Tax Deduction Research Paper
Business owner, if you've ever wondered why you're paying so much in taxes, one reason may be that you're not investing enough in your company, or if you are investing, you're not claiming all the deductions you are entitled to.
There can be other reasons too, such as you're not paying as you go, your business has not been established as the correct entity type for your particular business, and you aren't properly planning. Many business owners, however, don't realize, how much they can save on taxes by investing more in their business and claiming the tax deductions the law allows. By spending a few hours to understand all the deductions you are entitled too, you can save thousands of dollars.
Is Your Business a Startup?
First, if your …show more content…
You can't deduct the entire cost of the purchase in the year it was purchased. Instead, you will depreciate the times and deduct a portion of the cost annually on your tax return. To save more and deduct more in the year the item was purchased, use the special depreciation allowance. You can take 50 percent of the cost of the item as a deduction the year the item is purchased. The rule will apply to almost anything tangible you purchase.
In addition, you might be able to deduct 100 percent of the cost of of business property purchased using the Section 179 Deduction. This is for all tangible property purchased for a business. If the property is residential property, you can't deduct …show more content…
The Lifetime Earning Credit is worth up to $2,000 per year (as much as 20 percent of $10,000 spent on post-high school education). This pays for educational and college expenses to improve your job skills. In addition to this deduction, the costs of a class or seminar to improve or maintain your skills are also deductible.
Do You Have a Home Office, Besides an Office at Your Place of Business?
If you do some of your work at home, you can possibly deduct some of your every day living expenses. While you can't deduct solely a desk in one room, if you have converted that room into an office, you can. In that case, you can deduct insurance, mortgage interest, repairs, depreciation, and utilities.
Contribute to a Retirement Account
Once established, more of your business income can be sheltered from taxes by contributing to a U.S. IRA (Individual Retirement Arrangement) account for you and your spouse.
You can contribute as much as $5,500 annually. If you consider yourself self-employed, retirement accounts such as SIMPLE IRAs (Savings Incentive Match Plan for Employees) and SEP (Simplified Employee Pension) accounts can be established. This will allow you contribute as an employer and as an individual, which can double the amount you can put in
There can be other reasons too, such as you're not paying as you go, your business has not been established as the correct entity type for your particular business, and you aren't properly planning. Many business owners, however, don't realize, how much they can save on taxes by investing more in their business and claiming the tax deductions the law allows. By spending a few hours to understand all the deductions you are entitled too, you can save thousands of dollars.
Is Your Business a Startup?
First, if your …show more content…
You can't deduct the entire cost of the purchase in the year it was purchased. Instead, you will depreciate the times and deduct a portion of the cost annually on your tax return. To save more and deduct more in the year the item was purchased, use the special depreciation allowance. You can take 50 percent of the cost of the item as a deduction the year the item is purchased. The rule will apply to almost anything tangible you purchase.
In addition, you might be able to deduct 100 percent of the cost of of business property purchased using the Section 179 Deduction. This is for all tangible property purchased for a business. If the property is residential property, you can't deduct …show more content…
The Lifetime Earning Credit is worth up to $2,000 per year (as much as 20 percent of $10,000 spent on post-high school education). This pays for educational and college expenses to improve your job skills. In addition to this deduction, the costs of a class or seminar to improve or maintain your skills are also deductible.
Do You Have a Home Office, Besides an Office at Your Place of Business?
If you do some of your work at home, you can possibly deduct some of your every day living expenses. While you can't deduct solely a desk in one room, if you have converted that room into an office, you can. In that case, you can deduct insurance, mortgage interest, repairs, depreciation, and utilities.
Contribute to a Retirement Account
Once established, more of your business income can be sheltered from taxes by contributing to a U.S. IRA (Individual Retirement Arrangement) account for you and your spouse.
You can contribute as much as $5,500 annually. If you consider yourself self-employed, retirement accounts such as SIMPLE IRAs (Savings Incentive Match Plan for Employees) and SEP (Simplified Employee Pension) accounts can be established. This will allow you contribute as an employer and as an individual, which can double the amount you can put in