As the end of the year approaches, it’s time to start thinking about tax preparation again. Whether you operate a contracting business in New York, New Jersey or anywhere else in the country, you may qualify for many different tax write offs that could add up to significant savings.
7 Tax Write Offs to Capitalize on
1) Business and Health Insurance
The cost of insurance premiums that are related to running your business, such as general liability and property insurance, are entirely tax-deductible. However, auto and disability insurance are not.
As a self-employed individual, you can deduct the costs of your personal health insurance premiums as long as you meet this criteria:
- Your business makes a profit in the tax year you are claiming the deduction.
- You are not eligible to enroll in an employer’s health plan or your spouse’s plan.
Although your own salary is not tax-deductible, you may be able to deduct your employees’ wages, including salaries, commissions and bonuses.
3) Transportation and Travel Expenses
Many of contractors’ transportation costs are eligible for tax write offs. You can deduct the mileage or actual expenses for business-related trips during the day as well as those made between multiple job sites. For example, you may deduct the expenses for trips to pick up supplies or attend off-site meetings.
4) Entertaining Clients
If you are entertaining a client, you can also deduct up to 50 percent of the entire meal expense, including sales tax and tip. However, IRS rules state that you must conduct business either directly before, during or after the meal.
5) Supplies and Equipment
The cost of normal replaceable supplies, like those used for cleaning, may also be deducted. However, construction materials, like concrete, are not eligible for a write off.
6) Legal and Professional Services
Any fees you have paid to attorneys, tax accountants and other professionals may be deducted on your tax return. But, the costs of paying employees to complete these same types of services are not eligible.
7) Advertising Spending
Some of the costs of promoting your business may also be tax-deductible. You can write off the cost of promotional items, like branded materials, and the cost of hiring a company to design and create them. But, you may not deduct non-branded materials or business gifts.
By taking advantage of these seven tax deductions for contractors, you will put more money back in your pocket that you can use to grow your business.