Qualified Business Income Tax Deduction
Small businesses that earn less than a certain level of income can deduct up to 20% from their net income. QBI is your net income, but does not include income from capital gains, interest or income earned outside of the United States.
Self-Employment Tax Credit
You must pay 15.3% of your total income as a self-employed person. You can deduct half of this amount. You can claim 7.65% of self-employment taxes as a deduction and they will not be included in your taxable income.
Home Office Tax Reduction
The home office deduction is another way to save. This deduction is not available if you are simply working at home. This space must be your primary work site and dedicated to your business.
You can deduct a portion of your home-related expenses if you qualify. Rent, mortgages and other home repairs can be deducted in proportion to your home office’s size. This is all in addition to any office supplies and goods that you use exclusively for your work.
Medicaid Premium Reduction
You can deduct your health insurance costs as a business cost if you are not entitled to health insurance via your spouse. You are effectively your own employer, paying for the health insurance of your employees. This cost should therefore be paid from pre-tax income.
Vehicle Use Tax Deduction
Use your car for business frequently? The cost of commuting does not count, but you can deduct other travel expenses related to your job, whether it’s for a personal car or a company vehicle.
You can claim this deduction by either keeping detailed records of vehicle expenses, or simply logging the miles you travel for business. IRS established a standard rate of mileage for tax purposes. In 2023, businesses will be able to claim a deduction for travel related to business, charity, medical or moving.
Web and Telephone Bills allowance
How much money do you spend each month on your phone and internet bills? If you use them for your business, these expenses may be deductible. You can deduct some of the cost of a home-office or personal phone you use to conduct business.
You might, on the other hand have a phone that is only used for business or even an internet subscription. You can then deduct all of the costs as business expenses.
In certain circumstances, you may be able to deduct all or a portion of the cost of meals and entertainment that are part of your job. You can deduct 50% of the cost if you bring food into your office to share or take clients to a restaurant.
Some meal costs can also be deducted in full. For a meal or entertainment to be fully deductible, they must be provided as part a company party or as an official compensation for employees.
Retirement Plan Commitments
You can deduct an amount each year for contributions you make to your retirement plan. You can defer the tax on this income until you take it out later.
You should maximize your retirement contributions if you are likely to be in a higher tax bracket.
You can also find out more about the Interest Rates
Even if you do not have a home-office, you can still deduct interest from loans. This includes your mortgage.
The IRS views continuing education as an essential part of the job. You can deduct any money spent to improve your job or stay up-to-date with the latest industry developments.
You can also claim any membership fees or professional publications that you may have paid.
Get the Most Out of Your Tax Savings
To reduce your tax bill and taxable income, you need to be able to use the available tools.
With 1-800Accountant on your side, it won’t be overwhelming. Our experts will handle your taxes so you can focus on growing your business. You can rest assured that America’s top virtual accounting firm won’t leave any potential savings untapped.