Don’t Miss These Deductions for Small Business Owners

When you’re a small business owner at tax time, the bottom line is that you want that bottom line to be as small as possible. Here are some tips that can lower your tax liability this year:

• Health insurance. If you're self-employed, you’re allowed to deduct 100% of your health insurance costs covering yourself, your spouse, your dependents, and any of your children under the age of 27 at the end of the tax year. This deduction goes on the 1040, line 29.

• Business use of gas and diesel. If you operate a business that uses machines like generators, power saws, or bulldozers, you may be able to claim a credit for federal excise tax you paid on the fuels you used. Check out the Form 4136 instructions on IRS's website for more information.  
• Sale of business property. If you sold business property during the year, you will need to report the amount of the loss or gain. Selling your vehicle at a loss, for example, could make a big difference on your taxes.
• Vehicle expenses. Besides claiming mileage, you may not know that there are other expenses you can claim related to your vehicle. You can deduct the business-related portion of your personal property taxes, as well as the car loan interest that's related to the business use of your vehicle.
• Business use of home. If your home is your principal place of business, check with your accountant to see if you can deduct the business percentage of your home expenses, such as utilities, rent, and homeowner's insurance.
• Depreciation and Section 179. If you have business property with a useful life of more than one year, you must depreciate that item. Depreciation expense can often make a big difference to self-employment income, as it's a way to write off the expense of an item over several years. Section 179 allows you to write off all or a portion of the cost of an item in the year it is put into service. Once again, the IRS has more information on this subject.
• Charitable donations. Don't overlook your donations! Naturally you’ll want to deduct any checks you write to charities, but don't forget about any non-cash donations you may have made. Also you may take a deduction for any mileage you used as a volunteer for a qualified charity. Contributions go on your Schedule A, which is for itemizing deductions. Don't forget that to itemize, the total itemized deductions must exceed your standard deduction.
• Medical and dental expenses. If you've had out-of-pocket medical expenses that exceeded 10% of your income, you can deduct them on your Schedule A. Remember to keep track of medical mileage—trips back and forth for orthodontist appointments, for example, can really add up.

There are many credits that can help reduce your tax bill as well—education credits, child care, and earned income, to name a few. We aren’t tax professionals or accountants, so if you had any large expenditure last year that you’re unsure about, or had expenses related to making income which you think you should be able to take off, or any other questions relating to your taxes, be sure to check with the IRS or your tax preparer or attorney to see if you will be able to use them on your return.