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Life is expensive, from business expenses to personal expenses to paying Uncle Sam on April 15. Wherever you go, it may seem like your wallet is open. One way to save money each year is to find legitimate tax write-offs that intersect both personal and business expenses.
As a certified public accountant, everywhere I go, even when I’m at dinner with friends, I constantly am asked the question: “So, what can I write off my taxes?
Surprisingly, there isn’t some master list included in the Internal Revenue Code or provided by the Internal Revenue Service. There is simply the tax principle set forth in Code Section 62 that states a valid write-off is any expense incurred in the production of income. Each deduction then has its own rules.
A good CPA should be teaching their clients to think above the line — that is, your Adjusted Gross Income line. Your AGI is the number in the bottom right-hand corner on the front page of your tax return. Any tax return. And what I mean by thinking above this line is constantly trying to think of any and all personal expenses that may have a business purpose. With a small-business venture in your life and on your tax return, you may be able to convert some personal expenses to business expenses, as long as you have the proper business purpose for that expense.
Seasoned business owners become proficient over the years at keeping good records and realizing when expenses have a legitimate business purpose. For some, this thought process becomes so ingrained that it becomes almost impossible to buy something without first considering a tax purpose for that item or service.
Related: Don’t Let These Tax Write-Offs Trip You Up
Consult this list of 75 possible tax deductions for business owners. It’s just a start and not every one of these items is always a legitimate deduction. For example, you may be able to deduct entertainment expenses, but only when entertaining a client, customer or employee, while also meeting particular IRS rules. Some deductions may only cover a percentage of your expenses, like the aforementioned dinner with clients (usually 50 percent) or the home-office deduction, which is based on the square footage of your office. When documenting, go beyond collecting receipts. If you hire your teenager as an employee, document his or her duties and hours. On parking and toll receipts, write your destination and business reason for the road trip.
You should track every business expense and comb over them with your CPA at the end of the year to ensure you only take legitimate deductions, both to minimize your risk of audit and to have the documentation in place in case the IRS ever comes knocking.
Possible Deductions for Taxes
Accounting fees
Advertising
Amortization
Auto expenses
Bad debts that you cannot collect
Banking fees
Board meetings
Building repairs and maintenance
Business association membership dues
Business travel
Cafeteria health-insurance plan (requires plan)
Charitable deductions made for a business purpose
Cleaning/janitorial services
Collection Expenses
Commissions to outside parties
Computers and tech supplies
Consulting fees
Continuing education for yourself to maintain licensing and improve skillsl
Conventions and trade shows
Costs of goods sold
Credit card convenience fees
Depreciation
Dining during business travel
Discounts to customers
Education and training for employees (new)
Employee wages
Entertainment for customers and clients
Equipment
Equipment repairs
Exhibits for publicity
Family members’ wages
Franchise fees (new)
Freight or shipping costs
Furniture or fixtures
Gifts for customers ($25 deduction limit for each)
Group insurance (if qualifying)
Health insurance
Home office
Interest
Internet hosting and services
Investment advice and fees
Legal fees
License fees
Losses due to theft
Management fees
Materials
Maintenance
Medical expenses (with plan)
Mortgage interest on business property
Moving
Newspapers and magazines
Office supplies and expenses
Outside services
Payroll taxes for employees, including Social Security, Medicare taxes and unemployment taxes
Parking and tolls
Pension plans
Postage
Publicity
Prizes for contests
Real estate-related expenses
Rebates on sales
Rent
Research and development
Retirement plans
Royalties
Safe-deposit box
Safe
Software and online services
Storage rental
Subcontractors
Taxes
Telephone
Utilities
Website design
Workers’ compensation insurance
This article is an excerpt from the book What Your CPA Isn’t Telling You from Entrepreneur Press.