What is a Tax Write-Off?
Have you ever heard someone say, “We can write that off at the end of the year”? A write-off is any qualifying expense you incur while running your small business. These can be subtracted from your revenue, which in turn lowers your taxable income, saving you money.
For example, if you run a small business that repairs computers, you can write off expenses related to the tools and supplies you need to perform repairs, as well as most of the costs related to your office, including the rent, telephone and utilities. Advertising and promotion costs are deductible, too. If you make house calls, you can write off the cost of transportation.
For any employees you have, you can deduct their compensation along with the cost of the insurance you provide.
And if you decide to attend a seminar to learn a new skill or train your employees, your travel and lodging costs, your meals, and the cost of the seminar may all be deductible.
There are exceptions, so you’ll want to do your research. For example, your daily commute is not considered a travel expense. And if you work out of your home, you can write off a portion of your property taxes and utilities, but only the percentage that is used exclusively for your business.
You’ll also want to be sure to keep your receipts organized for anything you plan to write off.
Since the rules for deductions can be complicated, it’s a good idea to consult a tax professional. The good news? That service fee can be written off, too!
For a complete list of what qualifies as a deduction, visit irs-dot-gov and look for Publication 535, Business Expenses.