Did you know you can deduct the cost of lunch on your business taxes? What about uniforms required for work? If you can document reasons for unusual business expenses used to benefit your business, you can generally deduct them from your business income. You may already know that you can deduct items like airfare and hotels. Read on to find out other deductions you may be missing.
Even though any expense incurred in the production of income can be a valid write-off, you must keep good records. Go beyond collecting receipts: document duties and hours, write notes on receipts and keep a log of items like mileage and gas.
Reimbursements you pay your own employees are also deductible. These could include:
- Baggage fees
To claim such a deduction, your business should have an accountable plan that shows how reimbursed expenses were actually business-related.
Are you a new business owner and feel especially lost? Consider that many of your startup expenses can be deducted once the business starts. These include continuing education courses, lunch with future clients or a previously purchased computer. You can deduct up to $5,000 of business start-up costs and $5,000 of organizational costs, with the rest amortized. None of this is valid, however, without adequate records.
Beyond the more obvious deductions, consider if any of the following seven deductions might apply.
Looking for Work: If you’re looking for a job in your field and you itemize deductions, document those that exceed two percent of your gross income. Any over that threshold can be deducted. Remember that costs add up quickly. Consider the mileage you put on your car when driving to interviews and the cost of printing resumes. (But remember: keep a record!)
Self-employed Social Security: You have to pay 15.3 percent of your income for Social Security and Medicare taxes — the portions ordinarily paid by both employee and employer. One small consolation is that you can take a deduction on your income taxes.
Health Insurance Premiums: Medical expenses can blow any budget and, to be deducted, they have to be a certain percentage of your adjusted gross income. If you’re self-employed and responsible for your own health insurance coverage, you can deduct 100 percent of your premium cost. That gets taken off your adjusted gross income rather than becoming an itemized deduction.
Tax Savings for Teachers: K-12 educators are allowed to deduct $250 for materials. This gets subtracted from income and can be taken advantage of even without itemization.
Other deductions include:
- Education and training for employees
- Exhibits for publicity
- Investment advice and fees
Apps can be great resources to keep track of receipts. Hubdoc, for example, turns financial documents into digital files that are easy to store. You should also keep business expenses separate from personal expenses. A red flag for the IRS is when expenses are combined.
Of course, these are just the basics. There may be exceptions and special provisions, and the laws and regulations can change each year. Your best bet is to think long term and work with a tax professional on strategies for current and future planning.
Let us help you save as much on your taxes as you are legally able to do. Contact us today.