Where Work Ends and Taxes Begin

This is a nutty time of year for everyone. If you've sold a house, collected an inheritance, even won a television from a church raffle, you've got some extra legwork ahead of you as the tax filing deadline approaches. But, what if you're self-employed? Yeah, then you really have your work cut out for you.

If you're a strict record keeper and you've logged your miles in the car, written on the backs of your receipts and documented all expenses--you win. But most of us didn't, and we're sitting here scratching our heads and wondering the following: On the way to a meeting with a client we stopped at the comic book store (for a non-work related excursion). How many of those miles get logged for work and how many don't? In other words, where does work begin and personal stuff end?

Kathleen Ryan O'Connor at FORTUNE Small Business asked tax experts that same thing. And, overall, here's the answer: "There's two ways to look at it," says Grafton Willey, former chair of the National Small Business Association. "There's the technically correct way, and the practical way."

In other words, chill. Log the miles you drove for the business meeting and be done with it. As for computer and business equipment and supplies, there's no way to truly keep records on the amount of time you spent using it for personal reasons as opposed to business reasons. The best approach is to estimate how often you use it for business (say, 60 percent of the time) and deduct accordingly.

Paul Stappas, founder of Bookkeeping Administration Management, agrees: "For example, if the office comprises 12% of your home, then you can deduct 12% of the house expenses, including mortgage interest, house cleaning, repairs, home insurance, etc."

So, there you go. Nothing to worry about. Now, back to filing...