Every Year, Business Owners across the Nation sit down with their Tax Accountants to come up with as many Legal Tax Deductions as possible. As a Business Owner, knowing which Business Tax Deductions that you qualify for can help:
It is unfortunate that many Business Tax Deductions are misunderstood and underutilized. Some Business Owners make the mistake of claiming the wrong deductions or claiming the wrong amounts. Most Business Owners overlook the most important Deductions that can help reduce their Tax Liability. As you file your Taxes this Year, We have compiled the Top 10 Overlooked Tax Deductions that most Business Owners ignore during Tax Period. Our Aim us to help you remember to claim these deductions as you file your Taxes.
1. Software: A Software Deduction is more than the traditional idea of Software in a Box or Download. If you use any Cloud Based Tools such as Online Accounting Software or Other Productivity Tools, your Subscription Fees are deductible as well as these Software- as- a- service (SaaS) options.
2. Education: Did you spend money to attend a Trade Show, Industry Seminar, Training or Conference relating to your Business or Career in the Past Year? Did you Buy Books, CDs or Online Tutorials related to your Business? These Tools help you get smarter at running your Business and are all Tax Deductible.
3. Licensing & Regulatory Fees: Do you know that the Regulatory and License Fees that you pay each year to keep your Business Operating and in Good Standing are Tax Deductible?
4. Bad Debts: When a Client owes you money and they are not paying their Bills, It is possible to deduct the Uncollectible Bad Debt from your Taxable Income.
5. Student Loan Interest: Student Loan Interest is a Tax Deduction that is commonly missed. If you have Student Loan Debt and you are still paying for it- Either for yourself or for your Children, you have to ensure that the Loan Interest is deducted for Tax Purposes .Note: The Person who gets to deduct the Loan Interest is the person who is legally obligated to pay back the Loan. This means that if the Loan is under your Name, you can take the Tax Deduction; If the Loan is under your Adult Child's Name, then your Child will be the one to claim the deduction on their Tax Return.
6. Medical Costs: These include Health Insurance Premiums, Dental Care, Glasses, Counselling, Therapy and Miles driven to Medical Appointments. Weight- Loss Programs are also deductible if undertaken as treatment for a Disease diagnosed by a Physician.
7. Retirement Plan Expenses: Whether you are a Solo Entrepreneur or Business Owner with many Employees, Any Contribution (up to a certain limit each year) made to a Qualified Tax-advantaged Retirement Plans such as SEP IRA, SIMPLE IRA, 401(K) or Other Retirement Accounts are Deductible. It is important to note that some People with IRAs miss the opportunity to contribute to their Plan and don't realize that it's a deduction that does not need to be funded by December 31st of the Tax Year. Tax Payers have until April 14th of every following Year to fund their IRAs.
8. Depreciation: Depreciation can mean large Tax Savings for most Business Owners and is usually complex enough to intimidate or confuse many Business Owners. Certain Fixed Assets Purchases that you buy for your Business cannot have the entire cost deducted in the same year that you purchase it, instead you need to spread the cost across a few Tax Years and deduct part of it each year.
9. Business Transportation (Vehicle Mileage & Maintenance) : Using your Personal Vehicle or Business Owned Vehicle for Business Related Travel allows you to deduct the Value of Depreciation on the Vehicle's Value by deducting your mileage with the IRS standard mileage rate per mile of Business Travel, or ( If the Number is Greater) by deducting the Total Value of Gas and Maintenance on the Vehicle.
10. Charitable Contributions & Non-Cash Charitable Donations: The IRS likes to encourage and reward People who donate and volunteer for charitable causes. Any Money that you give to a Tax- Exempt Charitable Organization can be deducted from your Taxable Income. You can also deduct certain out - of - pocket expenses incurred while volunteering for a charitable organization. Deducting a Cash Contribution to a Charity is easy, but too often People don't accurately value Non- Cash Contributions such as Clothes. You will have to determine the fair market value.
It is important to take note of these overlooked Tax Deductions and remember to list them during your Tax Filing. It has been reported that Most Business Owners give lots of extra money to the IRS due to lack of record keeping of these overlooked Deductions. This is why it is compulsory to keep accurate record of all your Expenses during the Year and have them categorized properly, so that you can reduce your Tax Liability to the minimum.
We know that the Tax Filing Season is not fun and will like to take the stress off you, so that you can concentrate on building your Business, If you have not been keeping accurate records of your Income and Expenses, We are available to help you. Please Free to give us a Call on 202.422.4586. You will be glad you did.
To your Business Success,
Rosemary Anyanwu, CFE.
Certified QuickBooks ProAdvisor, Professional Bookkeeper & Accountant.
Rosyan Bookkeeping Services.