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10 small business tax deductions every entrepreneur can use

Small business tax deductions you can use
Photo by Win McNamee/Getty Images

April 15th is going to be here before United States taxpayers realize it. Therefore, it is important to make sure that you are aware of the commonly overlooked things that could be written off on your taxes.

The IRS’s small business tax deductions list is extensive but we were able to narrow it down to 10 tax deductions that you should know about. Furthermore, even if you have already filed your taxes for the current year you can send in an amended version. Just make sure you keep your receipts because they will be needed. Now let us get started, shall we?

#1 – Home office deduction

If you have an office in your home, it can be written off as a tax deduction. You are able to claim the square footage that you use for solely business purposes as a deduction. In the past people did not know about the home office deduction or they simply did not write it off because of all of the calculations that were required to come up with accurate numbers.

However, the regular deduction method will allow you to deduct your rent or mortgage payments for your home office space, utilities, interest, repairs, and insurance fees. The good news is now the IRS has made the home office deduction simpler, which allows taxpayers to claim up to 300 square feet or $1500.

#2 – Non-Cash charitable deductions

Most taxpayers know that they are able to deduct charitable contributions to 501C organizations that are cash. However, what you may not be aware of is non-cash charitable donations can be written off as well. Therefore, the next time you donate some clothes or items to a thrift store make sure that you ask them for a receipt.

Additionally, you want to make sure that you have a list of all of the items that you are donating so you can be prepared in the event that the IRS audits you. However, keep in mind you will only be able to use the “fair market value” for items that are donated.

#3 – Insurance premiums

Obamacare is now in full effect so all Americans are now responsible for paying insurance premiums. The good news is if you are self-employed or your employer does not cover your premiums you are able to claim 100% of your insurance premiums

#4 – Other healthcare costs

In addition to your insurance premiums, you can write off on your taxes, numerous other healthcare expenses. Some of the most common healthcare expenses that receive deductions are listed below:

  • Doctor visits
  • Dentist visits
  • Alcohol or drug addiction treatments
  • Insulin fees
  • Fees associated with smoking cessation programs
  • Fees associated with weight loss programs

There are plenty of other healthcare costs that can be written off to. You just have to make sure that you keep all of your records. Lastly, you are forbidden from writing off costs that were reimbursed by your insurance, including Medicaid.

#5 – Entertainment and meals

You are able to deduct expenses from business lunches, parties, and dinners. However, this does not mean you should start throwing business parties, etc., just because you know you are able to deduct them at the end of the tax year. The IRS is going to want you to have a good reason for the massive business entertainment and meals deductions in the event that they audit you.

Therefore, it is important for you to make sure that you keep your receipts and they do not show that you have ordered luxurious meals or alcohol. It is okay to do business while entertaining but you have to conduct it like any other business event.

#6 – Website design

Most freelancers and small business owners hire a web designer to do their websites for them. This is not a bad thing yet when tax time rolls around this is something that usually slips their minds. Even do-it-yourselfers can deduct website creation and hosting costs. Your logo designer fees, SEO marketer’s fees and promotion fees are tax deductible, in addition to many other tech expenses.

#7 – Business travel

Travelling is complicated. In order to deduct business travel expenses it has to be only for work reasons and it has to be a good distance from your residence and your job. For example, if you work in a city for eight months of the year and spend four months of the year working in another city you can only write off the expenses for the city that you spend four months in.

#8 – Software and online services

Do you use online applications for your website, such as MailChimp, Copyscape Premium, or Asana? Do you file your taxes with an online service such as TurboTax or H&R Block? If so, the fees that you pay can be written off.

#9 – Bad debts

It is not fun to find yourself dealing with bad debts but it is something that happens all too frequently in the business world. You provide clients with work, send them an invoice and they never pay it even after you send them follow up reminders. The good news is your bad debts can be deducted from your yearly income. You may have to wait all year to get it but at least it comes back to you.

#10 – Business association fees

To write off your business association fees all you have to do is file them under other expenses. However, you cannot write off country club dues for obvious reasons. Also, make sure you save your receipts. Moreover, keep in mind you can scan them into the cloud so you do not have to keep a lot of paper lying around.

Get every business tax deduction and credit you deserve

TurboTax Home & Business and TurboTax Business can help you to uncover the money-saving tax deductions available to small-business owners. TurboTax will walk you through all the business expenses you can deduct—like vehicle expenses, supplies, assets, promotion and advertising and travel, so you don't pay more taxes than you owe.

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