Claiming every tax deduction that you can for your business is vital to protecting your profit margin. Yet it can be hard to find the time to worry about deductible business expenses all year and especially during tax season. You may be missing money-saving tax deductions if your accountant hasn’t set up a system to capture business expenses and to ensure that you are taking every valid tax deduction.
Below is a list of some of the most frequently overlooked business tax deductions. Connect with your tax preparer early to make sure you can take these tax deductions this year. The IRS maintains a guide of tax-deductible business expenses with the most up-to-date information.
Deduct Wi-Fi & Cable
A commonly overlooked tax deduction is the money you spend on WIFI and cable expenses. You can deduct a portion of these costs as businesses expenses for yourself and for any of your employees who are working from home. These are a home office deduction even if you and your team don’t have formal home offices. If you or your staff use home WIFI or cable for business, you can deduct it.
Unless you have dedicated WIFI or cable at home that’s used only for business, you won’t be able to deduct 100% of this business expense. Estimate the percentage of time you are using home WIFI or cable for business and what percentage is for your or your family’s personal use. Add up your annual costs and claim the percentage that is used for business as a tax deduction.
Deduct Technology Purchases
You can take tax deductions from qualified technology purchases, like laptops, cell phones, or iPads you and your staff use for work. Don’t forget the accessories and peripherals. Money you spend on cables, wires, external drives, mice, headphones and the like is also a tax deduction.
Be sure to include in your technology tax deductions any costs for setting up internet after a move or for internet you pay for when traveling.
You might be able to claim a tax deduction on technology purchased for your child or spouse if they support you with your business. Indeed, your child may know more about technology than you do, and they might be helping you quite a bit. If you’re working with a tax preparer, bring it up.
Deduct Marketing Expenditures
Whether you’ve built or maintained a website, launched social media campaigns, offered webinars, or attended industry events, you can deduct many of these marketing costs. To qualify as a tax deduction, these marketing business expenses must be reasonable and directly related to your business. Are you claiming these marketing expenses for your small business?
Home Office Deductions
Sole proprietors, partnership members, and business owners can take the home office deduction on their individual tax returns. The IRS requires that the designated space be exclusively used for business affairs. To claim this tax deduction, file IRS Form 8829. To calculate the deduction for business use of the home, the IRS offers either a complex calculation or a simplified option that involves taking $5 for every square foot of designated workspace.
You can claim home office deductions for the portion of utilities, mortgage interest, depreciation, and property taxes that apply to your use of your home office. Other home expenses, such as upkeep, decorating, and expenses of that nature do not qualify for a home office deduction. If you rent your home, you can claim a percentage of your monthly rental bill as a home office deduction.
Bernstein Financial Services Inc. provides a wide range of services to individuals and businesses in a variety of industries. We do not provide legal advice. This article is for educational purposes only and should not be taken for business advice about your specific situation. Please schedule an appointment with a Principal at Bernstein Financial Services to help you determine your optimal planning strategies.