Don't miss out on deductions you are allowed to take

Unreimbursed employee business expenses are allowed as a miscellaneous itemized deduction provided they exceed two percent of your adjusted gross income when combined with all your other miscellaneous expenses.

 This fact causes most taxpayers to miss out on the deduction. However, if you keep careful records of all your expenses, you may well meet the two-percent floor. In addition to these requirements, the expenses must be ordinary and necessary business expenses. An expense is ordinary if it is common and accepted in your type of business. An expense is necessary if it is appropriate and helpful to your business.

The most common types of deductible employee business expenses are professional dues, safety equipment required by your employer, and business travel. You may also take deductions for the cost of uniforms and other special work clothes that are not suitable for everyday wear, including the cost of cleaning the clothing. Some other commonly overlooked employee business expenses include:

  • Depreciation on a computer required by your employer.
  • Job search expenses for a new job in your present occupation.
  • Licenses and regulatory fees.
  • Passport for a business trip.
  • Subscriptions to professional journals and trade magazines related to your work.
  • Tools and supplies used in your work.
  • Damages paid to a former employer for breach of an employment contract.
  • Business liability insurance premiums.
  • Home office required by your employer and used regularly and exclusively.
  • Dues to a chamber of commerce if membership helps you do your job.
  • Education that maintains or improves your job skills or required by your employer.
  • Transportation costs for going between job locations in the same work day.

Tax Tips Small Business

  • Turning Interest Payments Into Tax Deductions

    Make interest payments work for you, not against you

    You can deduct business-related interest on your business return if you used the borrowed funds to purchase business supplies, equipment, services, etc. Co-mingling business and personal expenses makes it difficult to determine what amount of the interest is business versus personal. If this happens, the IRS may consider the entire amount as nondeductible personal interest and disallow the deduction. Therefore, keep all business purchases made with loans and credit cards clearly separate from your personal expenses. Use a separate credit card for your business to make it easier.

    Read more ...

Small Business Quick Tip

  • Personal Assets to a Business

    If you have contributed personal assets, such as a computer or vehicle to your business, the lower of the fair market value or your cost basis of these assets qualifies as a business deduction, subject to depreciation limitations, beginning with the date of conversion.
Monday, 18th March 2019
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Tax Tips Personal

  • Converting a Traditional IRA to a Roth?

    You may want to wait

    At some point, taxpayers who have a traditional IRA may wish to convert it to a Roth. Roth IRAs are more flexible in that there are no required minimum distributions when the owner reaches age 70 1/2. In addition, qualified distributions from a Roth IRA are not taxable.

    Read more ...

Personal Quick Tip

  • HSA Contributions

    Contributions to a health savings account (HSA) must be made by the due date of your tax return excluding extensions.