What Expenses are Tax Deductible? 

Many people mistakenly believe that deductibles apply directly to the amount you owe to the IRS at the end of the tax return, which is not true.

Every company has expenses to comply with its operations, the IRS allows you to report many of these expenses to reduce the income that you must declare, it is important to have a detailed record of these operations so that you can reduce the amount of your company's income that it will be subject to tax, which reduces the tax liability and subsequent taxes.

Commercial use of your Residence: Using Form 8829, the commercial use made to homes is calculated, which is based on the amount of square feet you use for your commercial operations.

Commissions: If you buy or sell a business and pay a broker a commission, it is deductible as long as you don't include this expense elsewhere on your return.

Continuing education: In some cases, you can deduct education expenses for the preparation of your employees, if you can verify that the training they have taken during the year serves to enrich their skills or is a legal requirement to maintain a professional license.

Independent Contractors: All the activities that your company subcontracts to independent contractors who carry out the assigned tasks using their own resources are self-employed and are not considered employees, so you can deduct these expenses.

Gifts to clients: The IRS stipulates that you can deduct $ 25 per customer. That is, if you gave a customer an item valued at $ 100, you can only deduct the first $ 25.

Depreciation and expenses of Section 179: It is possible to claim the total of what you have invested for assets that you buy, finance or rent if these are for the exclusive use of your company, you can also deduct the equipment and vehicles that have suffered depreciation since the first time you used them for your company until the end of its useful life.

Employee benefit programs: Health plans, group life insurance, accident insurance and dependent care programs can be deducted.

Financed Deferred Compensation Plans: This business tax deduction includes contributions you make to your employees' annual retirement plan, profit sharing, or another type of annual plan.

Sure: Payments made to your commercial insurance to cover property, professional liability, and products, among others, are also tax deductible.

Advertising: Typical advertising expenses include business cards, yellow pages ads, radio and television ads, and other expenses made to promote your business.

Unchargable debts: Loans to customers, suppliers, employees, and sales to customers that you have not been able to collect are considered legitimate business tax deductibles.

Business trip: If you spend the night out of your city because of a convention or a seminar related to your company, you can deduct the costs of accommodation and transport.

Interest paid: Interest paid on a commercial property mortgage is considered an expense. If you use a credit card to pay for personal and business expenses, you can only deduct business-related charges plus applicable interest. They are usually reported on Form 1098.

Legal and professional fees: the money you pay to a lawyer, accountant or other specialists related to your business, can also be deducted. If you use a tax professional to help you with your return, don't forget to include this expense.

Repairs: Routine repairs and maintenance are deductible as long as they do not increase the property's value.

Investigation and development: You can deduct expenses related to the process of searching and creating new products and services.

Safe-Deposit Box: If you use one to store stocks, bonds, and other investment-related documents, the cost of a safe is considered a business expense and is tax deductible.

Software and technology: The purchase of new or updated software, computers, smartphones and other small devices for business use is considered a business expense and is tax deductible. Your accountant can advise you whether more expensive purchases should be reported as depreciation or reported in full under Section 179.

Taxes: This includes business taxes paid on real estate. You should consult with an accountant to determine if the state and local taxes you paid as a seller of goods and services can be deducted.

Losses due to theft: If someone steals money or business property, you can also deduct it from your taxes.

Public services: the electricity needed to supply a commercial space is deductible. You can deduct all business-related mobile phone charges and business landlines.

Wages: Payments to employees in the form of salary, commissions, bonuses and fringe benefits are considered business expenses and are deductible.

Licenses: These are the fees you pay to the state or local government in relation to your business.

Materials: Materials and supplies that you purchase during the tax year are deductible as long as they are not also part of your inventory on your return.

Foods: You can deduct 50% of the value of your business lunches (made during meetings with clients, with potential clients or with other contacts that have to do with your company).

Miles traveled: You can use the standard rate used to report miles earned for business purposes, or deduct expenses like gas, repairs, and vehicle insurance. Regardless of how you determine the deduction, you will need to keep accurate records for documentation.

Office furniture and accessories: Deductible items include desks, chairs, bookshelves, tables, and cubicle partitions. These items are movable and are not permanent construction items.

Office supplies: These types of supplies include items that you buy and use throughout the year. Some examples include paper, sticky notes, staplers, folders, printer ink, and shipping costs. The supplies you use to make, ship, and package products count as cost of products sold.

Parking and tolls: If you visit a client and park in a garage or pay tolls during your journey, these costs are deductible.

Rental: You can deduct the rent you pay for your vehicles, machinery, equipment or commercial space.


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