23 Common Tax Deductions for Small-Business Owners


In 2019, 29% of all Medicare beneficiaries had access to some dental coverage through Medicare Advantage plans (including 3% of beneficiaries also eligible for Medicaid who had access to dental coverage through a Medicare Advantage plan). About 11% of Medicare beneficiaries had access to dental coverage through Medicaid (including the aforementioned who also have coverage through Medicare Advantage plans). You can deduct your travel expenses (including travel, lodging, and meals for yourself) when you attend a convention within the United States if you can show that attending the convention benefits your business. These rules apply to workshops, conferences and seminars, as well as actual conventions.

Tax filers with income above $100,000 were 18 percent of all tax filers, but accounted for about 78 percent of the total dollar amount of SALT deductions reported. Do you have vehicle expenses, adoption credits or home office deductions? Claiming excessive or unrealistic deductions (especially when they’re disproportionate to your income or other expenses claimed by members of the dental profession) can also attract IRS attention. You’ll also want to make sure your deductions are backed up by proper documentation.


The bill failed to make it into the $1.3 trillion spending bill that was passed on Mar. 23, 2018. As such, the burden of providing affordable health insurance will be on states and health https://turbo-tax.org/take-a-closer-look-at-the-2019-home-office/ insurers. Along with the new standard deduction, several others are better under the TCJA. Note that to take the deduction, the home equity loan must be on the property you are renovating.

How many square feet is a home office?

The average home office size typically falls between 100 and 200 square feet.

Okay, no matter what kind of business you run, you probably have to stock up on traditional office supplies—whether it’s printer ink, pens or Post-it notes. Salaries paid to your workforce are fixed annual costs, as they don’t change based on production. Indirect labor costs are not tied to production and could be classified as someone in security. If the company has to lower its prices, then they are going to have to cut labor costs as well so that they are not running in the negative.

Family Credits and Deductions

If you travel outside the U.S. purely for business purposes, all your travel expenses of getting to and from your business destination are deductible. However, if you spend part of your time in a foreign country engaging in personal activities, you may have to allocate your travel expenses and only deduct the amounts allocated to business. If you or your employees travel out of town on business (e.g., visiting a client, vendor, job site, or tradeshow) the cost of transportation, lodging, tips for services, baggage fees, shipping costs, etc. are fully deductible. Common tax deductions for construction contractors include protective equipment, tools, building materials and transportation expenses. Keep reading to learn more about what construction contractors can deduct from their taxes. There’s a tax credit for dependent care expenses (known as the Child and Dependent Care credit), and you can’t use both the credit and money from your dependent care FSA for the same expenses.

  • Among the 10 illustrative Medicare Advantage plans, three plans do not cover any out-of-network dental care (Appendix Table 1).
  • It scales back the AMT and estate tax, as well as reduces the taxes levied on pass-through income (70% of which goes to the highest-earning 1%).
  • Fill out your tax return carefully and don’t leave any questions blank.
  • For example, nearly all enrollees (88%) are in plans that have frequency limits on the number of cleanings, with the most common limit being twice per year.
  • Send Bench’s books to your accountant at year end, or let us take the tax filing off your plate for good!

For example, if you sell one stock you invested in for a $1,000 loss and another for a $3,000 gain, you can use the loss to reduce your taxable gain to $2,000. In other words, if you were paid $1,000 from https://turbo-tax.org/ a lottery ticket, but lost $400 at a casino in 2019, you can use the loss to reduce your taxable gambling winnings to $600. Did you lose a few hundred dollars at the slots last time you went to Las Vegas?

Switching payroll providers

Actual pay stubs vary based on individual circumstances and the state. Some have specific requirements about the information that has to be included on the pay statement and when it must be delivered to employees. A paycheck is how businesses compensate employees for their work.

This effectively provides the paying spouse with a deduction because they are giving away money they would have had to pay taxes on eventually. In the past, the person making alimony payments received an above-the-line deduction, and the person receiving the alimony counted the money as taxable income. As of 2019, the paying spouse no longer receives a deduction, and the receiving spouse no longer declares the payments as taxable income for any divorce after Dec. 31, 2018.

Medicare and Dental Coverage: A Closer Look

However, because companies no longer receive a deduction for offering the benefit, most have little incentive to offer it. Your employer can also offer bicycle-commuting benefits in any amount, and this expense is deductible. Following is a closer look at how Schedule A itemized deductions changed with the TCJA. If these steps seem cumbersome – remember, it’s your responsibility to prove you are entitled to the home office deduction – no proof, no deduction. If the IRS denies your home office deduction, you can expect to see other deductions – such as auto expense – reduced as well.

  • Generally, your tax home is the entire general area or vicinity (e.g., a city and surrounding suburbs) of your principal place of business, regardless of the location of your personal or family’s home.
  • The idea of a fiscal trigger, a mechanism to enact automatic tax hikes or spending cuts that some senators pushed for in case optimistic growth forecasts did not come to fruition, was rejected on procedural grounds.
  • A special exception to the 50 percent rule applies to workers who are away from home while working under Department of Transportation regulations.
  • The caveat is that in order to contribute to an HSA, you need to be covered by a qualifying high-deductible health plan.
  • That same budget resolution tasked the Senate Energy and Natural Resources Committee with achieving at least $1 trillion in savings over 10 years.
  • This allows self-employed expats who work from home to reduce their US tax bill.

The good news is there is no dollar minimum to the items you can deduct, so even things like lens caps and camera chargers count as business expenses. About 16% are in a plan that pays up to $500, while 22% of enrollees are in plans with a $2000 annual limit, and 8% of enrollees are in plans with a limit greater than $2,000 and up to $5,000. Coverage limits are far more common among plans that cover more extensive benefits than plans that cover only preventive services. However, because of the potential for abuse (e.g., sneaking in a Paris vacation under the guise of a business trip), these expenses are scrutinized closely by the IRS. The advantage to using the standard meal allowance is that you don’t have to keep records of actual meal expenses, although you still have to keep records to prove the time, place, and business purpose of your travel.

Automatic Spending Cuts

Four out of the five plans have annual caps toward covered services, while one plan does not specify if it has an annual cap. The other five plans that offered dental coverage did not specify if dentures were covered. In light of these ongoing policy discussions, this brief provides new data on the share of Medicare beneficiaries with dental coverage, the share with a dental visit in the past 12 months, and out-of-pocket spending on dental care. It also takes a closer look at the scope of dental benefits offered to Medicare Advantage enrollees in individual plans in 2021.

Expensing these items upfront is more attractive because of the quicker tax benefit. Fortunately, the IRS gives business owners several ways to write off the full cost in one year. When you purchase furniture, equipment, and other business assets, depreciation rules require you to spread the costs of those assets over the years you’ll use them rather than deducting the full cost in a single hit. There are two methods for deducting vehicle expenses, and you can choose whichever one gives you a greater tax benefit. You can deduct 100% of the cost of providing meals to employees, such as buying pizza for dinner when your team is working late. Meals provided at office parties and picnics are also 100% deductible.


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