Experts say that busy entrepreneurs often miss tax incentives & advantages available to them. It’s quite common for you as a small business owner & entrepreneur to overlook various tax breaks that could save you a lot of money.
Commonly overlooked tax breaks, incentives, & strategies that can help:
1. Home Office Deduction: If you use part of your home exclusively for business purposes, the home office deduction can be a huge benefit. It allows you to deduct a portion of expenses such as rent, mortgage interest, utilities, & repairs based on the percentage of your home used for business.
2. Section 179 Deduction: This provision allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. What’s particularly useful is that Section 179 is designed to make purchasing equipment more affordable for small businesses.
3. Bonus Depreciation: This is often used alongside Section 179. Bonus depreciation has been enhanced in recent years, allowing businesses to immediately deduct a percentage of the cost of eligible assets in the year they are placed in service.
4. Qualified Business Income Deduction (QBI): Under the Tax Cuts & Jobs Act, eligible self-employed individuals & small business owners can deduct up to 20% of their qualified business income. However, there are thresholds & limitations based on your type of business & total income.
5. Health Insurance Deductions: If you are self-employed & paying for your health insurance, you might be able to deduct premiums for yourself and your dependents. This deduction is taken from your adjusted gross income rather than as an itemized deduction.
6. Retirement Plans: Contributing to retirement plans such as a SEP IRA, SIMPLE IRA, or a Solo 401(k) can provide significant tax deductions. Contributions reduce taxable income & grow tax-deferred until retirement.
7. Energy Efficient Commercial Buildings Deduction (Section 179D): If your business has installed any energy-efficient systems or buildings, you might qualify for this deduction. It applies to items such as lighting, heating/ cooling systems, & building envelope components.
8. Research & Development (R&D) Tax Credit: This credit is intended to help small businesses that develop, design, or improve products, processes, techniques, formulas, or software.
9. Work Opportunity Tax Credit (WOTC): This credit is available to employers who hire individuals from certain groups that have consistently faced significant barriers to employment, including veterans, ex-felons, & recipients of various forms of public assistance.
10 . Disability Access Credits: Small businesses that incur expenses to provide access to persons with disabilities may be eligible for tax credits. This can include renovations to buildings accessible, purchasing adaptive equipment, or providing services like sign language interpreters.
