The Internal Revenue Code (IRC), in multiple ways, is written for business owners because of the many tax deductions they can implement that are not available to W2 employees. Whether you are an established business owner or new to the entrepreneur life, it is crucial to know the best legal deductions for your business so you are not leaving money on the table when filing your taxes.


What should you be deducting already?

 

Home Office

If you have an exclusive home office that you regularly use for business, you can write off associated rent, utilities, real estate taxes, repairs, maintenance and many other expenses.

Vacations

Who says you can’t mix business and pleasure? As long as 50% of your travel days are business days, you can deduct all your travel expenses, plus 50% of the cost of any meals.

Business Meals

Employee and client meals can be deducted, though the purchase qualifications do depend on the purpose of the meal, and more specifically, who benefits from it.

Continued Education

Any educational courses, licensures, and/or certifications your employees take are often tax deductible. Industry-related webinars, classes, workshops, and/or subscriptions would also qualify under this tax benefit.

OTHER TAX DEDUCTIONS TO CONSIDER:

  • Business insurance
  • Moving expenses
  • Car expenses
  • Charitable donations
  • Supplies
  • Marketing and advertising

What else should you be aware of?

 

Cost Segregation Analysis

A cost segregation analysis allows you to allocate or reallocate building costs to tangible personal property in order to accelerate the depreciation deductions. This can dramatically reduce your taxable income, so if you have or are planning to purchase or remodel a residential rental or business real estate property, you’ll want to consider this as a tax saving potential.

The Augusta rule

Applicable to any taxpayer who owns a home anywhere in the United States, the August Rule will allow you to rent out your home for up to 14 days a year and not have to report the income on your individual tax return. Play your cards right, and you can benefit from tax-free income AND tax deductions with this tax saving rule.

Employing the kids

You can hire your children and pay each of them up to $12,000 per year tax-free. As long as they are doing legitimate work, this tax saving strategy is an excellent way to maximize your income.

R&D Tax Credit

The Research and Development tax credit is a program that rewards businesses for improving a product, process, invention, or technique. This credit applies to all sizes of businesses, not just corporations. To claim this credit, make sure you document your research and evaluation activities.


How can TSP help?

At Tax Saving Professionals, we can help you save up to 50% on your tax filing strategy. Check out our Savings Calculator to find out how much money you could be saving and to get started on your tax savings strategy with one of our tax professionals.