number of total days gone.

Here is where things get a little more complicated. If you are traveling on business and planned a couple of vacation days but ended up spending much of your time taking calls and sending messages, then it is possible that you can show you ended up working on your vacation days and fully deduct the cost of your travel.

The tax law says that if a trip is primarily for vacation you cannot deduct airfare, but you can deduct business-related expenses once you are there. Your tax preparer needs to be your guide here. The laws do not say exactly what is permissible but they do not exclude the possibilities of taking this type of deductions.

Documentations and a good travel log with the more detail the better are crucial. Keep good cell phone and text records as well as emails with descriptions in your log of the nature of the business. If you have a meal with a business client, you need more than your credit-card receipt. You also need the restaurant receipt and a personal record of who the guest was and the nature of the business. The IRS may disagree with you but since there are no clear guidelines, you have the right to establish your own. Therefore, if your vacation is ruined or cluttered with work, there may be a silver lining in the form of a tax deduction.

For information, visit www.irs.gov/taxtopics or www.irs.gov/publications.

Judith Culp, a CIDESCO Diplomat has been in the esthetics industry since 1980. A CPCP permanent makeup technician for over 18 years she served a 4-year term as a Director for the Society of Permanent Cosmetic Professionals, two years as their president. She is president of Culp Enterprises Inc. and CEO of NW Institute of Esthetics. Judy Culp is available for consulting. For more information visit www.estheticsnw.com.