Tax season can be stressful, and that’s why many people try to get it over and done with as quickly as possible. Are you rushing through your returns and not taking advantage of every available deduction?
- It must be a necessary business expense.
- It must have been incurred and paid during the tax year.
- It must be related to an ordinary part of doing business.
Are You Overlooking Deductions?
Many businesses let potential deductions go by overlooked and unclaimed. In fact, the Vice President of Business Development for Deductr (a company that tracks tax deductions for independent business owners) says that 7 out of 8 taxpayers overpay every single year. Do you really want to be part of that statistic? We don’t think so. So what are you missing?
For one, startup costs aren’t claimed as much as they can be. You can deduct up to $5,000 of the startup costs that your business incurred before operations in the first year – anything over can be amortized over a 15-year period. Other deductions that often go unclaimed include home office expenses, auto expenses and health insurance premiums.
Keep Your Records!
When you’re filing business deductions, it goes without saying that you need adequate documentation. The law requires specific substantiation for entertainment or travel expenses. Deductions can be disallowed if the IRS questions a return and you can’t produce records. If you’re traveling for work make sure you always keep a record of the dates, distance traveled and purchases.
Business owners are liable for the back taxes that haven’t been paid if the IRS disallows a claimed deduction. The IRS Office of Appeals gives you the option to appeal the decision, and you can also go through the U.S Tax Court.
- 1 Tax season can be stressful, and that’s why many people try to get it over and done with as quickly as possible. Are you rushing through your returns and not taking advantage of every available deduction?
- 3 Small business owners are willing to pay their share, sure, but getting back all the money you’re entitled to means having extra to reinvest in your business to help it grow.