Form 1040 (Schedule A&B: Fill & Download for Free

This boils down to the difference between an above-the-line vs below-the-line impact or deduction. In some cases there may be no difference; but in many cases there may be.In general, you should prefer to claim legitimate expenses above-the-line if you can. If there is a legitimate business purpose for the expense, you should always opt to use it as such."Above-the-line"Anything that is used as an input to calculate your Adjusted Gross Income (Line 37) is considered "above-the-line". This includes all income found on lines 7-21 on Form 1040, including Schedule C (or 1065 Partnership) business income, plus certain "adjustments" found on lines 23-35 of Form 1040.Specifically, Sole Proprietorship, LLC and S-Corp income flow through to your 1040 on Line 12 (S-corps flow through to Line 14).Why should you care about this?1. Lower (non-passive) business income (from this $2k deduction) means you will have the lowest taxable income. Taking the $2k deduction as a legitimate (and defensible) business expense means your specific deduction is not subject to:a. The itemized deduction minimum threshold. If you claim this deduction as a charitable contribution, deductible on Schedule A, you must have at least $6100 in other total itemized deductions to receive the full tax benefit. Itemized deductions include state and local income taxes (or sales taxes), mortgage interest, property taxes, and others. If you only have $2k of state income taxes and zero other itemized deductions, your total itemized deductions will only be $4100, and since the standard deduction is $6100, you would receive zero tax benefit. given that your income in the question is $72k, your state and local income tax burden is unlikely to be more than $6100 (maybe if in NYC or CA). Either way, this outcome creates an "unknown outcome" for you until the end of the year; as a tax professional who pushes proactive tax planning, I hate unknowns and beat them with a stick.b. AMT. Let's say you have $20k of other itemized deductions. Most people don't realize that AMT forces you to pay a minimum amount of federal income tax, even if you have a ton of itemized deductions. Now there are income exemptions to AMT, etc.. but in general, putting something as an itemized deduction puts that deduction at risk of being giving you the full deduction benefit if you are subject to AMT. At $72k gross income, it's incredibly unlikely you are subject to AMT. But this is something to consider once you make $100k+.c. Deduction phase-out for higher income earners. While this doesn't directly apply to you with your $72k of income, as you earn above certain thresholds (~$150k as you can see on Line 29 of Schedule A), your deductions may be limited. Something to consider in the future.To sum a,b and c up - you need to have at least $6100 in other itemized deductions, but not so much that you are subject to AMT or itemized deduction phaseout.2. Lower business income means lower AGI. If you are not subject to passive activity limitations, lower business income means you reduce your Adjusted Gross Income (and business losses can actually offset other income you may have like W-2 income). AGI (and MAGI) is important because it affects your eligibility for certain adjustments (like student loan interest or using up to $25k of passive losses from rental property to offset other non-passive income), which can be "phased out"at higher income levels.3. Depending on what state you live in, lower AGI may mean lower state income tax.Bottom line: in your exact circumstance with no information other than what you have int eh question, there may be zero difference between claiming the $2k as an itemized deduction on schedule A (via charitable contribution), assuming your other itemized deductions are at least $6100, and spending the $2k on business-related (make sure the expense doesn't need to be capitalized / depreciated over several years like new durable equipment).However, to take something away from this, I can say with confidence that regardless of the rest of your circumstances that we don't know, spending the $2k on legitimate (and defensible) business expenses will get you at least the best outcome and no worse. Claiming it as an itemized deduction may have the same monetary outcome this year, but may not get you the same tax benefit in the future as your tax circumstances fluctuate.-D

The IRS calls the amount of time and money spent by taxpayers complying with the tax laws the “taxpayer burden.” On average, self-employed taxpayers spend significantly more time than those whose income comes from wages and investment.The IRS itself itself reports the taxpayer burden filling out Form 1040 as part of the instructions with the form each year. They state (2018 instructions):Reported time and cost burdens are national averages and don’t necessarily reflect a typical case. Most taxpayers experience lower than average burden, with taxpayer burden varying considerably by taxpayer type. For instance, the estimated average time burden for all taxpayers filing a Form 1040 is 11 hours, with an average cost of $200 per return. This average includes all associated forms and schedules, across all tax return preparation methods and taxpayer activities.Those filing one of the simplified Form 1040 variants would, I presume, take less time, and there are many other tax forms beyond the Form 1040 that individuals have to fill out not included in the number.Studies have found that the compliance burden has been decreasing so that the average taxpayer burden in 2000 was 23 hours, but had declined to 19 hours by 2007.[1]One would expect further reductions for 2018 due to the effect of the Tax Cuts and Jobs Act that made it less advantageous to use itemized deductions.Footnotes[1] https://www.irs.gov/pub/irs-soi/10rescon.pdf

I’m assuming you are referring to US taxes. You might get some of it back, but not all.I was in this position a number of years ago. In 2000, I did an early exercise of stock options in a startup company. In 2005, that company was sold for less money than had been invested in it, and all of our common stock became worthless. I declared the loss, $9475, on Part II of Form 1040 Schedule D (Capital Gains and Losses). I had no capital gains that year. I was allowed to deduct $3000 of that loss from my 2005 income (because I filed married jointly; if I filed separately, it would have been $1500). So, at a marginal federal tax rate of 25%, this reduced my federal taxes by $750. My state marginal rate was 9.3%, so that also saved $279 on state taxes.The remaining capital loss, $6475, carried over to my 2006 Schedule D. So I could once again deduct $3000 of that loss from my income, with the same tax savings as 2005. The same was true for 2007, except that I had an additional $50 capital loss from stock options (I really know how to pick them!). So in 2008 I was finally able to completely write off the remaining capital losses of $515. So I effectively got back a third of my original loss, over 4 years.I haven’t had the pleasure of making a capital loss since the new tax laws went into effect, so I can’t tell you if this has changed.