10 Commonly Overlooked Tax Deductions for Small Businesses
As a small business owner, you’re probably well-acquainted with the many tax deductions you’re allowed to take. But even the savviest business owners can overlook some of the deductions that are available to them.
Here are 10 tax deductions that are commonly overlooked when filing business taxes in Spokane and major cities across Washington state:
- Purchases of office equipment and supplies
- Business travel expenses
- Purchases of advertising and marketing materials
- Any fees or payments made to professional service providers, such as accountants or attorneys
- Membership dues paid to professional organizations
- The cost of renting or leasing commercial property
- The cost of business insurance premiums
- Utility expenses for business use of your home
- The cost of using your personal vehicle for business purposes
- Meals and entertainment expenses incurred while conducting business
The Home Office Deduction
You may be surprised to learn that the home office deduction is one of the most commonly overlooked tax deductions for small businesses.
Here’s how it works: if you use a portion of your home exclusively and regularly for business purposes, you can claim a deduction for that portion of your mortgage interest, property taxes, utilities, and repairs.
You don’t need to have a separate room set aside as your office. As long as you use the space regularly and exclusively for business, you can claim the deduction. So the next time you are preparing business taxes for your business, keep this deduction in mind!
You may be surprised to learn that driving your car for business purposes is a tax-deductible expense. In fact, you can write off a wide range of costs associated with using your vehicle for work, including fuel, repairs, and even parking fees.
So if you use your car for business trips, make sure to keep track of all the related expenses. That way, you can deduct them on your tax return and reduce your taxable income.
You know those times when you have to travel for work? Well, as it turns out, those trips are tax deductible.
There are a few things to keep in mind when it comes to travel expenses: first, the trip has to be for business purposes. Second, you can only deduct expenses that are related to the trip. That means things like hotel rooms, airfare, and rental cars.
And finally, you can only deduct expenses that exceed 2% of your adjusted gross income. So if your AGI is $50,000, that means you can only deduct expenses that exceed $1,000. But still, it’s worth checking into this deduction, because it could end up saving you a lot of money.
Office Supplies and Equipment
Here are some things you may not know are tax deductible: office supplies and equipment, marketing and advertising expenses, business travel and mileage, and meals and entertainment.
Think about anything you’ve purchased in the past year that’s related to your business. Chances are, at least some of those expenses can be written off on your taxes. It’s important to keep track of everything though, so make sure you save your receipts!
Training and Education Expenses
You may be surprised to learn that you can deduct certain training and education expenses from your taxable income. This includes anything from tuition to books, software, and other supplies.
If you’re currently in the market for some new training or education, keep in mind that you may be able to write off at least part of the cost. Just be sure to save your receipts and invoices, so you can back up your claim when it comes time to file your taxes.
Health Insurance Premiums
You may be surprised to learn that health insurance premiums are tax-deductible expense. That’s right, you can write off the cost of your health insurance as a business expense.
This applies to both the premiums you pay for yourself and your employees. So if you’re self-employed, make sure to include this expense on your tax return.
And if you’re a small business owner, be sure to take advantage of all the tax deductions that are available to you. There are plenty to choose from, and most of them are easy to claim. So don’t miss out on claiming the deductions that could save you money on your tax bill.
Retirement Plan Contributions
Are you surprised to hear that retirement plan contributions are tax deductible? Most people are. A lot of small business owners don’t realize that they can deduct their contributions to a 401(k) or IRA plan.
This is a great way to reduce your taxable income and lower your tax bill. The best part is that you can contribute up to $18,000 a year to a 401(k) and $5,500 a year to an IRA. If you’re over 50, you can contribute an extra $6,000 to a 401(k) and $1,000 to an IRA.
Don’t forget—if you’re self-employed, you can also contribute to a SEP IRA or Solo 401(k). Check with your accountant to see what’s the best option for you.
Child Care Expenses
You may not know this, but you can deduct the cost of child care from your taxes. This includes daycare, preschool, and summer camp.
The key is to keep your receipts and to make sure that the care you’re getting is for a qualifying child. This could be your biological child, your stepchild, a foster child, or a descendant of any of these.
So if you’re paying for daycare so you can go to work, you can deduct that cost from your taxes. And if you’re a stay-at-home mom, you can still deduct the cost of daycare—even if you don’t work outside the home. Pretty sweet deal, right?
You may be surprised to learn that there are a number of charitable donations that you can deduct from your taxes. Here are a few of the most common ones:
- Monetary donations to qualified charities
- Donations of property, such as clothing or furniture
- Contributions of food or blood
- The value of your time spent volunteering for a charity
- The cost of racing in a charity race
- Travel expenses incurred while volunteering for a charity organization
Advertising and Marketing Expenses
When you’re running your own business, you know that every penny counts. So it’s important to take advantage of every tax deduction you’re eligible for.
One common deduction that’s often overlooked is advertising and marketing expenses. This includes things like website design and development, SEO services, printing costs, and even the cost of your business cards.
As long as you can justify the expense as being related to promoting your business, it’s generally considered a valid deduction. So dig through your past expenses and see if there are any that you can claim this year.
How Dreis Accounting Services Can Help?
As a small business owner, it’s important to be aware of the different tax deductions you may be eligible for. From office supplies to travel expenses, there are a number of deductions you may be able to claim on your taxes. You could also rely on the services of a tax professional when filing individual taxes or business taxes
To ensure you’re taking advantage of every deduction available to you, schedule a consultation with our experts or review the latest IRS guidelines. By taking the time to understand the tax deductions available to you, you can reduce your tax liability and keep more of your hard-earned money in your pocket.