Our Clients save thousands each year using these valuable tax reduction strategies.
Palm Beach Gardens, Florida (PRWEB) March 03, 2015
The IRS tax code offers many tax deductions to business owners. The trick is to know which tax reduction strategies to use and how to apply them to your particular situation. Below are eight valuable tax deductions for business owners and the self employed. A more robust list of tax reduction strategies can be found at http://www.montellotax.com.
1. Home office
The home office deduction can offer a valuable deduction for expenses you already pay such as rent, mortgage, insurance, electricity, maintenance and real estate taxes. As a business owner, you can deduct a percentage of these expenses as a business deduction but beware of certain caveats. Contact us for information concerning the home office deduction.
2. Supplies, Office Equipment & Furniture
Basic office supplies are always tax deductible but when your office supplies are more than just ink and paper you have another tax-saving opportunity. Office equipment such as computers, fax machines and scanners or furniture for your office or home office can provide a tax deduction. A taxpayer will have two choices for deducting the expenses (1) Deduct 100 percent of the cost in the year of the purchase using the Section 179 deduction or (2) Depreciate the expense over the useful life of the equipment. We can show you how to maximize these types of deductions.
3. Software and Subscriptions
According to IRS guidelines, you can take the total costs as a full deduction in the year spent.
Mileage may be one of the biggest expenses but it can also offer a handsome tax deduction. Taking the mileage deduction requires you to keep track of your mileage expenses such as parking, tolls, car washes, gas, and repairs or you can simply use the standard mileage rate (56 cents per mile in 2014). With this method, you don’t have to track your auto-related expenses, just the miles driven for business purposes. In addition, if you can claim a home office deduction, you get a bigger tax break because you can deduct the entire business-related mileage, from the minute you leave the driveway until you return home.
5. Travel, Meals and Entertainment
While traveling for business purposes the cost of travel -- air, auto, rail, or boat - is 100 percent deductible, as are costs associated with life on the road (dry cleaning, rental cars and tipping). Meals on the road and any entertainment costs are deductible at 50% while traveling.
6. Insurance Premiums
Health insurance premiums for business owners are 100 percent deductible. This tax break primarily benefits sole proprietors, but the deduction can't be more than your business' net profit. And it's not allowed if you were eligible for other health care coverage, including that offered by your employed spouse's medical plan. You also can include some of the premiums you pay for long-term care insurance for yourself, your spouse or dependents.
7. Retirement contributions
Business Owners can save for retirement with a SEP IRA or Keogh and can deduct all contribution on their personal income tax return.
8. Hire your Child
For those running a small business as a sole proprietorship or husband-wife partnership consider hiring your under-age-18 child as a bona fide employee. It can be part-time or full-time. Your employee-child can use his or her standard deduction to shelter up to $6,300 ( in 2014) from federal income tax. Make the money go even further by contributing the salary to a Roth IRA. Not only have you gotten a nice tax deduction from the salary but you've also helped establish an account that can be used for college or retirement. This break is available only if you operate as a sole proprietor or as a partnership in which you and your spouse are the only partners.
Montello Tax and Financial Planning, LLC educates business owners about tax planning and offers prudent tax reduction strategies for our clients. For more information about tax deduction strategies give us a call at (561) 694-6660 or visit our website at http://www.montellotax.com .
SOURCE: Montello Tax & Financial Planning, LLC. montellotax.com