The Top 5 Most Overlooked Business Expense Deductions 💸
Do you feel like you’re constantly spending money on your business, yet struggle to come up with enough deductions at tax time? You’re not alone! Many entrepreneurs overlook some of the most lucrative expense deductions available to them. Here are the top five most overlooked business expense deductions and how you can take advantage of them:
1. Home Office Expenses 👨💻
If you work from home, you could be missing out on some significant tax deductions. You can deduct a portion of your rent, mortgage interest, property taxes, insurance, utilities, and depreciation as home office expenses. To qualify, your home office must be your principal place of business, and you must use it exclusively for conducting business.
Taking advantage of this deduction requires some calculation, but it’s worth it! To make it easier, you can use the Simplified Option for Home Office Deduction, which allows you to deduct $5 per square foot of your home office, up to 300 square feet.
2. Business Travel Expenses ✈️
Do you ever travel for business purposes? If so, you can deduct expenses such as transportation (flight, train, or rental car), lodging, meals, and even tips or dry cleaning expenses incurred during your trip.
Keep in mind that the trip must be primarily for business purposes and not for pleasure to qualify. Also, if you take a vacation and conduct business during the trip, you can only deduct expenses for the days you conducted business.
3. Car Expenses 🚗
Did you know that vehicle expenses could be tax-deductible if your car is used for business purposes? You can choose between two methods: actual expenses (including gas, oil, repairs, insurance, and depreciation) or the standard mileage rate ($0.56 per mile in 2021).
Mileage tracking is essential to take advantage of this deduction. Be sure to keep a log of the mileage, date, and purpose of the trip. Having an organized record will make tax season much less stressful!
4. Interest and Fees on Business Loans 💰
Starting a business and keeping it running is not cheap, which is why many entrepreneurs take out loans. It’s easy to forget that the interest and fees on those loans can be tax-deductible.
The interest and fees you paid on business loans, credit cards, and lines of credit can be deducted on your tax return as business expenses. Keep track of the interest rates, payments, and fees paid, and you’ll be on your way!
5. Professional Development Expenses 📚
As an entrepreneur, you must continuously improve your knowledge and skills to stay ahead of the competition. The good news is that professional development expenses can be tax-deductible.
You can deduct expenses such as courses, seminars, workshops, and conferences that relate to your business. Keep all receipts, agendas, and any material related to the event to prove that it’s a business expense.
Conclusion
By taking advantage of these overlooked deductions, you can save a considerable amount of money come tax season. Remember to keep accurate records, and use technology, such as expense tracker apps, to make tracking expenses easier.
As always, consult with a tax professional to ensure you are taking advantage of all the deductions you’re entitled to. Don’t wait until the last minute to start working on your deductions; start tracking your expenses now to get the most out of your tax return!
Now go forth and deduct, fellow entrepreneurs! 💪
