What are the Small Business Tax Deductions & How to Claim them?
Tax amounts should be paid by each individual and businesses directly related to the income earned. An experienced CPA firm can assist you in finding out the small business tax deductions in a proper way. However, there are some exceptions where a tax deduction could be claimed.
Major List of Tax Deductions for Small Business
Following is a list is of the type of tax deductions for small businesses and organizations for your reference.
- Home Office – According to the “IRS”, you are able to deduct $5 per square foot of your home is used for business, which could go up to a maximum of 300 square feet.
- Telephone and internet expenses – If these are used for business purposed tax deduction are possible.
- Business meals – A 50% deductions could be made on qualified food and beverage costs if the meals are business related.
- Travel expenses – If you travel for business outside your tax home which is the city or area in which you conduct business, then tax deduction is possible.
- Business use of a vehicle – You can deduct the total cost of operation of your vehicle used for business purposes.
- Business Insurance – You can deduct the tax of your business insurance.
- Medical care expenses – Medical costs for prescription drugs, doctor’s fee, and home care could be deducted.
- Education – Education, which adds value to the business or the expertise, are deductible in tax.
- Investments – Interests for money borrowed for investments could be deducted under given terms and conditions.
- Charitable contributions – Charitable contributions given to qualified organizations could be deducted.
- Retirement contributions – Contributions made for retirement could be deducted under given conditions.
Other such straightforward tax deductions include:
- Business interests and bank fees
- Child and dependent care expenses
- Mortgage interest paid
- Real estate taxes
- Foreign earned income exclusion
- Legal and professional fees
How to Claim Tax Deductions?
In order to claim a deduction in tax, the following should be fulfilled:
- The money should have been spent yourself and not reimbursed at any cost
- It should be related to your job
- You should have a proven record to claim tax deductions
A knowledge of the tax deductions available and how to claim tax deductions will be extremely useful in your business in order to get the maximum benefit out of this opportunity. Often times these tax deductions may get ignore resulting in an unnecessary cost and burden on you and your business which could be easily avoided given the correct knowledge and application.
So this article helps anyone running a small business to identify where tax deductions could be possible and make use of it.