Business owners know that when tax season comes around they are going to owe the government a good bit of money. However, in a lot of instances these business owners are not taking advantage of all of the possible tax deductions available to them. What could your business do with extra money? Let’s take a look at some commonly missed deductions that business owners should discuss with their accountants when it comes time to file their business’s taxes.
1. Charitable Donations
If your business has donated money to charity you will be able to write the total off of your taxes. The charity must be IRS eligible for the business to be able to write it off of the taxes, and the IRS also limits the amount of charitable contributions businesses may write off to 50 percent of their gross adjusted income.
2. Non-Profit Volunteer Work
The IRS does not allow businesses to put a price tag on their charitable time. However, this does not mean that time spent doing volunteer work cannot be written off. What you can write off is any and all of the tangible expenses incurred while volunteering. For example, the cost of gas to drive out to the location, or the price of printing and distributing posters for a charitable event.
The charges you pay to the power company, for example, to keep your business powered are fully deductible on your taxes. Other utilities that can be deducted from your taxes are things like your cell phone bills. The IRS allows businesses to deduct any expenses that are “ordinary, necessary, and reasonable” that help to earn your business income. Expenses that keep your business powered, and operating on a normal level can be deducted from your taxes.
4. Accounting Fees
The costs you incur paying an accountant to prepare your taxes are tax-deductible on your following taxes. So in 2017 you will be able to deduct the costs of doing 2016’s taxes.
5. Bad Debts
If you lent money to a vendor, employee, or another business and haven’t been repaid, you will be able to deduct this loan on your taxes if you classified the initial loan as a loan from the business and not from you the individual.
6. Bank Fees
All costs of banking, checking and ATM fees and whatever other costs you incur from your financial institution are all fully tax-deductible.
If you were unable to deduct something like capital loses or charitable contributions from previous years, you may be entitled to do so this tax season. Have your accountant check to see if you are able to make these deductions now.
8. Health Insurance Premiums
As a business owner any premiums paid for yourself, your spouse, and any children under the age of 27 are tax-deductible as a personal expense as long as you are self-employed or own more than two percent of your S corporation.
9. Interest Payments
If you purchased business equipment on your credit card, then all of the costs of interest on those purchases are tax-deductible as business expenses.
10. Self-Employment Taxes
As a business owner you employ yourself. Therefore half of the tax payments you make for Social Security and Medicare are deductible on your personal taxes form 1040.
When going over your deductions make sure to go over your taxes from previous years so you don’t leave out or overlook any deductions that you qualify for. Business owners need to be sure to meet with an accountant to do their business taxes so they can write off as much of their taxes as possible, and in any case the cost of preparing taxes is a deduction your business can make so in the long-run it is free anyway!