Top 20 Small Business Tax Deductions 2023: Complete Checklist

When it comes to deducting depreciation, however, there are some restrictions. For example, you can only write off the depreciation for computers and cars over a five-year period. For furniture and appliances, you can write off the depreciation over a seven-year 22 Small Business Tax Deductions Checklist For Your Return In 2023 period. There is no limit to the amount of money you can write off. And if your business experiences losses for several consecutive years, you won’t get penalized. For 2022, meal deductions were cut back to 50% from the 100% we saw the last couple years.

Expenses on cars or vehicles used for business purposes are 100% deductible. Renting an office space or warehouse for your business is 100% deductible. Office supplies such as computers, website hosting fees, paper, subscriptions, printers, pens, and any other work-related software used for business purposes are deductible. You have to ensure that the bills for phone and internet are for work and not personal purposes. If there is a mix of work and personal reasons, you can only write off the cost for business use.

Max out your retirement account contributions

If you don’t meet the required amount for your RMD, you’ll face the harshest IRS penalty around — 50% on the shortfall. Required minimum distributions, or RMDs, are calculated by adding up all of the money in your retirement accounts and dividing by an IRS life expectancy factor. The Securities and Exchange Commission provides a simple calculator that incorporates the latest IRS life expectancy tables. Before donating to anyone, make sure that your contribution will be tax deductible by searching the IRS’ tax-exempt organization database. All valid charities and non-profits will also have a tax identification number that identifies them as tax-exempt. Tax credits for energy improvements aren’t limited to alternative energy.

22 Small Business Tax Deductions Checklist For Your Return In 2023

The following is a brief discussion of the expenses you can deduct. These are the ordinary and necessary expenses of traveling away from home for your business. You are traveling away from home if both the following conditions are met. This section briefly explains the kinds of travel and meal expenses you can deduct on Schedule C. You can also deduct registration fees for the right to use property within a state or local area. You can deduct one-half of your SE tax on line 15 of Schedule 1 (Form 1040).

Consider deferring end-of-year bonuses and payments

This rule applies whether or not you hire others to help you make deliveries. It also applies whether you buy the papers from the publisher or are paid based on the number of papers you deliver. If you administer a deceased person’s estate, your fees are reported on Schedule C if you are one of the following. A short-term lease is a lease (or other agreement for occupancy or use) of retail space for 15 years or less.

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  • The tax credit phases out for businesses with 51 to 100 employees.
  • You must include in gross income compensation you receive during the tax year as a result of any of the following injuries connected with your business.
  • If you borrow money in order to make investments, you can write off the interest paid on the loan.

If you’re frequently on the go, you should definitely look into deducting your travel expenses. For a business expense to qualify as travel, it must be away from the city or area in which you conduct business. You must also be away from your tax home for longer than a full workday. Types of deductible travel expenses include airfare, tolls, taxis and lodging.

common small business tax deductions

If you do not have to make estimated tax payments, you can pay any tax due when you file your return. We welcome your comments about this publication and suggestions for future editions.You can send us comments through Or, you can write to the Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. Don’t send tax questions, tax returns, or payments to the above address. To claim small business tax deductions, it’s important to track and log your expenses throughout the tax year. When you keep meticulous records, it makes your life easier during tax time, and if you were ever audited, you would have proof of those expenses.

  • To qualify under the exclusive use test, you must use a specific area of your home only for your trade or business.
  • Other federal agencies also publish publications and pamphlets to assist small businesses.
  • To make staying on top of documentation easier, download and use the small business tax deduction checklist below to compile all the essentials.
  • The reimbursement you deduct and the manner in which you deduct it depend in part on whether you reimburse the expenses under an accountable plan or a nonaccountable plan.
  • This deduction only applies to a business owner who pays rent on a physical space that is outside of their home.
  • The home office deduction includes the cost of utilities, such as heat, electricity, and Wi-Fi, so those expenses can’t be deducted separately.