Are you paying too much in taxes? We asked professionals with an in-depth knowledge of taxes to share information about credits and deductions that you may not know about.
Software subscription fees
The costs of subscription fees for cloud-based software as service applications are often tax-deductible. As many more entrepreneurs and small businesses use cloud-based software and apps for their business, this tax deduction will become increasingly relevant. A business that operates necessary software like accounting software in order to do business can deduct the software cost or monthly subscription.
Losses and home office deductions
A lot of small business owners don’t know that you can carry over losses year to year from things like operation losses, financial losses, and home office deductions. Software can keep track of all of this for you. Even though it may look or sound like some complicated tax scheme, it is very straightforward and legal.
Stacy Caprio
Stacy Caprio, business coach, life coach, and marketing guru, Stacy loves helping people design their ideal lives and careers. Find her at dealsscoop.com.
Retirement savings
Putting money into a retirement savings account is a tax deduction every entrepreneur should be aware of. There are a few options. you can put up to 25% of your W2 income into a SEP account, or you can put money into a 401K or even start a business pension plan, allowing you to put more money in each year.
No matter the option, the money you put into your retirement plan is not taxed and reduces your tax burden, making it a huge plus. It is taxed instead when you withdraw it at retirement age, at which time you can plan to take withdrawals when you are in a lower tax bracket.
Chayim Kessler
Chayim Kessler is a Certified Public Accountant and has run MiamiBeachCPA LLC for almost 25 years.
Tax Credits And Deductions
Tax Credits
Business accessibility: If your office has undergone renovations to make it more accessible to differently-abled people, then you can claim credit as long as your small enterprise has less than $1 million in revenue and less than 30 full-time staff members.
Small employer health insurance premiums. If you have paid for your employees’ health insurance coverage, it can be considered a tax credit as long as you have less than 25 full-time staff, the paid premiums are under the SHOP Marketplace, and the paid average annual wages are less than the amount prescribed by the IRS.
Paid leave for medical (such as childbirth) and personal (for spending time with the family) reasons. Eligible small business owners can file this as a credit, which equals the percentage of wages they pay to employees who avail [themselves] of the leave.
Tax Deductions
Business research and development. Each expense that you incur when preparing to launch your business can be filed as a tax deduction. This could be worth as much as $5,000 as long as it’s related to research and development expenses such as supply orders, employee training and the like.
Depreciation. Your business tools and equipment can deteriorate, and you can claim their wear and tear. These include buildings, cars and trucks, machines and even furniture. The IRS also considers copyright, patents, and software (intangible assets) to be depreciable, too.
Building repairs and maintenance. This is allowed by the IRS only if the amount is not otherwise required to be capitalized.
And there are other deductions such as car expenses, banking fees, charitable contributions, consulting fees, customer discounts, equipment repairs, publicity expenses, gym membership for employees and even newspapers and magazine subscriptions for the company.
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