The following are the top tax deductions that are often overlooked by small-business owners.
Home Office Space:
If you have a portion of your home that is solely devoted to work, you can either claim a portion of your rent, mortgage, and other home expenses based on the percentage of your home that is used for business or use the simplified deduction.
You can claim a deduction for desks, filing cabinets, and other furniture that you purchase for the office. You can deduct the full cost in the year that the items are purchased or depreciate the expense over seven years.
You can use expenditures for consumable office supplies to offset a portion of your business income.
The cost of computers, printers, and other office equipment can be deducted in total during the year of purchase or depreciated over five years.
Computer Software and Subscriptions:
The cost of industry-related magazines and business-related computer software can be fully expensed in the year purchased.
If you use your vehicle for business-related travel, you can claim a deduction for mileage, tolls, and parking. You can either calculate the actual expenses or deduct a percentage of your auto expenses based on the amount of business usage.
If you travel for business, you can claim expenses for lodging, transportation, and miscellaneous expenses related to being on the road. There are limits to how much you can deduct for meals, entertainment, and client gifts.
If you are self-employed, you can deduct contributions to your IRA or KEOGH on your personal income taxes.
Depending on the circumstances, you may be able to deduct up to 100 percent of the cost of your health insurance if you are self-employed.
You can claim up to 100 percent of the cost of business calls made from your home phone. You can also deduct the percentage of your cell phone bill related to work-related calls.
If you are self-employed, you can deduct half of your social security contribution.
If you meet certain requirements, you may be able to deduct the salaries of your children that you employ in your business.
Before claiming any deductions, be sure to consult a tax professional or certified public account to ensure that you comply with current tax regulations.