The ins and outs of justifiable business expense tax write offs

The ins and outs of justifiable business expense tax write offs

Knowing what business tax write-offs are legal and justifiable is incredibly confusing for even the most tax-savvy small or mid-size business owner.The tax code of the Internal Revenue Service is not an easy thing to navigate; and the end result is that most of the time business owners actually do not take all of the business tax write offs that they are entitled to.This is sometimes because businesses are afraid of breaking the law.And often business owners simply are not aware of the tax write offs that they are eligible for.

The best way to know what businesses expenses you can legally claim as tax write offs is to consult an accountant who specializes in business taxes.This CPA knows exactly what you as a business, whether a small, a large, a mid size, or a home business, can claim.A tax accountant can also ensure that all of your business write offs are legal.

Here are the major areas where businesses fail to take the write offs that are justifiable and legal.Look carefully at these areas to make sure that you are taking all of the tax write offs that you are entitled to.There are others, of course, but these are the major areas that businesses overlook.

1.Different equipment expenses

Did you know that you can deduct your different equipment expenses?The amount that you can claim as a deduction is based on the depreciation of the equipment.Examples of equipment that you can write off includes your telephones, your furniture, your computers, and various other equipment.As long as you have bought the equipment instead of renting the equipment.

There is another part of the IRS code that you should know about as a small business.Section 179 or the IRS tax code states that you can claim up to $108,000 as a deduction for just one piece of equipment or different items of equipment as long as you begin to use that equipment before the end of the year.These items may be new, they may be previously owned, but they simply have to be new to your company.The purchase of that equipment can also be financed.

2.It pays for your business to go green.

The IRS implemented in 2006 a new deduction for commercial building owners.If you own a commercial building, if your building/s meet particular energy standards, you can get deductions.If your building meets an energy savings target of at least 50 percent, you can claim a deduction of up to $1.80 per square foot.

In order to claim your deduction, you have to be able to get a certification that your commercial buildings will be able to meet the energy savings standards.Visit www.efficientbuildings.org/about_the_provision.html in order to find out how you can achieve that certification and how you can claim the deduction.

3.Domestic production activities

The domestic production activities deduction will let you take off 3% of your net profit if you meet the following criteria:
produce at least something in the United States
production includes manufacturing, leasing or selling items that have been grown, created, or manufactured in the country, construction and/or renovation of both residential and commercial buildings, engineering and architecture projects for construction within the U.S., and anything having to do with film produced in the U.S.
The deduction cannot be more than 50% of your W-2 wages.

4.Depreciation for components of buildings
You can take accelerated depreciation for parts of commercial buildings that are not integral to the structure of the building.This could be special flooring or wiring within your building, or something akin to this.Find an engineer who can perform a cost segregation study for you.