8 Valuable Tax Deductions for Process Servers and Investigators

• March 17, 2010
• by ServeNow.com Staff
• Business Tips

April 15 is just around the corner and unless you’re one of those motivated process servers or investigators who filed months ago, taxes are weighing heavily on your mind. If you want to save money on your taxes, now is the time to start digging through your receipts to find out where you can deduct some of the businesses expenses you incurred in 2009. The primary goal is to make sure that all expenses you deduct are actually related to your business.

We here at the ServeReport compiled a list of eight business-related items you can deduct to line your pockets with more of your hard-earned money in 2010.

1. Business use of cars

Process servers and investigators use their cars more than most other professions, so using all of that accumulated mileage to your benefit when filing taxes makes perfect sense. The Internal Revenue Service (IRS) said that people using vehicles for business purposes could deduct 55 cents per mile in 2009, but it will drop to 50 cents for miles driven in 2010. If you plan on claiming your car as a business expense, you need to first decide whether you will use the car solely for business because that will determine how much you can deduct. The IRS has two ways to decide how much you can deduct, the standard mileage rate method and the actual expense method, so you should visit the IRS website to determine which you are eligible for and which will save you the most money.

If you decide to invest in an alternative-fuel vehicle, you can get better gas mileage as well as leverage a tax credit issued by the government for purchasing hybrid vehicles. The credit ranges from $1,950 to $3,000 for 2009 model year vehicles.

Finally, if you use GPS equipment to navigate during your service of process assignments, that technology is also deductible because it aids you during the performance of business duties.

2. Deducting your marketing dollars

If you spent money to advertise your business, well … that was a smart move. Another smart move is deducting those expenses to get an even greater return on your marketing investment. Deductible marketing expenses include billboards, posters, flyers, and brochures. Additional marketing expenses that you can deduct include: 

• Money spent on promotional activities such as contests, special events to attract business or sponsorship of local events
• TV and radio advertisements
• Business cards
• Money spent creating and maintaining your business website
• Sponsorship of a sports team
• Advertising to fill a vacant position within your company
• Online directory listings
• Phonebook listings

3. Association membership

Not only is belonging to your state or national association a wise business decision because of the networking and educational opportunities, but the membership fees are also deductible. Make sure you briefly document how belonging to the association is related to your profession, and don’t forget to keep any receipts that prove you paid your dues. If you subscribe to trade publications or publications from your association, those costs can also be written off.

4. Entertaining clients

Providing entertainment can be a valuable method for strengthening relationships with clients. While sometimes expensive, conducting business outside the office is a long-used method of discussing business and closing deals. Luckily, the IRS allows you to deduct 50 percent of business-related meal and entertainment expenses – for example if you took a client out to dinner to talk about a service of process assignment.

Entertainment, as defined by the IRS, “includes any activity generally considered to provide entertainment, amusement, or recreation, and includes meals provided to a customer or client.” In order to deduct these expenses, the entertainment must have either:

• Taken place in a clear business setting, or 
• Been conducted mainly for business purposes, where you engaged in business with the person and expected to gain income or other specific business benefits.

5. Business-related education

As in most professions, process servers and investigators can benefit from participating in ongoing education. Education enables process servers and investigators to perform their jobs using better technology, more streamlined techniques and knowledge of the latest legislation. Any money you spend on classes, seminars, conventions, videos or CDs is tax deductible for your business, provided that these educational expenses are directly related to your profession and intended to improve your on-the-job skills and knowledge.

6. Haiti relief deduction

Donations to help earthquake-ravaged Haiti are both generous and deductible. Eligible contributions to Haiti relief charities must have been made after Jan. 11, 2010, and before March 1, 2010. The donations may have been made by check, credit card, debit card and text message. You can write the donations off from your 2009 taxes by using the Schedule A form.

7. Business equipment

You can fully deduct new business equipment that you purchased and put into use between Jan. 1, 2009, and Dec. 31, 2009. The Section 179 deduction allows you to write off equipment including:

• Business vehicles with a gross vehicle weight of more than 6,000 pounds 
• Office furniture and equipment, including scanners, fax machines, printers and copiers
• Computers and off-the-shelf computer software 
• Other equipment and machines purchased for business use

8. Carrying over old losses

You can now receive a refund on taxes you paid over the past five years if your small business had a net operating loss in 2008. Your business is only eligible for this refund if it averaged $15 million or less in gross receipts over the past three years. For more information about this deduction, visit the IRS website.

Conclusion:

As long as you save and organize all receipts and invoices throughout the year, and you ensure that your tax deductions are truly related to business, you should be able to save thousands of dollars for your business. It might seem like a chore to those of you who aren’t naturally inclined toward financial record-keeping but give it a try and you just might be surprised how pain-free April 15, 2011, seems.

Editor’s note: ServeReport writers are not tax advisors and you should not make financial decisions based on the advice in this article. Please consult with your own tax advisor or attorney before taking any action regarding how you treat expenses in your tax filings.