The Small Business Write-Offs Most Owners Miss

Small business write-offs most owners miss, by Robert Allen Bautista, Kansas City tax preparerMost small business owners claim the obvious deductions and stop there. The ones they miss are small one at a time, but together they can add up to thousands.

The test for any business expense is simple: it has to be ordinary (common in your line of work) and necessary (helpful and appropriate for the business). Pass that test, keep the proof, and it counts.

The write-offs I see missed most often:

  • Home office. The space must be used regularly and exclusively for business. The simplified method is $5 per square foot, up to 300 square feet. The regular method can be bigger when housing costs are high.
  • Phone and internet. Deduct the business share, and write down how you figured it.
  • Self-employed health insurance. Taken on Form 1040, not Schedule C, so it's easy to forget. Not allowed for months you could have joined an employer-subsidized plan.
  • Card and payment-app fees. Report the gross sale and deduct the fee separately.
  • Education that improves skills you already use in your business.
  • Startup costs, up to $5,000 in the first year, with the rest spread over 180 months.

Business meals are generally 50% deductible. Entertainment generally isn't deductible at all.

The full breakdown, with worked numbers, is on my Substack: The Write-Offs Small Business Owners Miss.

Robert Allen Bautista is a Kansas City tax preparer and accountant, PwC alum, and author of The Small Business Tax Code, Unlocked. Sources: IRS Publications 587, 535, 463; Form 7206 instructions. General information, not advice for your situation.

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