Overlooked small business tax deductions

As a small business owner, you want to ensure you are getting the most out of your money and not leaving anything behind. We like to explain clients in the following manner, if your tax bracket is at 20%, for every dollar you can deduct, you can save 20 cents from paying Uncle Sam.

So let’s go through some of the following deductions that are generally missed by business owners:

  1. Home Office Use Expense – if you are generally operating mainly out of your home. And you use a home office space EXCLUSIVELY and regularly for principle place of business for your trade then you can deduct business use of home that includes real estate taxes, mortgage interest, rent, utilities, insurance, depreciation, repairs, maintenance, and casualty losses.
  2. Business use of Car – If you are using your car for your business related activity. The IRS gives you two methods of deductions per your car: Actual Car Expenses or Standard Mileage expenses.
    1. Actual Car Expenses include: Depreciation, Licenses, Gas, oil, Tolls, Lease Payments, Insurance, garage Rent, parking fees, Registration Fees, Repairs, and tires.
    2. Standard Mileage Include: For every mile that you drive for business purposes, you can deduct 57.5 Cents per Mile. You can also add tolls to the standard mileage deductions
  3. Contribution to your Retirement plans –
    1. SEP IRA
    2. 401k
    3. Traditional IRA
    4. Other pension Plans
  4. Self-employed Health Insurance – the premiums you pay for yourself as an Employee-Employer goes on 1040 Line 28.
  5. Meals & Entertainment – the expenses can be fully deductible at 100% if there are meals provided to employees at your office during work hours and/or for extended work hours. While it’s 50% for meals and entertainment for when you are traveling.
  6. Start up & Organization costs – these are costs that you incur before you officially open doors to your customers.
  7. Section 179 – if you have a qualified fixed asset such as equipment, furniture, computer items, vehicles, etc. Then you claim up to $500,000 worth of deduction right off the bat for those items instead of depreciating it over time.

At Modi CPA we can assist you in identifying these expenses and more. Modi CPA is a licensed firm in the state of Texas in the North Dallas located area at The Colony, TX. We are a qualified firm to discuss Domestic and International tax services to ensure your compliance with the United States’ Domestic & International tax laws. Do not hesitate to contact our office should you have further questions. Our Phone number is (214)618-0468 and email is ravi@modicpa.com

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