02 Nov Can I Write That Off? Income Tax Deductions for Batman
Can I write that off? Sometimes income tax deductions can get complicated as a self-employed professional or small business owner. There are many strategies available to maximize tax savings. Since The Heroes Group is a team of Sidekicks supporting Heroes (our clients), we found it appropriate to use on of our favorite Heroes, Batman, to simplify the complexities of income tax deductions. So, can Batman write off….
His Gadgets & Accessories?
Yes! All of Batman’s gadgets, computer equipment, printers, etc. can be written off, as these are necessary for operating the Batcave and rescue missions. These are referred to as fixed assets and will be depreciated over 5 to 7 years.
Remember that depreciation is not optional. If you don’t claim all the depreciation deductions that you’re entitled to, you will be treated as having claimed them when you compute your taxable gain/loss on the sale (or disposal) of the asset, meaning you’ll have more gain to report, but will have lost the opportunity for deductions from income from previous years. On the flip side, if you claim more depreciation than you’re entitled to, you may suffer penalties in a tax audit.
Will you be in a financial position to sustain a tax hit if you sell one of these items, recapturing all of the front-loaded depreciation? Speak with your Certified Public Accountant (CPA) to go through these scenarios and see what strategy is best for you and your business.
Yes! Remember, the Batsuit is supposed to be used for Batman related missions only. Meaning he can’t be using it for Bruce Wayne events and activities. Some additional good examples are other uniform related professions, such as nurses or doctors that wear scrubs, real estate professionals required to wear a branded polo, etc.
Unfortunately, no. Even though gym memberships may have many positive effects, you are not able to write them off. There are certain (limited) instances where this is possible. For example, many athletes and models have the opportunity to write off their gym membership, as it is ordinary and necessary for them to perform their job.
Yes! Alfred is an employee and his paycheck is deductible, but only when working on Batman related missions. He also is a butler for Bruce Wayne. The portion related to his work for Bruce Wayne cannot be deducted as it is for personal use.
Yes! He can deduct the portion of his phone (initial purchase and monthly bill) that was Batman Missions related. We’ve broken down a few more examples:
Odds are if you are self-employed, you may be using your personal cell phone as your business phone (since you are the business). You may write off 100% of your cell phone expenses (initial purchase and monthly bill) as long as the phone is used for business purposes – exclusively.
If you use your phone and it is required by your employer (expenses as well) and you don’t receive reimbursement, you also have the right to deduct the business portion of your cell phone expenses from your taxable income (on Schedule A, subject to certain limitations).
Business & Personal use
Whether or not you are self-employed, if your cell phone acts as both your business and personal phone, you are only able to deduct the portion used for business. Remember to keep records of your itemized phone bill and all receipts.
Parties & Galas?
It depends. Parties and galas that Batman throws can be written off as an entertainment expense and/or marketing expense, only if it is directly related to his business as Batman.
Yes! Batman can receive a deduction for using a portion of his home (in this case the Batcave) for this as long as his employer doesn’t provide him with a place of employment. In other words, if your employer does not provide you with an office and you make a portion of your home your primary office, you can receive a deduction. On the flip side, you cannot write off your home office just because you choose to work from home on occasion.
Disclaimer: We made assumptions and used brevity, simplicity and professional judgement in preparing this information. Your specific situation may vary. We recommend contacting a CPA and/or attorney prior to making any important business decisions.