It’s hardly news that businesses are hurting in today’s economy where money is tight, clients are paying and banks aren’t lending. If you are struggling to make ends meet, don’t despair. Things will get better and it may be sooner than you think. Tax time will be rolling around before you know it and many overlooked deductions could save a great deal of money. Before you file your next tax return, do some research and see where you can cut your taxes. Here are 10 things that you didn’t know were tax deductible.
10. Depreciation on Breeding Animals
If you breed dogs as a full or part-time business, you can claim depreciation on the breeding animals. The current U.S. tax code allows depreciation for breeding stock such as show dogs and race horses. You must intend to sell the offspring in order to claim this deduction. Additionally, you can only depreciate the breeding male and/or female, but not the offspring.
9. Business Travel
Travel expenses may be written off if they pertain to your business. When one is attending a conference or business meeting, this may be taken off. You will need to be able to show proof that business was conducted during this trip though. Don’t mark off your second honeymoon weekend to Boston with your wife. If your spouse is a business partner or employee though, they can travel with you and their expenses may be written off as well as half of their meals. Be sure to save all receipts.
8. Disaster Related Expenses
Last winter was rough for many parts of the country. Casualty deductions may be claimed if the president declared your area a designated disaster area. Any losses you incurred as a result of the disaster may be claimed on your return. Remember this for the future also as you never know when Mother Nature may strike.
7. Tax Preparation Fees
Tax planning is a big part of any business. In order to make the largest profit, you need to pay the minimum in taxes. Often investment and tax planning expenses are overlooked at tax time though. These qualify as itemized expenses as long as they are more that 2% of your adjusted gross income before you receive any tax benefit. Expenses you should include are tax preparation fees and employee business expenses. As a small business owner, every penny counts and this is a great way to put some back for a rainy day. Don’t forget safety deposits boxes, magazine subscriptions and long distance phone calls as they may all be deducted also.
6. Home Office Expenses
Home office deductions are a must for any small business owner operating out of his or her home. Everything can be marked off as long as it is used solely for business. If you use your computer or any other item in this office for personal use, you will need to calculate how much time the item is used for personal reasons and how much time it is used for the business. If you rent an apartment, a portion may be deducted for home office use also.
5. Home Refinancing Costs
When operating out of your home, remember to deduct points when you refinance your home. Points that are paid on a refinance may be deducted over the life of the loan. Although this may not seem like a great deal, over time it adds up. Small deductions like this, taken together, can make a huge difference on your tax burden.
4. Health Insurance Premiums
Those who are self-employed can mark off 100% of health insurance premiums. You don’t have to itemize to claim this deduction either. As long as you are not covered by an employer paid plan, you can take this deduction.
3. Travel Expenses for Military Reservists
Those who are in the military reserves can take a deduction for travel expenses. Your trip must be more than 100 miles from home and overnight to qualify. Not only can you deduct the cost of your lodging, but half of your meals also as well as wear and tear on your vehicle. Parking fees and tolls may also be deducted.
2. Hobby Related Expenses
If you have a hobby and sell the fruits of your labor, you may be able to deduct expenses here also. You can only deduct as much as you made, but it will help in the long run.
1. College Fees
Finally, if you go back to school to further your career, these expenses may be marked off. You must make less than $65,000 a year if you file single and $130,000 a year if you file jointly. Up to $4,000 may be deducted here.