As a business owner filing as an S corporation, you’re eligible for several tax deductions that can apply to your business expenses, drive down your taxable income and decrease your tax bill. While business owners are typically familiar with common tax write-offs such as rent, employee wages, and travel expenses, you may not be aware of some uncommon but highly beneficial deductions. Here are five unusual tax deductions you don’t want to miss:
1. Education Expenses
If you pursue education courses that conveniently enhance your business skills, the expenses accrued can be deducted. Such learning can include formal continuing education for you, your employees, or an associate program. These learning opportunities can improve the efficiency, performance, skills, and knowledge of any entity. You have to take an educational expense after determining its required relation to the operation, official requirements, and associated costs. Tax deductions for this expense can cover registration and course tuition fees, books, educational travel, and materials. It can also cover business development books from Amazon, Audible, or any other source.
2. Charitable Contributions
Making charity contributions can be a write-off because donating to charitable organizations is considered a socially loving activity. Many companies make charitable contributions to improve or uplift a particular community or group. While such contributions may benefit positive social causes, it can also help businesses to receive significant tax deductions. If you want to optimize your charitable contributions and make the most of tax savings, you should ensure that the charities you contribute to are recognized nonprofit or tax-exempt organizations that provide a certification of contribution receipt.
3. Employee Care During Lunch Breaks
Many companies supply meals to help employees during this work period. You can monetarily provide free snacks, occasional paid lunch day, or hire functioning chefs who will prepare meals for the on-site eatery. Some companies also provide modern conveniences like yoga classes, gym subscription or massage sessions. All these are deductible activities that improve the quality of life and wellness of your employees.
4. Goods-Selling Expenses
If you sell goods that may suffer a significant loss due to expiration or spoilage, this type of expenditure is also tax-deductible. You have to establish revenue lists of potentially expired products to determine the permissible amount of dry or almost dead supplies present on your inventory per year. For instance, if the admissible percentage for write-offs on an inventory is five per cent, and an inventory cost of $2000, then up to $100 of goods written off is deductible for the year.
5. Vehicle Expenses
If you use your car for business, then the wear or tear on the mileage driven is tax-deductible. You can utilize the IRS standard rate mileage plan that remains $0,56 per mile for the year 2021 concerning tax deductions. For instance, driving a business-related 5000 miles means the tax credit will be $2800 thereafter. Alternatively, you can opt for the actual expense approach which covers the total cost of running the vehicle for the year irrespective of whether it was used exclusively for business or not.
There are some slightly different but perhaps overlooked tax breaks from businesses. Remember to keep all record keeping for total compliance with the IRS and to consult with a tax professionals or a CERTIFIED FINANCIAL PLANNER™ to be sure of all deductions. Tax refunds can save businesses a lot of money, and the lesser-known deductions outlined in this article can help business owners to make the most of their tax deductions in their day-to-day activities.
As always, feel free to reach out to learn more about your specific situation
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.