We get it. The tax code is daunting (it’s over 70,000 pages long after all). As a small business owner, it’s unlikely you have time to finish reading an entire New York Times article, let alone memorize all 70,000 pages of the tax code. That being said, there are TONS of tax write-offs located in the tax code. And we are going to share 10 of our favorites.
Sending off the check to the IRS every year is likely to bring you a sinking feeling in the depth of your guts. Fortunately for you and other small business owners, there are plenty of legal, moral, and ethical green lights already in the tax code, that will greatly reduce your tax liability. That means you’ll keep more of what you earned so you can invest it back into your business.
So, who can you turn to for help reducing your tax liability?
After a simple 15-30 minute no obligation assessment, Financial Gravity will determine if we can substantially reduce your tax burden. If so, we will develop a tax savings plan utilizing our exclusive Tax Blueprint®. The Tax Blueprint® will provide a clear tax reduction plan that is customized specifically for you and your business. Until then, here are 10 tax write-offs that you have probably overlooked.
Yep, that’s right. Our CEO, John Pollock, confirmed that massages can indeed be tax write-offs as long as they are a doctor’s order. The next time someone says taxes stress them out, share this tax tidbit with them!
2. Gambling losses
Whether you were dealt a bad hand, picked the wrong numbers, or bet on the wrong horse; the IRS allows you to write off your gambling losses. The one caveat — your losses can never exceed your winnings. So, if you won $500 dollars, the most you can write off is $500 in losses.
3. Babysitting or daycare expenses
In order to claim the up to $3000 per child credit, you must be working, at a work-related function, or doing charity work when the babysitting and daycare expenses occur. Sorry, getting a babysitter to go to the movies on a Friday night doesn’t count.
4. Summer BBQs (or winter bonfires) at your home
These fun functions only qualify as business expenses if there is a bona fide business discussion before, during, or after the S’more smushin’.
5. Your backyard pool
You can deduct your backyard pool as an on-premise employee athletic facility. According to Code Section 132(j), if you have a home-based business and one or more members of your household qualify as employees, you may be entitled to this tax deductible.
6. Income from renting your house
Believe it or not, you can rent your home to your business for up to 14 days of tax-free income. Sometimes called the Augusta rule, Section 280A(g) of the Internal Revenue Code, gives you permission to rent out your home for up to 14 days per year. Bonus–you don’t have to report the income! You can read more about this rule here.
7. Fully depreciated business property
You can use a “gift-leaseback” to deduct the equivalent of fully depreciated business property all over again. It’s the gift that keeps on giving!
8. Your child’s braces
According to The Nest, a popular finance blog, you can deduct your child’s braces as a business expense or even as a rental expense, as long as you itemize. In addition, there are a few other factors involved, including your income and your total medical expenses.
If you are a small business owner and you offer your customers a free drink to improve business, the courts have ruled you can write off a free cold one as a tax deduction. I’ll cheers to that!
10. Quitting smoking
Programs that help you quit smoking can be tax write-offs, as long as they are prescribed by a doctor. In addition to improving your health, you’ll also be decreasing your tax liability. That’s what I call a “win-win”!
Please note that there are usage rules tied each of the tax write-offs listed above. Please contact a tax professional to help you determine which write-offs make the most sense for you and your business.