Tax Return Business Expenses Pay Back in Tax Savings
What kind of tax return business expenses can you deduct? The good news is that a small business of your own, even a single person freelance business, opens some awesome tax advantages for your business and for your personal taxes. This isn’t a complete list, as your type of business can have others. However, these are the most common that apply to every small business.
- Supplies for Production – If you make things, crafts, or any items for resale, whether assembled or made from scratch, the materials you use, parts, or supplies that are used are all deductible tax return business expenses.
- Labor for Production or Services – If you pay someone for their labor to make things for resale or their labor as a service for sale, those paid wages are deductible business expenses. Examples would be someone you pay to clean homes as your business.
- Office Supplies – From printer ink to paper and pencils, your office supplies used to manage the business are tax return business expenses for deduction from income. It can be surprising over the course of a year just how much you spend on everything from paper clips to rubber bands. Don’t lose even one receipt from the office supply store.
- Production or Service Delivery Equipment – Equipment that you use to make things, assemble them, or what you use to provide services is a deductible expense. If you clean offices, all the brooms, mops, and vacuums are deductible, as well as cleaning supplies.
- Office Equipment – Computers, smartphones, printers, and other office equipment are tax return business expenses and deductible.
- Vehicle Expenses – If you use vehicles exclusively for business, the costs of operation, fuel, repairs, etc. are all deductible expenses. If you buy a vehicle for business, you may be able to write off depreciation for its value as well. Also, the interest on the financing is deductible as well.
- Rent – If you rent office, manufacturing, or sales space, the rent is fully deductible as well as utilities, maintenance, and other expenses to maintain the facility.
- Mortgage Interest and Taxes – If you buy real estate for your business, the mortgage interest and real estate taxes are legitimate tax return business expenses.
- Real Estate and Major Equipment Depreciation – Large purchases, such as real estate or major equipment, can have their value depreciated over time. This is a great deduction, as you are not spending money out of pocket, just taking a portion of the value each year as a depreciation deduction.
- Employee Salaries and Benefits Costs – All costs associated with wages, salaries, and employee benefits are deductible.
- Certain Retirement Account Contributions – You may set up qualified retirement plans for owners and employees. IRS qualified plans properly set up and managed will allow you to take some deductions for the business’ contributions to the plans.
- Home Office Deduction – If you meet the IRS requirements for operating a business out of your home, there are two different calculations to allow you to deduct expenses for the portion of your home based on square footage.
Those are the most common tax return business expenses that apply to most businesses of all types. There are other specific expenses related to specialized business activities, so consult with accounting and tax professionals for help with those tax return business expenses.