If you’re a business owner, you likely have enough out-of-pocket expenses throughout the year without worrying about how much you will have to pay in annual taxes. There are some simple ways you can maximize your tax return, however. Discover these eight deductions you might be eligible for.
If you just started your business, you might be able to write off legal, accounting, travel, advertising, transportation, consultant and employee training/wage costs. According to Steve Nicastro, contributor to Nerdwallet.com, if you’re total startup cost is under $50,000, then you can deduct up to $5,000 in organization fees and up to $5,000 in qualifying startup fees.
You can also receive a tax break for having a home office. The only restriction: your office must be in a certain part of your home used exclusively for conducting business. So, no “mixed use” rooms like an area that is part home gym and part workspace.
Another tax deduction that relates to home offices is the carryover deduction. You might qualify for this tax break if your home office expenses were greater than the income you generated from it. Consult a tax professional or accountant for more details about this type of write-off.
If you regularly meet with clients over lunch to discuss products and/or services, you might be elgible for another tax deduction. According to Marc Prosser, contributor to Investopedia.com, you can deduct 50 percent of meal costs when eating with employees or clients in a business context.
Business travel costs
Business owners who travel for work might be tempted to use their personal frequent flyer miles to pay for these expenses. Those who want to maximize their tax return should refrain from doing this, and instead write off their business-related travel costs for a deduction.
Using your cell phone as your work phone
If you use your personal cell phone for work, you could obtain another tax deduction. As Prosser with Investopedia.com states, how much you can write off depends on what percent of your total calls were business-related. To receive this tax break, secure an itemized monthly bill for your cell phone each month to verify the deduction amount that you are claiming at the end of the year.
Health care premiums
If you pay for your health insurance out of your own pocket, you might qualify for an additional tax break. To receive this deduction, you must meet one of the following conditions. You must be a sole proprietor, partner in a business or an LLC or S corporation shareholder that owns more than 2 percent of the company’s stock.
Legal, tax and educational expenses
According to Nicastro with Nerdwallet.com, you can also write off some legal, tax and education fees if they meet certain criteria. Legal and tax fees are eligible for deduction, as long as they were necessary for operating your business. Educating and training employees for your business is another expense that you can write off.
Equipped with these strategies to boost your tax return, you are well on your way to enjoying a larger tax reimbursement than ever. For more potential deductions, consult with your accountant or a tax professional in your area.