It’s tax season again, which means Americans all over the country are dealing with the same questions they had to ask themselves—and figure out how to answer—last year and the year before, and which they’ll undoubtedly have to ponder again 12 months from now. Even if your situation hasn’t changed very much since last year, filing taxes can be burdensome and frustrating. That’s why it pays to do some advance tax prep in Elkhorn, WI to ensure you aren’t dashing off to the post office or feverishly trying to complete your taxes online come April 15.
Filing taxes is complicated anyway, but for those who have significant business expenses related to owning a small business or being self-employed, things can get even trickier. The seemingly basic question, “What can I deduct?” turns out to be not so simple after all. Fortunately, this is where a tax professional can come into the picture. Here are some basic facts regarding deductible business expenses from the team at A Plus Accounting LLC Traveling Bean Counters:
- What is deductible? In determining whether business expenses are tax-deductible, there are two keys attributes that the expenses under consideration must possess. First, they have to be ordinary expenses. This means that the expenses must be typical for someone in your particular line of work. Second, the expenses have to be necessary. This means that the expenses should be appropriate to your line of work, and beneficial to your accomplishing the tasks of your job. What you can actually deduct, in the end, depends a great deal on what kind of work you do.
- Personal vs. business expenses: Especially for the self-employed, the line between what constitutes a business expense and a personal expense can be unclear. (This is another great reason to seek the help of a tax professional.) Of particular importance for many people are two major expenses: your home and your vehicle. For these, and for other expenses that are split between your personal life and your work life, it’s customary to deduct only the percentage of the expense that is actually used for business. For example, you can deduct the cost of home office space, or car expenses based on actual mileage.
- Expenses you can deduct as a small business owner: Small business owners are also able to deduct a number of different expenses directly related to the cost of owning and operating their business. Some of these, such as employee pay, are relatively obvious. Others, however, such as rent for business property that you don’t own, insurance expenses necessary for your profession, and even interest on money you borrowed for your business can all be deducted.
This is just some of the most basic information about business deductions. For questions unanswered here, or to get more information and guidance to help you with your taxes, seek assistance with tax prep in Elkhorn, WI from the pros at A Plus Accounting LLC Traveling Bean Counters. We look forward to helping make your taxes as easy as possible—and getting you the largest return!