As a Financial Advisor I also often get questions this time of year about what is deductible. Although I will mention things in broad terms, it is always best to ask your tax advisor about your specific items.
Here is a good rule of thumb: If it cannot be used for other purposes and is purchased specifically and exclusively for your Santa business, it is usually deductible.
- Santa suit - yes, can't be worn to work or church or anything "normal"
- Santa belt - yes
- Wig and beard - yes
- Boots - this one is tricky - do you wear them to ride your motorcycle? Do you wear them everyday? With Jeans? Might not be deductible. If they are exclusive to Santa then yes.
- Bells, toys, stickers or candy to give away - yes
- Eyewear - another tricky one. Do you use them exclusively for Santa? yes if exclusive, no if you wear them everyday.
- Santa's chair - yes, if it is decorative and not used for other purposes.
- Memberships to Santa organizations - yes
- Books for Santa or your Santa business - yes
Here are some tricky ones:
- Domain name and hosting - yes if exclusive for Santa
- Internet service - usually you can deduct a portion. Speak with your tax advisor
- Home phone or cell phone - same as internet service
- Mileage - a qualified yes. Speak with your tax advisor, keep good records. It can get a little complicated - donated time as a volunteer, for example can count as a donation. Get advice. KEEP RECORDS
- Hair care products, bleach, etc - complicated. If you bleach year round it may not be deductible.
- Storage containers - yes, if used only for Santa stuff.
- Software, computer equipment, cameras, electronics - mostly no, but qualified. You must prove the equipment is dedicated and cannot be used in every day life. Talk to your tax advisor.
Most of all, with everything, keep good records! I often recommend that clients buy a 3-ring binder and fill it with paper. Tape receipts to the pages and make notes beside the receipt as to what was purchased and the use.
I also recommend that business purchases be made separate from personal purchases. Keep the receipts separate; it is easier that way. Keep your mileage in a small notebook in your car - or even better, if possible do a MapQuest directions printout for your mileage and place in the same 3-ring binder.