Are you taking advantage of your tax write-offs?
For years I didn’t take advantage of all the tax benefits that I was entitled to because quite frankly, I just didn’t know what I did know.
This was costing me thousands of dollars every year.
So, I made a list and I want to share it with you.
There are many advantages to becoming a business owner but one of the biggest is your deductions.
Every business is different so the deductions may vary. I would advise you to meet with your CPA to discuss what you can deduct from your individual business.
Here are some more tips to help you grow your business
Tax Deduction Checklist:
- Office expenses, including rent, utilities, etc.
- Car Repair
- Car Mileage or gas
- Office supplies, including computers, software, office supplies
- Health insurance premiums 100%
- Continuing Education such as online courses, coaching, classes
- Cell phone
- Postage and shipping
- Parking and tolls
- Advertising
- Travel including flights, rental cars, hotel, uber
- Marketing
- Client gifts
- Donations
- Charity
- Medical bills
- website
- Office Furniture, Computer, electronics
- Office supplies
- Health Insurance
- Liability Insurance
- Entertainment
- Cost of goods
- Marketing tools
- Professional services: IT, CPA, VA
Download the PDF version of the checklist here
6 Most Overlooked Tax Breaks
Meals
If you (eat-in or take-out) and have meetings with clients or employees, you might be able to deduct 50% of these meals as an expense as long as they are reasonable. You would be surprised at how much you spend on food and are able to claim as a deduction.
Manage Your Tax Bracket
Let’s say for instance, your taxable income is 80K for the year and you’re in the 34% tax bracket and you were planning to buy a new computer and office furniture that will run about 15K. If you make the purchase before the end of the year it will change your taxable income to 65K and a 25% tax bracket. This could lower your tax bracket and in turn save you on your income tax. A couple of months before the end of the year check to see where you’re at and decide whether you should make those big purchases and reap the rewards.
Health Insurance
If you have your own health insurance and pay out of pocket you can probably claim those premiums as a tax deduction at 100%.
Here’s how that can benefit you. Let’s say for instance you made $50,000 last year and your tax obligation is 30%. If you spent $10,000 on your health insurance premium last year, you can deduct the $10,000 to reduce your total income to $40,000. That will save you on your income tax payment. Your accountant can give you the exact numbers and explain all the other benefits. But you get the BIG picture.
Cellphone
Just about everyone these days have a cell phone. We are all busy and always on the go so it’s not uncommon for a business owner to have a cell phone. Most people only have one phone that they use for personal and business.
Did you know that you can write off a portion of your monthly bill as a business expense? Talk to your account to see what percentage you can use as a tax deduction.
Travel Expenses
One of the best advantages for a business owner that travels a lot is they can write off travel expense. That also includes car rental, parking at the airport, and uber (if used). As long as you are traveling for business and not for pleasure you can write off all your travel expenses. There are certain guidelines to combine business with pleasure travel you must follow.
Home Office
One of the best deductions as a small business owner is working from home. This is why more and more people are starting their own home-based business, for the tax benefits and deductions. And the best thing about owning your own business is…You don’t have to work 40 hours a week. You can work as little as 4 hours a month if you want.
There are so many things you can write off that surprisingly so many people miss. Such as:
- Home office: Rent, Mortgage (this is a big one)
- Homeowners insurance
- Property taxes
- Internet
- Water Bill
- Electric Bill
- Business equipment: such as computer, printer, camera, monitors Ect.
- Office supplies: Ink, pens, paper, furniture, etc., etc., etc.
I’m not allowed to give you any legal advice or make any claims this is just an overview of some of the benefits and to help guide you to make good choices when it comes to owning your own business. I suggest you call your CPA, Accountant or attorney for tax advice based on your individual business.
If you want to learn how to start making money with your hobby get the detailsHERE.
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Blessings,
Cheryl
FAQs
Reviewing what you can deduct each year is important to make your business as profitable as possible if you're self-employed. You can calculate a deduction for a home office and a vehicle used for business purposes. Meals with clients and business travel are deductible, but meals included with entertainment may not be.
How do I get the biggest tax refund when self-employed? ›
To get the biggest tax refund possible as a self-employed (or even a partly self-employed) individual, take advantage of all the deductions you have available to you. You need to pay self-employment tax to cover the portion of Social Security and Medicare taxes normally paid for by a wage or salaried worker's employer.
What deduction can I claim without receipts? ›
What does the IRS allow you to deduct (or “write off”) without receipts?
- Self-employment taxes. ...
- Home office expenses. ...
- Self-employed health insurance premiums. ...
- Self-employed retirement plan contributions. ...
- Vehicle expenses. ...
- Cell phone expenses.
Qualified business income deduction: Do you qualify? The QBI deduction is for you if you're a small-business owner, or self-employed, allowing you to deduct up to 20% of your QBI from your taxes. This includes people who have “pass-through” income, which is business income that you report on a personal tax return.
How to minimize taxes for self-employed? ›
You can accomplish this by seeking to maximize tax write-offs through your business. Maximizing write-offs directly reduces the income subject to self-employment tax. As a self-employed individual, the tax law allows you write-off all ordinary and necessary expenses to conduct your trade or business.
What is the biggest deduction for self-employed? ›
Self-employment tax deduction
The IRS lets you deduct half of the 15.3 percent self-employment tax (which covers social security and medicare taxes), so 7.65 percent—the same amount you would deduct if you were an employer. Plus, you'll lower your taxable profit with the more deductions you're able to claim.
How to get extra $1,000 tax return? ›
For 2021, taxpayers can use either their 2021 or 2019 income to maximize the credit. If you're a college student or supporting a child in college, you may be eligible to claim valuable education credits. The American Opportunity Credit is refundable up to $1,000.
What personal expenses can I write off? ›
You can deduct these expenses whether you take the standard deduction or itemize:
- Alimony payments.
- Business use of your car.
- Business use of your home.
- Money you put in an IRA.
- Money you put in health savings accounts.
- Penalties on early withdrawals from savings.
- Student loan interest.
- Teacher expenses.
When can you deduct car loan interest from your taxes? Only those who are self-employed or own a business and use a vehicle for business purposes may claim a tax deduction for car loan interest. If you are an employee of someone else's business, you cannot claim this deduction.
What else can I deduct if I take the standard deduction? ›
Some of the most common above-the-line deductions that taxpayers take include retirement contributions, student loan interest, healthcare expenses, and business expenses.
Yes, you can write off the interest on a car loan if it's used for business purposes. You'll need to use the actual expense method to deduct this expense and you can only write off the business use portion of the interest. Also, keep in mind that your principal payments aren't deductible.
Can I deduct my meals if I am self-employed? ›
Share: If you're a sole proprietor, you can deduct ordinary and necessary business meals and entertainment expenses. However, these expenses must be directly related to or associated with your business. If you're an employee, you can deduct these only to the extent your employer doesn't reimburse you.
Can you write off clothes for work self-employed? ›
The Internal Revenue Service (IRS) allows certain individuals to write off work clothes as a business expense. You'll need to be self-employed to qualify, so if you consider yourself a sole proprietor, freelancer or gig worker, you fit this criteria.
How do I get the most out of my self-employed tax return? ›
By taking a business deduction instead of an itemized deduction, you reduce your adjusted gross income (AGI) and your self-employment tax. Whenever possible, it's best to deduct an expense or a portion of an expense as a business expense rather than an itemized deduction, as this generally increases your tax savings.
Are credit card fees tax deductible for self-employed? ›
Key Takeaways. Credit card fees are not deductible for individuals and are deductible for businesses. Businesses can deduct all credit card fees as well as finance charges. Businesses are eligible to deduct credit or debit card processing fees associated with paying taxes, but individuals are not.
How much can you make self-employed without paying taxes? ›
You usually must pay self-employment tax if you had net earnings from self-employment of $400 or more. Generally, the amount subject to self-employment tax is 92.35% of your net earnings from self-employment.
How to get $7000 tax refund? ›
Requirements to receive up to $7,000 for the Earned Income Tax Credit refund (EITC)
- Have worked and earned income under $63,398.
- Have investment income below $11,000 in the tax year 2023.
- Have a valid Social Security number by the due date of your 2023 return (including extensions)
How do I get a 10,000 tax refund? You could end up with a $10,000 tax refund if you've paid significantly more tax payments than you owe at the end of the year.
How do I get my maximum tax refund back? ›
How to maximize your tax refund
- Itemize your deductions. Deductions are dollar amounts you're able to subtract from your taxable income, reducing the amount you'll owe in taxes. ...
- Contribute to tax-advantaged accounts. ...
- Ensure you are claiming the right credits. ...
- Adjust your filing status.
