The tax season is almost here, and several small businesses defer their tax proceeds in fear of what’s to come. No worries, we have come to remind you of some tax items you may have overlooked.
A lot of small businesses exclude daily expenses in their tax return deductibles. Usually, these expenses reduce what you can reinvest. But you don’t need to worry (even though you’re a new to tax), this could be an opportunity to earn back some money.
Keep reading to see some purchases you didn’t know were tax-deductible – hopefully, you might get to save extra cash to help with cash flow.
Medical and Dental Bills
Nothing strains your income like emergency medical or dental bills, but the IRS makes these out of pocket expenditures easy for us.
Medical and dental bills that exceed 7.4% of your adjusted income are considered tax deductible by the IRS. That means you can save extra cash out of those sudden medical bills. Great, right?
Student Loan Interest Paid by You or Someone Else
Student loans are bad, and we all know it but what is even more horrible is the interest. Some stipulations make student loan interests tax-deductible.
If your student loan interest is more than 4%, the IRS allows you to deduct $2,500 from your taxable income. And get this; this deduction still works even if someone else paid the interest on the loan for you. However, this golden gift is only for people whose individual income is less than $80,000 per year.
Donations to Registered Charitable Organizations
Giving is an act of kindness and the IRS rewards that by awarding a tax deductible for charitable work. If you’ve been an ardent giver to local charities and this does not have to be large monetary donations, you can deduct these from your taxable income.
So, collate and add up the cost for that cake you made for a charitable organization. And remember to include 14 cents per mile for every trip you made for a charitable organization.
Home Improvement Renovations
Yes, the IRS recognizes and offers tax deductibles for home improvement renovations but only when they are done for medical purposes. So forget about getting a tax-deductible for that new pool you installed.
If you have had to make certain changes to accommodate a medical situation, the IRS would consider this expenditure and deduct it from your taxable income.
Compensation from Jury Service
Being a Jury is a great opportunity to play an active role in the criminal justice system and society. In addition to the salary concessions made for juries which make provision for them to be paid even while on jury service, they receive compensation from the state.
Although this money is often remitted back to the company where they work, it is tax deductible. If you’ve been a jury this year, just deduct the compensation from your taxable income.
State Sales Tax / Local Tax
If you haven’t been making use of this tax-deductible, then you’ve been missing out on saving extra money. You can deduct either your local income tax or your state sales tax. You can choose to deduct whichever tax would benefit you better.
For states like Texas and Washington that don’t pay income taxes, there is no choice; they have to deduct their state sales tax. For people living in the other states, pick between your state sales tax and your local income tax and subtract from your taxable income.
Expenses Incurred While Job Hunting
Looking for a job does take its toll not only on your finances which is a heavy impact but also on your mental well-being. While the IRS can’t do anything about the latter, they can help out with the former.
Any expense you incur while Job hunting and even after you get a job is recognized as a tax-deductible by the IRS. But you need to meet some conditions for this. One of them is that the job you’re going for must be within your field of study.
The following expenses are tax deductible under this heading:
- You can itemize any amount incurred from having your resume reviewed by professionals as long as you have receipts for this service.
- Travel expenses are also tax-deductible, and they cover gas expenses for transporting yourself for interviews.
- Moving costs necessitated by a new job are also tax deductible by the IRS. If you move within 50 miles, you should calculate 23 cents for every mile.
Child Care Tax Credit
Expenses double when you have kids and during the holiday, those expenses triple, especially when you have to pay for summer camp or babysitters to watch them.
The Child and Dependent Care Act recognize these expenses, and you can deduct $3000 for each child or dependent and $6000 for two or more. This tax-deductible is only valid as long as the babysitters aren’t family or relatives.
Loss from Disasters or Accidents
Any damages that aren’t covered by your insurance company can be claimed as tax deductibles.
Out of Pocket Teaching Expenses
Many teachers often have to make out of pocket expenses to aid their teaching. The IRS offers a tax deductible for these expenses even if they aren’t itemized. All teachers are allowed to subtract $250 from their taxable income.
Final Thoughts
You need to keep evidence of purchase and written records for every item you claim. Also, make sure you check with your tax expert to know how much and if you qualify for these tax claims. If you have any questions, feel free to contact us. We’d love to help you!
