Monday, November 30, 2020
Home Business Taxes 10 Major Tax Deductions You Can Pocket

10 Major Tax Deductions You Can Pocket

Here are 10 major tax deductions that can make your pocket heavy and make you happy.

Important note: the material provided here is for informational purposes only and is not professional tax advice. It is intended for our readers in the United States. Please consult a professional tax advisor to discuss your specific tax situation.

1. Children as employees. If your own children are helping you run your store, shop, or office, then they can get paid a small amount without paying income tax on that amount. They may still have to pay other taxes, such as Social Security Tax.

You can also claim this deduction if you and your spouse are partners in the company unless you have formed a corporation.

2. Travel Expenses. The money you spend on business-related travel is tax deductible. So if you spend money for an airplane ticket to attend a business convention and stay in a hotel, and travel in that city by taxi or rent a car, then these expenses are deductible.

A portion of the money that you may spend on meals for yourself or clients when traveling on business is also tax deductible.

3. Subscriptions. Subscriptions to magazines or books related to your business are deductible. These could be monthly subscriptions or books bought from trade exhibitions, fairs or even a bookstore.

4. Vehicles and their maintenance expenses. Any vehicle that you purchase for your business can be depreciated and all its operating and maintenance expenses can be deducted. You must keep track of mileage for business and personal use in case you are audited and need to prove that this is a valid business tax deduction.

These expenses can be fuel, regular service, repairs, and oil-changes, which are normal recurring expenses. If you use your vehicle to travel to see clients or make deliveries, then you can also deduct the mileage. The IRS changes the mileage rate for vehicles each year.

5. Advertisement expenses. Any amount you spend on advertisements, such as business cards, flyers, brochures, or advertisements placed in newspapers or any other media, such as television or the Internet, are all deductible.

6. Telephone expenses. Any local or long-distance calls made from your fixed phone line or mobile phones in the course of your business, as well as fax and Internet messaging fees related to your business are deductible.

7. Home office expenses. If your office is in your home and you have a dedicated room that you use exclusively for your business, you can deduct a percentage of your rent, mortgage, electricity, telephone, and other expenses corresponding to the size of the room as compared to the size of your home.

8. Social security taxes. You may be able to deduct a portion of your social security taxes if you are the sole proprietor of your small business; this ensures that you do not pay double taxes as both employer and employee. However, you need to make sure that you pay the employer portion of the social security and medicare taxes that are due.

9. Gifts to suppliers or clients. You can also deduct a portion of the money that you spend on gifts given to clients or suppliers on festive occasions, or as a mark of appreciation for their loyalty toward you and your business.

10. Office expenses. Any money spent on your office expenses such as rent, payments to external cleaning staff, or payments made for tea or coffee for clients can all be deducted.

The main thing to remember in claiming these expenses is to ensure that you have an invoice or receipt as written proof of any expenses on hand. It very important to maintain your business records in the proper manner when preparing to claim deductions.

Check with a professional tax advisor to verify that these deductions apply to you. Home-based businesses that the IRS deems as hobbies may not be deductible.

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