When tax time comes around, you know all of the standard expenses you can write off, like office rent and equipment, payroll, and vendor costs. But you may be neglecting to take note of dozens of potential tax write-offs that could save you thousands of dollars. Here are a few of the most often overlooked business expenses you should probably be claiming:
1) Home office deductions. Even if you have a traditional out-of-home office, if you also spend a significant amount of time working from your home in a dedicated area, you can write off a percentage of your mortgage and real estate taxes, based on the area of the office space in relation to the size of the house. Check out the IRS’ guidelines for more details.
2) A portion of phone and Internet charges. Again, if you do any work from home (and even if we try to avoid it, nearly all of us do), you can claim deductions for the portion of communications expenses associated with work. Be sure to log your calls and track your time online to take note of how much time is spent on work-related communications, and deduct that percentage from your monthly bills.
3) Business-focused books and subscriptions. As a business owner, you probably like to stay up to date on your industry and competition by subscribing to business-focused magazines and local newspapers, and reading books on business strategy within your industry. All of these purchases are deductible: Pay for them on a business credit card for easy tracking, or save all of your receipts in one location if you don’t have a business credit card.
4) Car mileage and parking fees. Even if you’re only driving a few miles at a time to meet with clients, you should track your mileage for business-related meetings and associated parking fees — over time, they can really add up, and those costs are completely deductible (though the costs for commuting to your own office are not). For easy tracking, keep a notepad in your car and mark down the miles driven, date, and associated tolls or parking fees for every business meeting. Smartphone apps for this area also readily available.
5) Business-related dining, entertainment, and gifts. If you’re wooing potential or existing clients by taking them out to sports events or dinners or sending Christmas presents, be sure to track all of these expenses: Gift costs are fully tax-deductible, and you can deduct 50 percent of your meal and entertainment expenses. However, these sorts of deductions are closely scrutinized by the IRS, so be sure to claim them only in situations where the expenses are related to creating or maintaining a profitable business relationship — it won’t fly if you try to expense a romantic dinner with your wife, even if she’s also your business partner. For more information, check out the IRS’ entertainment expense guidelines.