Tax changes occur every year. New deductions emerge while some earlier ones aren’t being renewed for this year, so it’s important to stay up to date and always look for those tax deductions often overlooked.
- Vehicle expenses:If you own or lease a vehicle used for business travel, you can deduct a percentage of the cost of the vehicle based on business use, as well as the same percentage of operating expenses like oil and gas. However, you must observe strict record keeping requirements to establish legitimate business use.
- Travel and entertainment expenses:Besides vehicle costs, a business owner may deduct other travel expenses, such as plane fare and hotel lodging, if the primary purpose of the trip is business-related. Furthermore, if the owner entertains clients or customers, 50 percent of the cost of the entertainment and meals is deductible if certain requirements are met. Typically, the entertainment must follow or precede a substantial business deduction. Again, detailed recordkeeping is a must in this area.
- Health insurance premiums:Naturally, a business can deduct the health insurance it pays for its employees, but this write-off isn’t limited to corporate entities. A deduction for health insurance paid by a self-employed person, including amounts covering a spouse and dependents, is also deductible. This is especially valuable in reducing taxable business income.
- Networking for Cash The business of doing business means calls to connect with contacts, faxes to confirm orders and other expenses. Make sure to get itemized bills from your networking transactions so you have solid records. You can deduct half of what you pay for business meals and entertainment not reimbursed by your company.
- Make the most of Giving Tuesday Qualifying charitable organizations are nonprofits, generally with a 501(c)(3) filing status. These include religious, charitable, educational, literary, or scientific purpose groups or groups dedicated to the prevention of cruelty to animals or children. Make sure the organization qualifies and save all receipts. This is a great strategy for tax deductions as well as community publicity.
It is always a good idea to save receipts and ask your tax professional if there is something you may have overlooked. You might be surprised!
Ron Leger is a Massachusetts based CPA who specializes in the R&D Tax credit and taxes for businesses, individuals, trusts and tax exempt organizations. Contact us today!