What the Tax Return Box and Allowable for Tax settings mean when you set up a new spending category or edit an existing one, if you have a Universal account with FreeAgent.
Tax Return Box
When you set up a new spending category or edit an existing one, you’ll be asked to choose the Tax Return Box.
These correspond to the box names on the US 1040 individual tax return.
Choose the name from the list of boxes. Pick the one that’s most appropriate for the category you’re setting up.
For example, if you run a cupcake-making business and you want a new category for fuel for your delivery van, you’d choose the "Car and truck expenses" box.
Allowable for Tax?
You also need to choose whether this category is allowable for tax or not.
The box is ticked by default. Leave the box ticked if the category is allowable, untick it if it’s not allowable.
"Allowable for tax"? Stop talking accountantese.
That just means whether you’re allowed to take this expense off your income when you’re working out the profit that your tax is due on.
Most business expenses will be allowable, but some will not be. This will vary between different tax authorities in different countries.
Check with your local tax authority, or your accountant, if you have one, if you’re not sure whether an expense is allowable or not.