Top 10 Tax Write offs for 2020

Having your own business can mean many exciting things, from acting as your own boss, having control over your products and services, and making your income from your hard work. Along with that, the perk of investing in your business and what to use as a tax write-off for what you spend. This can make the following a bit more complicated, but much more worth it after seeing the numbers come back. So, keep track of your spending and save those receipts.

How Do I get a 2020 Tax Write-Off?

First off, you need to know what a write-off means to start organizing yourself for this task. Simply put, a write-off consists of any legitimate expenses that can get deducted from your business’s taxable income on your upcoming tax return. Using the term “write-off” means the reduction of something financially. During tax season, people write-off or reduce their taxable income by writing-off these expenses. Your taxable income consists of the amount of your income that the government will tax.

There’s a ton of things you can do to write-off expenses. Since there’s no clear line saying what you can and cannot write off, just remember that it must somehow directly relate to your business.

2020 Tax Write-Off Examples

To give you a more general idea of what businesses will write off, take some of these into consideration. Each of them directly relates to the business to function and provide services. The IRS defines tax write-offs to be “Ordinary and Necessary” to the business.

Advertisement and Promotions 

When investing in advertising for your company, it’s completely deductible. This means getting someone to create logos and designs for you, printing business cards or brochures, social media ads, and campaigns. These are all ways to help your business and are crucial to call attention to your company.

Business meals Tax Write Offs for 2020

Business meals are a little tricky since you can only deduct 50% of these costs. When you buy food for those late nights at the office or provided at company parties and events, this comes into effect. The food must qualify to fall under this category. It can’t list as anything lavish or extravagant. Keep the purpose written on the back of the receipt to remember why the purchase was made easily.

Business Insurance 

You can deduct the renter’s insurance you have for your home office or portion of your home to make your business run. It can even get used for rented buildings for your business as well.

Bank Fees and Interest 

If your credit card or bank charges monthly or annual fees for service, transfers, or overdrafts, then they all qualify. Even merchant and transaction fees applied to third party processors will qualify as deductible. Even the interest for your business card can get deducted if it’s only used for business purposes.

Business Travel Expenses 

Anything involving travel with your business can get used as a write-off. This means flights, places to stay, car usage, and more. There’s a lot of information on business expenses on the IRS website.

Depreciation 

This can come into play if you’re writing off big items like cars or equipment over the item’s lifetime instead of having the deduction all in one year. Here’s a formula created for this to make it simpler to calculate.

Depreciation = Asset Total Cost / Asset Lifetime

Education 

If you’re looking to add value to your expertise in your business, education can get deducted. To see if your classes will qualify, the IRS will determine if they improve skills relevant to your business. This can even count for workshops, seminars, webinars, subscriptions, and books.

Home office Tax Write Off 2020

A lot of businesses are working from home right now, and this can also get deducted. If you have a home office set up and a specific area for your work, then you need to look at the square footage. This area must only get used for work, though. You don’t have to devote an entire room, but it should be clear that only work happens here. Keep some photos to back up your workspace if you plan on doing this.

Salaries And Benefits

Almost every business out there will have a staff. No matter how big or small, that money probably comes from the business pocket. Take in mind salaries, benefits, bonuses, anything you pay out your employees is deductible. Even freelancers and contract works fall under this category.

Have Ever Write-Off For Tax Time 

Overall, we could continue the long list of expenses, but these are some of the most common and important write-offs you will come across. We help you with your business accounting services. If you have any questions or need some advice, contact us so we can help you. With 20 years of experience, we can help break down your write-offs for your business and make every tax year smooth and simple.