Whether you own a business or simply file personal taxes each year, you probably are not aware of all the tax deductions you can take. Tax deductions help lessen the amount of taxes that you owe to the government and allow you to keep more of your money in your pocket each year.
Choosing Your Tax Plan
Before you can take any deductions, you can choose your tax plan. Your business structure can change your tax implications by a significant amount. Most businesses have to pay a series of four taxes in the United States. These taxes include the Income tax, self-employment tax, tax for employers, and excise taxes. In addition to these taxes, companies have to pay state income tax as well. If you are not self-employed, you do not have to pay the self-employed tax. However, if you are self-employed, you do have to pay the tax for employers. You can learn more about choosing a tax plan on the U.S. Small Business Administration website.
What deductions are available?
Most people are simply unaware that they can take some of the following deductions, whether they are personal or business expenses. If you would like to cut back on your taxes this year, find out if you are eligible to take any of the following deductions:
Did you know you can deduct travel expenses from your taxes? If you take a business trip or work during any travel experience, you can deduct the expense from your taxes. This can include long business trips as well as the trips you take each day to get to work. In some cases, you may even be able to deduct the cost of gas during your drive. Travel expenses are 100 percent deductible.
Eating business-related meals can also be deducted from your taxes. Meals, however, are only 50 percent deductible. Basically, if you go to a new city or location to eat, you can deduct it. You cannot, however, deduct the cost of your regular lunch each day.
Any technology that you use regularly for your business you can deduct from your taxes. This could include any phones you use for business, your Internet connection, your fax line, and even the cost of your computer. Anything that you use solely for work can be deducted from your taxes. If you work at home, even a percentage of technology at home can be deducted. If you use something 80 percent for work, you can deduct up to 80 percent of the cost.
As a business owner, you have the chance to get a health credit on your taxes. The Patient Protection and Affordable Care Act of 2010 is a credit you get if you have fewer than 25 employees and they all earn less than $50,000 per year. You have to pay half of their insurance premiums to get up to a 35 percent credit on your taxes. There is also a regular health insurance deduction that every business owner can take.
Before you file your taxes next year, discuss these tax deductions with your accountant. You may be surprised at how much your taxes fall after you claim all of your eligible deductions.