Tax Deductions That Many Forget About
1. Business Meals: you can typically deduct 50% of your business meals if they meet the following criteria:
The meal is an ordinary and necessary part of your business.
The meal is not lavish or extravagant.
The business owner or an employee is present at the meal.
2. Business Use of Vehicle: If you use your car or truck solely for business purposes then you could write off the entire cost of operating and maintaining it. And even if you use it partly for business and partly for personal, you can still write off whatever percentage is used for business. There’s two ways you can write off your mileage:
Standard Mileage Rate. Add up the total miles you drive for business in the year and multiply it by the standard mileage rate (this varies year by year, but in 2019 it was $0.58 per mile).
Actual Expense Method. You could also track all the costs of operating your vehicle for the year (gas, insurance, repairs, oil changes, etc.) and then multiply that by the percentage of business use for the vehicle.
An easy way to track this is to use a mileage tracker app like Hurdlr. This will allow you to automatically track all your mileage and other business expenses in real time.
3. Section 179 Deductions: When you buy a vehicle, furniture, equipment and other business-related items you can write off the depreciation of those assets. There are several ways to do this but one of the most attractive methods is the Section 179 deduction. This allows you to deduct up to $1 million of property placed in service during that tax year. So, if you bought a “Section 179 vehicle” then you could write off the total depreciation for that vehicle in that year.
4. Business Education: If you choose to buy a course or take a class to help you with your business then you could write that off too. You can also write off business-related books and any subscriptions to trade or professional publications.
5. Direct Home Office Expenses: This deduction is different than the normal home office deduction, which allows you to write off a percentage of your home-related expenses when you have a home office. But direct home office expenses on the other hand allow you to write off 100% of the purchases you make for your home office specifically. So for example, if you buy new furniture or paint your home office, then you could potentially write off 100% of those expenses.
So there you go my friend! Those are just five business write-offs that most small business owners forget to take.