With less than a month to go until Tax Day, you may be scrambling to prepare for your tax submittal. You may also wonder what expenses you can deduct to lessen your tax liability. While some tax-deductible expenses are well known such as charitable donations, there are others that people often overlook. To help you get the most out of your taxes this year, here is a list of 10 purchases you may not know are tax deductible.
1. Advertising and Promotion
Generally, you can claim deductions for the expenses related to advertising and promoting your business, provided they were incurred to earn assessable income. These expenses include advertising, market research, public relations, and website development.
2. Business Cards and Stationery
Creating and printing business cards, letterheads, envelopes, and other stationery for your business may be deducted as ordinary and necessary business expenses. If these costs are not considered part of capital expenditures, they can be deducted in the year they were incurred.
3. Office Furniture and Fixtures
According to the IRS, businesses can deduct the total purchase price of office furniture up to $1,000,000 if they are deemed necessary for the company’s operations. But the caveat is that if you just started your business, then the IRS will only allow you to deduct $5,000 worth of furniture with any expense more than that considered capital costs. Types of office furniture and fixtures you can deduct include shelving, artwork, desks, cubicles, chairs, tables, cabinets, phones, speakers, and appliances. Also, software subscriptions are a qualifying tax deduction.
4. Work-Related Education Expenses
You can deduct continuing education costs and any associated expenses, such as textbooks, tuition fees, and travel costs, from your taxes. Also, check into The Lifetime Learning Credit to see if you qualify.
5. Vehicle Maintenance and Fuel
You must meet specific criteria to claim vehicle maintenance and fuel expenses on your taxes. Mileage, maintenance, and fuel expenses from company-owned and registered vehicles can be deducted. But if a personal vehicle is used for company purchases, then only mileage can be deducted up to the current IRS allowable mileage deduction. For example, if you use your car for business, such as making deliveries or traveling to clients, you can deduct the mileage.
6. Small Business Insurance
Business owners can generally deduct the cost of insurance premiums that provide coverage for their business operations as expenses. This deduction is typically available for insurance premiums for property, liability, and casualty insurance. For example, if you own a small business and purchase liability insurance to cover your business operations, the cost of the insurance premiums would be deductible.
7. Interest and Bank Fees
Bank fees may be tax-deductible related to business expenses or investment activities. If you have incurred interest on a business loan, that interest may be tax-deductible. Similarly, if you are an investor and have paid fees to a financial advisor, those fees may be tax-deductible.
8. Employee-related Expenses
The rules for deducting employee-related expenses are complex and depend on various factors, such as whether the individual is an employee or self-employed, the nature of the expense, and whether the employer reimbursed the expense. Generally, unreimbursed employee expenses are deductible if they meet specific criteria, including being necessary for the individual's job, ordinary and necessary in the industry, and not reimbursed by the employer.
9. Child and dependent care credit
The CDCC (Child and Dependent Care Credit) is for working people who need someone to take care of their children. Credit can help reduce your tax bill by quite a bit, so it’s worth looking into to see if you qualify. For more information, visit benefits.gov.
10. Consulting and Professional Fees
You can deduct expenses related to consulting and professional fees incurred for your business from your taxes as a business expense. This includes fees paid to accountants, lawyers, financial advisors, and other professionals who provide services related to your business operations.
These ten deduction categories are just a few that can help save you money on your taxes. Remember that tax laws and regulations vary depending on your county or state, so it is crucial to seek advice from a professional. If you have any questions about what purchases are tax-deductible, contact ASP Bookkeeping, or call us at 203-641-7678.