Common deductions allowed for Business expenses
If you are a business owner, then the IRS will allow you to claim a deduction on your tax return if you have sufficient evidence (in the form of documents and receipts) to prove that the business cost that caused the deduction was actually legitimate and it was taken strictly for business purposes.
A tax deduction is an ethical tax relief method that reduces the amount of your taxable income, thereby reducing the weight of your tax liability. Put in the simplest terms, they are expenses that your business has incurred during the year and they can be listed on your tax return and subtracted from the overall amount of income reported for that fiscal year.
When it comes down to the business of approving deductions and sifting out the ones that do not qualify to be deducted from a taxpayer’s tax return, the IRS has one fairly simple rule: that all deductible business expenses must meet their standard of “ordinary” and “necessary.” Below are common examples of business expenses that the IRS will allow you to deduct from your tax return.
Common expenses that the IRS considers deductible
- Marketing and Advertising expenses: The IRS will give you a tax deduction on the total amount of money spent on advertising and marketing from your business revenue. This includes the cost of keeping your website, business cards, TV advertisements, hiring professionals, social media, etcetera. Such expenses are considered deductible by the IRS.
- The cost of labor: The IRS allows business owners to take a tax reduction on the amount spent on hiring the workforce they need. These expenses are not taxable, and they include the wages paid to both employees and independent contractors,
- Subscriptions and Dues: You will be able to get a tax deduction for any amount that your business spends on dues and subscriptions. This includes routine fees for software, trade organizations, merchant fees, and so on.
- Professional Development: The IRS greatly supports your self-development, and that is why they will give you a tax deduction on any amount spent to develop your skills through training, courses, and skill acquisition programs.
- Food: Meals consumed for business purposes (such as business dinners) are also common deductions approved by the IRS. It must, however, be noted that the IRS allows only a 50% deduction on business meals.
- Professional Fees: The IRS will give you a tax break on any amount you have spent to consult a professional for business purposes. This includes the amount that your business has spent on legal, accounting, consulting, and other required expenses.
- Supplies and Office Equipment: The IRS will give you a deduction on the amount it costs to furnish your workspace. This deduction covers the purchase of computers, furniture, printers, pens, sheaves of paper, and practically any other physical equipment to be used for business purposes.
- Overhead Office costs: The IRS allows you to remove your overhead office costs when calculating the total cost of your taxable income. This includes the cost of rent and utilities for your office space, your telephone, and electricity bill, etcetera.
Need help figuring out what credits and deductions you are entitled to? Then why not get the best team of tax professionals on your side today?
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