6 Tax Deductions You Won’t Want To Miss for your North Bethesda Business
For North Bethesda business owners at tax time, tax deductions are vital for offsetting the cost of keeping the doors open. Here are six legitimate deductions small business owners may overlook that can lessen their tax burden.
Babysitter Expenses
In some limited scenarios, you may be able to deduct the expenses you pay your babysitter. While you can’t get a tax break for going out on a Saturday night and leaving the kids at home, you can write off the cost of a babysitter in certain scenarios. For instance, if you’re looking for work, actually at work or if you’re a full-time student, you can apply this deduction. You’ll likely need to provide lots of documentation about who you are hiring to watch your kids, and that you aren’t simply trying to write off an everyday babysitter to get a tax deduction.
Out – of – Pocket – Expenses – For – Charities
Most taxpayers are aware that they can deduct the value of goods or cash donations they make to charities. However, there are other expenses you can deduct that may not immediately register as charitable donations. For example, if you buy ingredients to make cookies or cakes for a charity bake sale, the IRS allows you to deduct the cost of those ingredients as a charitable donation.
Earned Income Tax Credit
The Earned Income Tax Credit is one of the most well-known tax benefits. It provides a tax credit for taxpayers at qualifying income levels and typically with dependents. However, according to the IRS, about 20% of those who are eligible for the credit every year still don’t claim it. As the credit can be as large as $6,728, this is a benefit most taxpayers should investigate, particularly low- and mid-income earners.
Employer Social Security Taxes for Self Employed Workers
One of the major downsides of being self-employed is that you have to pay both the employer and employee portions of Social Security tax. As each half amounts to 7.65%, self-employed workers must contribute the entire 15.3% themselves. However, you are allowed to deduct the 7.65% employer portion of Social Security taxes, which can help reduce the sting a bit.
Post Graduate Educational Expenses
While some college expenses are tax-deductible, many taxpayers assume that once they graduate, such deductions are no longer allowable. The reality is that the IRS grants a lifelong learning credit amounting to 20% of your educational expenses every year, with a maximum credit of $2,000 annually. The credit does phase out based on MAGI, however, from $59,000 to $69,000 for singles and $118,000 to $138,000 for joint filers
K-12 Educational Materials Paid For By Teachers
Teachers have long been lauded for working long hours with low pay, but there is at least a tiny bit of relief that some of them can claim at tax time. Recognizing that many teachers dip into their own pockets to help pay for educational supplies for their students, the IRS allows teachers to deduct up to $250 per year for such costs.
Take Away
The key to taking advantage of these tax breaks? Keeping excellent records. While you don’t always have to provide receipts for deductions, businesses need records of the expenses in logs or ledgers. Keeping good records can also prevent you from missing out on potential savings and leaving hundreds or even thousands of dollars on the table.
Hiring a knowledgeable CPA can make ALL the difference in the world when it comes to finding applicable deductions for you! North Bethesda CPA is here to help.
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