Can I deduct that? 5 lesser-known tax deductions
KARL R. LAPAN, PRESIDENT & CEO, THE NIIC
It is the dreaded T-time again. Tax day is nearly here. Are you ready? Every entrepreneur is undoubtedly concerned with minimizing their tax burden and maximizing allowable deductions. However, you may be overlooking some obvious ones. Here are 5 lesser-known deductions that should be on your radar in 2018 and beyond:
- Home office: If you have a room or workspace solely dedicated to your venture, you may be able to list it as a deduction. The operative word here is solely. A room that doubles as a bedroom doesn’t qualify. However, if you do meet the criteria, the simplified method prescribed by the IRS is calculated by multiplying $5 per square foot of your home used for business up to $1,500. The IRS also spells out that it must be your principal place of business. For example, if you have an offsite office and use the home space for night or weekend work, you don’t qualify.
- Your vehicle: The IRS allows you to deduct either the standard mileage rate or your actual expenses. The 2017 mileage rate was .535 cents. If you had considerable maintenance or repairs, you might be better off going with that number. As always, you’ll want to have all receipts on file.
- Work Opportunity Tax Credits: This more is more obscure. If you hired an employee in a certain target group as defined by the Department of Labor, you may get a break. Think veterans, people receiving food stamps, and some ex-offenders, among others. Employers will have to use Form 5884 (PDF) to calculate how much money they can deduct from their taxes.
- Conventions: Going to conventions, trade shows, seminars and the like can be considered part of professional development or marketing. Related expenses could be the cost of meals, and also the standard travel expenses incurred in getting to and from the destination.
- Interest payments: Low on cash? If you financed the purchase of a capital expenditure on your credit card, the interest is a deductible business expense.
The tax code can be confusing at best. That’s why have a CPA as part of your trusted advisor network is a smart investment for startups and more established companies alike.