Business tax deductions work by lowering your taxable income, thereby lowering the amount of tax you owe toward your tax return. In order to claim the most deductions possible carefully review this list of deductions to see if they apply to your business, then reach out to your financial planner or tax consultant for clarity with accurate bookkeeping records.

Entrepreneurs, freelancers, and small businesses are allowed to write off a range of business expenses when filing their income tax.  These expenses include:

  • Startup Expenses
  • Postage
  • Business  associated travel
  • Educational
  • Advertising and Promotion
  • Business phone and internet
  • Business Insurance
  • Health Insurance premiums
  • Home Office Expenses
  • Office Supplies and related expenses
  • Business Meals
  • Work-related car use including maintenance
  • Business Interest and Bank Fees
  • Foreign Earned Income Exclusion
  • Interest on Loans
  • Depreciation
  • Real Estate Tax
  • Professional Service and Consulting Fees
  • Salaries, Benefits, Vacation Pay to employees
  • Moving Expenses
  • Home Energy Credits
  • Client and Employee Entertainment

Personal Tax Deductions for Business Owners

Charitable contributions

Business owners are able to claim their qualified philanthropic deductions on Form 1040 Schedule A attachment.

Child and dependent care expenses

If you pay someone for childcare or a codependent member, you may be able to claim the Child and Dependent Care Credit. Refer to IRS Publication 503 regarding limits and form requirements.

Retirement contributions

Depending on the retirement plan, business owners who contribute only to their own retirement funds can claim the deduction on Schedule 1 attached to their Form 1040.

Health care expenses

Out-of-pocket medical costs, like co-pays and prescription costs, can be deducted like the health plan premium and should be itemized on Schedule A.   A Self-employed business owner to itemize and deduct health insurance premiums for themselves, their spouse, and dependents.

How Can I Benefit From A 100 Percent Tax Deduction?

100% tax deductions are business expenses of which 100 percent of it can be claimed on the owners’ income taxes. These deductions can result from:

  • Annual business phone bills
  • Health premiums for the self-employed
  • Up to $25 per person per year as gifts to employees and clients
  • Office equipment, like computers, printers, and scanners
  • Business travel and its associated costs, like car rentals, hotels, etc
  • Furniture purchased entirely for office use in the year of purchase

What Do I Do Next?

Contact me to identify which deductions you can claim, which forms you require, timelines, deadlines, and anything else related to Financial Management and Tax Planning.

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