05 Jun Basic Brainstorm of Tax Write-offs
It’s a simple equation: lower your taxable income and you can then lower your taxes. In most instances, increasing the number of deductions allows you to decrease the amount counted as taxable when it comes time to paying your taxes. The simple fact is that the more deductions you are able to roll together: cars, vacations and business trips, etc. There are some very specific rules, however, that will need your attention so you keep within the rules of what the IRS would consider a legitimate deduction.
The most common deduction is for automobile expenses. Deducting automobile expenses is often considered tedious and even knit-picky, but at the end of the year if you have fully kept an accounting of the sum total of your auto expenses, these expenses can significantly help to reduce the amount you pay in taxes. You can deduct auto expenses in one of two ways: either by the mileage rate method or by the actual expense method. We will go into more detail on these two methods later.
New businesses can deduct up to $5,000 for the initial capital expenditures required to start the business. You can even deduct up to $10,000, but that amount must be deducted over a period of time. Here is a brief list of other expenses you can deduct when attempting to decrease the amount you pay on your business taxes:
- Advertising and promotional expenses
- Educational expenditures
- Charitable contributions
- Software Expenses
- New Equipment Costs
- Moving Expenses
- Legal and Professional Fees
- Bad Debts
- Travel-Related Expenses
- Interest Expense
As your business grows and expands, so will the expenses in each of the aforementioned areas. Higher expenses may drive you crazy during the year, but when it comes time to write your check to Uncle Sam, sometimes you may wish you had spent more on your advertising and promotional budget, just to ensure you’ll not be required to pay more on your tax bill.
When it comes time to prepare your taxes, give us a call. We can help.