Businesses can deduct a wide variety of business expenses from their taxes. The IRS specifies that, to be tax-deductible, business expenses must be ordinary and necessary for the operation of your business. Tax-deductible expenses include the following:
-
Home-office
If you work from home you can deduct the costs of operating and maintaining the part of your home that you use for business.
-
Rent
-
Phones
-
Utilities
-
Postage
-
Health insurance
-
Auto expenses
-
Internet access
-
Business travel
-
Business meals and entertainment
-
Professional services and consultants
-
Business cards and stationery
-
Retirement plans
-
Interest payments on business credit cards
-
Education
-
Office supplies
-
Office furniture
The federal government has determined that plenty of things aren’t deductible. Too bad! Here are a number of deductions that may not be considered legal by the IRS:
-
Anticipated liabilities
-
Bribes and kickbacks
-
Demolition expenses
-
Personal expenses
-
Social or recreational clubs
-
Lobbying expenses
-
Political contributions
-
Federal income taxes
-
Penalties and fines as a result of breaking the law
When in doubt, consult with an accountant or tax advisor to see which expenses you’re allowed to deduct and which ones you aren’t. It’s far better to be sure about your allowable deductions before you take them instead of years later, when your business expenses are disallowed by the IRS.
