Common Professional Deductions

Taxes can be one of the biggest expenses that anyone in a professional environment encounters. If you’re one of those professionals, there are many that can help you save. Unfortunately, you may not know some of them exist at all, or be aware of what records you should keep to claim certain . To maximize your savings at tax time, familiarize yourself with the following ten :

  • Operational : Any costs you incur to keep your business operational on a daily basis can likely be your largest source of deductions when you file your return. Things like rent, supplies, and salaries can all be deducted, along with virtually any other “ordinary and necessary” costs.
  • Business : if you host meetings with clients, marketing events, or other business conferences, you may want to combine business with entertainment. Professionals can deduct half of expenses incurred for business related entertainment. This deduction was one of the most misused, and therefore the IRS has put strict regulations in place about the type and amount of expenses that can be deducted.
  • Local : Transportation expenses that are necessary and ordinary for business purposes can be deducted, regardless of the method of travel. You don’t even have to own the vehicle you use, as it can also be leased. However, the IRS focuses on travel expense deductions, especially for small businesses, so it’s important to follow all rules.
  • Long Distance Travel: Overnight business trips can require airfare, hotel bills, and other fees, though they can be deducted under certain conditions. This deduction is scrutinized by the IRS, so you’ll need to keep accurate records of your expenses, and know what is deductible.
  • Long-term Assets: Business property that will exist for longer than a year is considered a long term asset. Things like furniture, computers, trade tools, books, automobiles or buildings are al examples of this type of asset. Long-term can either be deducted through depreciation, or by filing Section 179 with your tax return to get the entire cost in a single year.
  • Deduction: For business people who work from home, there is a home office deduction that can help save you money. The rues of this deduction can be stringent, and are based on the type of business and how you claim the deduction.
  • Outside Office: Most professionals work outside the home, in a separate office that is rented or owned. These types of offices have expenses that are virtually all deductible, from rent to maintenance.
  • : Business owners are granted the privilege of deducting the cost of health insurance from their taxes. You can also deduct nonprescription medications, eyeglasses, and other health costs that aren’t covered by insurance.
  • : Retirement savings can be a great deduction for business owners. The government allows special plans for small business owners, which can increase the amount that you are able to save through a tax deferred account.
  • Hiring : There’s a chance you can deduct expenses related to hiring employee. If you pay an employee $40,000 annually, you’ll most likely receive a $40,000 tax deduction. Independent contractors who work for your business can also be deducted as an operating expense.