Top 3 Small Business Tax Deduction Questions
You can’t escape old man IRS, but you can work within the parameters of his tax codes to benefit your business. Here are our top 3 deductions questions based on the most asked, easiest deductions, and what should be in your toolkit deductions.
Are your deductions “ordinary” or “necessary”?
An expense is “ordinary” if it’s common and accepted in your trade or business.
An expense is “necessary” if it’s helpful and appropriate to your trade or business.
Our Most Asked Question:
Are Vehicles Tax Deductible?
If you use your car only for business purposes, you may deduct its entire cost of ownership and operation (subject to limits discussed in IRS Tax codes). However, if you use the car for both business and personal purposes, you may deduct only the cost of its business use.
You can generally figure the amount of your deductible car expense by using one of two methods: the standard mileage rate method or the actual expense method. If you qualify to use both methods, you may want to figure your deduction both ways before choosing a method to see which one gives you a larger deduction.
To use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Then, in later years, you can choose to use the standard mileage rate or actual expenses.
For a car you lease, you must use the standard mileage rate method for the entire lease period (including renewals) if you choose the standard mileage rate.
To use the actual expense method, you must determine what it actually costs to operate the car for the portion of the overall use of the car that's business use. Include gas, oil, repairs, tires, insurance, registration fees, licenses, and depreciation (or lease payments) attributable to the portion of the total miles driven that are business miles.
Note: Other car expenses for parking fees and tolls attributable to business use are separately deductible, whether you use the standard mileage rate or actual expenses.
See Section 179 of the IRS Tax Code to see the vehicles and their requirements to meet the deduction criteria.
The Easiest Deduction:
Can I write off Marketing expenses?
Can I write off Marketing expenses?
The answer is "YES!" The government allows you to deduct marketing expenses used to generate or keep customers. Advertising and marketing expenses qualify as an ordinary, reasonable, and necessary tax deduction. When done right and with professionals, marketing and advertising can have a high ROI.
Marketing and advertising expenses aren't a particularly tricky tax-deduction as long as they are directly related to your business activities.
Here are 8 categories of marketing expenses that are tax-deductible:
Website Expenses
Marketing and Advertising Expenses
Consulting or Marketing Agency Retainer
Social Media Expenses
Technology and Marketing Software expenses
Print Advertising Expenses
Multimedia Advertising Expenses
Special Promotions
A Must Deduction:
What are qualifying educational expenses?
Qualified expenses are amounts paid for tuition, fees and other related expense for an eligible student that are required for enrollment or attendance at an eligible educational institution. You must pay the expenses for an academic period* that starts during the tax year or the first three months of the next tax year.
The world is changing quickly, and the businesses that keep learning are the ones that survive and adapt. Attending professional conferences and seminars and continually educating oneself about your industry changes are important and necessary for running a business. Don’t forget to deduct these costs as well.
Click the button below for a list of deductions
Please consult your tax advisor for current tax statutes.