Ready to see how
much you qualify for?
Let's get started
As a small business owner, you are probably always looking for ways to save money. One way to do that is to take advantage of deductions and credits that may be available to you.
What is a business deduction?
A business deduction is an expense that can be subtracted from your gross income to arrive at your taxable income. Deductions lower your tax bill by reducing your taxable income.
What is a business credit?
A business credit is a tax break that allows you to reduce your tax liability dollar-for-dollar. Credits are more valuable than deductions because they reduce your tax bill dollar-for-dollar, while deductions only lower your taxable income.
What are some common deductions for small businesses?
There are many credits and deductions that may be available to small businesses, but some of the more common ones include:
The Small Business Health Care Tax Credit
The Small Business Health Care Tax Credit is available to small businesses that offer health insurance to their employees. To be eligible, you must have fewer than 25 full-time equivalent employees and pay at least half of the premiums for employee health insurance coverage.
Retirement Plans
If you set up a retirement plan for yourself and your employees, you may be able to deduct contributions that you make to the plan. For example, if you have a Simplified Employee Pension (SEP) plan, you can deduct SEP contributions of up to 25% of each employee’s pay.
Home Office Deduction
If you use part of your home exclusively and regularly for your business, you may be able to take a home office deduction. To qualify, your home office must be used regularly and exclusively for business purposes. This means that you cannot use the space for both business and personal purposes.
Self-Employment Tax Deduction
If you are self-employed, you can deduct the Social Security and Medicare taxes that you would normally have paid as an employee. The deduction is reported on Schedule SE (Form 1040).
Vehicle Expenses
If you use your vehicle in your business, you may be able to deduct vehicle expenses such as gas, oil, repairs, tires, insurance, registration fees, lease or rental payments, or depreciation. However, there are limits on how much you can deduct.
How do I claim deductions and credits on my tax return?
Deductions and credits are claimed on your income tax return. You will need to itemize your deductions if you want to claim them. To do this, you will need to complete Schedule A (Form 1040). Credits are claimed on Form 3800.
If you have any questions about deductions or credits that may be available to you, please contact a tax professional. They can help you determine what deductions and credits you may be eligible for and how to claim them on your tax return.
This article is intended to provide general information about deductions and credits for small businesses. It is not intended to provide specific tax advice. You should contact a tax professional for specific advice about your situation.
There are many deductions and credits available to small businesses owners. Be sure to take advantage of them so that you can save money on your taxes!
