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10 Small Business Tax Deductions You Shouldn’t Ignore
Posted By US Small Business Administration On April 2, 2013 @ 8:00 am In Taxes | 6 Comments
Tax season is here, and it’s time to rifle through your business expense records and make the most of any legitimate small business tax deductions you can claim to lower your overall taxable income. Unfortunately, many taxpayers who qualify for a variety of deductions—most notably the home office deduction—aren’t claiming them.
To help you claim the deductions you deserve, below are 10 small business tax deductions that may apply to your business. For more information specific to your business, always consult with your tax professional.
If you provide insurance to your employees, under The Affordable Care Act eligible small businesses can claim a tax credit  of up to 35%, if you meet the following criteria:
If you use your personal car, truck or van for business travel, you can write off the business portion of vehicle usage by either:
You can also deduct parking and tolls . Remember to keep good records of all transactions. Make note of your mileage using your odometer or a GPS device, as well as the date of the trip, destination and purpose.
Small business owners may be able to claim most of the costs of doing business on the road . These include the cost of air, train or bus tickets, lodging, taxis, 50 percent of meal and business entertainment costs, dry cleaning and laundry costs, business-related calls and tips.
There are some limits to what you can deduct. For example, if you travel with a spouse or person other than an employee then you can’t deduct their expenses. There are also some restrictions on overseas travel deductions, cruise ship travel and attending conventions.
Over half of all U.S. businesses operate out of the home, and many (not all) may be eligible to claim the home office deduction. The caveat here is that you can only claim the deduction (which may include phone bills, Internet fees, insurance, rent and more) if an area of your home is used exclusively and regularly for business use.
Working from your dining room table one day and from the den the next does not constitute exclusive and regular business use of that area. Read more about the home office deduction  and look out for a simpler claims process  which will make it easier to file for the deduction in 2014.
Start a business in 2012? You can claim up to $5,000 of business start-up  and $5,000 of organizational costs incurred before you opened your doors. The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Any remaining costs must be amortized.
Any fees associated with the following are fully deductible as a cost of doing business:
The Section 179 deduction  allows you to fully deduct the cost (up to $500,000) of assets purchased in 2012, including computers, furniture, certain business software, vehicles and manufacturing equipment. A new “Bonus Depreciation” provision also allows you to depreciate an additional 50% of the cost of certain property after you’ve taken the Section 179 deduction and in addition to the standard depreciation deduction. IRS.gov offers more information about Section 179 .
Did you move in 2012 as a result of your business? If your new workplace is 50 miles further from your home than your previous workplace, you may be able to deduct certain moving costs on your individual 1040 tax return.
Did you hire a veteran in 2012? You may be eligible to claim a tax credit . Under the Vow to Hire Heroes Act of 2011, if you hired a veteran who had been unemployed for at least four weeks, you can claim a credit for 40% of the first $6,000 in wages (up to $2,400).
If you hire a veteran who’s been unemployed for at least six months, the credit goes up to 40% of the first $14,000 of wages (up to $5,600).
Charitable contributions can qualify as tax deductions against your business’ annual tax liability. Cash or other monetary contributions may be tax deductible as long as they are not set aside for use by a specific person. Contributions must also be made during the tax year to be eligible for a deduction, regardless of the accounting method you use.
When you file your claim you’ll need to use Form 1040, Schedule A and itemize each deduction. You can also deduct the fair market value donations of property, including inventory and any costs associated with volunteer work such as the costs for hosting a fundraising event. This guide from the IRS  explains more about the charitable giving tax deduction.
Tax Deductions  Photo via Shutterstock
Article printed from Small Business Trends: http://smallbiztrends.com
URL to article: http://smallbiztrends.com/2013/04/small-business-tax-deductions.html
URLs in this post:
 tax credit: http://www.irs.gov/uac/Small-Business-Health-Care-Tax-Credit-for-Small-Employers
 standard mileage rates for 2013: http://smallbiztrends.com/2012/12/irs-increases-standard-mileage-rates-2013.html
 deduct parking and tolls: http://www.irs.gov/publications/p463/ch04.html#en_US_2011_publink100033930
 claim most of the costs of doing business on the road: http://www.irs.gov/publications/p463/ch01.html
 home office deduction: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Home-Office-Deduction
 simpler claims process: http://www.whitehouse.gov/blog/2013/01/15/helping-small-business-owners-and-home-based-employees-claim-home-office-tax-deducti
 claim up to $5,000 of business start-up: http://www.irs.gov/publications/p535/ch07.html#en_US_2012_publink1000208919
 Section 179 deduction: http://smallbiztrends.com/2013/03/equipment-tax-deduction-section-179.html
 more information about Section 179: http://www.irs.gov/publications/p946/ch02.html
 may be eligible to claim a tax credit: http://www.doleta.gov/business/incentives/opptax/PDF/employers_wotc_veterans_brochure_5_24_12.pdf
 guide from the IRS: http://www.irs.gov/publications/p526/ar02.html#en_US_2011_publink1000229802
 Tax Deductions: http://www.shutterstock.com/pic-51293611/stock-vector-tax-deduction.html?src=DCC48844-9874-11E2-BC6D-B8D3ACE6966E-1-47