9 Tax Deductions You Might Qualify For
If you want to check out some of the possible expenditures small business owners can potentially deduct from their annual tax bills, then you’ve come to the right place.
Nothing is certain, except for death and taxes.
Long attributed to Benjamin Franklin, that line—whose origin, according to Freakonomics, is a matter of debate—is undoubtedly true. It is a particularly acute reality for all the procrastinating Americans who waited until the last possible moment to file their taxes this year. While you can avoid doing them as long as you want, Uncle Sam will always come for you and your money, regardless of who you are or what position you hold. (Need proof? Just ask Wesley Snipes.)
If there’s nothing you can do to avoid your taxes, then you might as well do them, and do them well, right? If you’re seeking guidance on how you can best navigate the complex U.S. tax policy, then we recommend consulting a C.P.A.
However, if you want to check out some of the possible expenditures small business owners can potentially deduct from their annual tax bills, then you’ve come to the right place. While these do not apply to every small business owner, they are out there for the taking. So, have a look, and see what you think. Who knows? Maybe you missed a possible deduction, and your penchant for procrastination will pay off this year.
Most people have heard of this one, but in case you haven’t, here’s a quick primer. If your mortgage qualifies under I.R.S. guidelines, you’re able to deduct those payments from your annual tax bill. It’s a welcome gift to homeowners, and it’s also a government incentive to drive more people to buy homes.
Medical and Dental Expenses
Depending on how you file and who you are, you might be able to deduct medical and dental expenses from your taxes. There are a lot of restrictions, though, so it’s important to read the fine print.
Donating to charities and nonprofit organizations is something that a lot of Americans do. In fact, according to the National Philanthropic Trust, more than 95% of all households give to charities. Apart from its positive impact, that money can also often be deducted from your taxable income.
Student Loan Interest Paid by Your Parents
This helpful hint comes courtesy of Kiplinger. According to the news provider, if a child is no longer claimed as a dependent, and her parents pay back her student loans, the government actually credits the child—not her parents—with executing those loan payments. Per these government guidelines, the child is legally allowed to deduct up to $2,500 of student loan interest annually.
Business Entertainment Expenses
Just as it implies, there are certain instances when the government allows you to deduct business entertainment expenses from your tax bill. Though there are, of course, limits to what qualifies, it is an important deduction, especially for self-employed people. Still, even if you do qualify, it’s not a free pass to huge deductions: “Generally, only 50% of business-related meal and entertainment expenses are allowed as a deduction,” according to the I.R.S.
Yes, you might be able to write off—at least partially—the money you’ve spent on gifts for your customers. While there are specific rules governing which business gifts qualify, the I.R.S. does allow taxpayers to deduct $25 per qualifying gift.
While you can’t deduct the cost of your subscription to People Magazine, there are government rules that allow certain individuals to deduct the cost of subscriptions to trade and professional publications from their annual tax bill.
If you’re a small business owner who moved at some point over the past year, there is a chance that you could deduct moving expenses. Just remember that to qualify, you have to meet three specific requirements: Your move has to be closely related to the start of work, and you need to meet both the distance and time tests set forth by the I.R.S.
Home Office Expenses
There are a lot of restrictions on this provision, but there are deductions that small business owners can take advantage of if they operate their businesses out of their homes. For those who do qualify, there are limits to what can be deducted. Per the I.R.S.: “If your gross income from the business use of your home equals or exceeds your total business expenses (including depreciation), you can deduct all your business expenses related to the use of your home.”