Everyone should know the many absurd tax rules that affect their business. Here are 10 expenses that you probably already paid for that could be deductible.
- Office at home. You may be able to deduct a portion of your housing expenses. Look it up here.
- Office supplies. This is a no-brainer, as long as your supplies are used for your business and not personal use.* Save all of your receipts from Staples and Office Depot.
- Interest. If you fund part of your business with a personal credit card, the interest paid may be deductible. Check it out here.
- Your car. If you use your car for your business, check out the rules here.
- Entertainment. A ball game or concert with business associates may be partially deductible if it meets the IRS rules.
- Travel. A business-related trip could be tax deductible. Here are the rules. Even conventions may be deductible. Sorry, the IRS even allows limited deductions for cruises.
- Gifts. The IRS has many limits on this, but it’s doable.
- Health insurance. The IRS permits deducting the cost of a self-employed person’s health insurance premiums. Rules are here.
- Bad debts. If you record a sale, but fail to collect the money, the write-off is tax-deductible. Rules are here.
- Cost of new computers, equipment, etc. These may be fully deductible under Section 179.
Many of these items could be taken as personal deductions. Business expenses reduce your self-employment tax, while personal expenses do not. If you are self-employed, you will usually save more money by deducting them as business expenses, rather than as personal expenses.
*My five-year old daughter liberally uses my paper, highlighters, scotch tape and staples. The items she uses for arts and crafts are not deductible.