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3 Commonly Misunderstood Tax Deductions

By January 29, 2024Tax Strategy, Taxes

Hey there, fellow business owners! Today, we’re going to demystify some common tax deductions that can sometimes be a bit of a headache. Buckle up; it’s time to talk tax!

 

 

1. The Scoop on Writing Off Your Car

 

Car expenses are a super common question we get. Can you write off your car? Absolutely! Now, there are two ways to do it – actual expenses or the mileage deduction. Don’t be fooled; even if you opt for actual expenses, you’ll need a mileage log so we recommend tracking milage no matter what. You can then check the Standard Milage Deduction and deduct that from your taxes.

 

2. Education Expenses – A Business Owner’s Ally

 

Education isn’t just for students. In fact, it might be even more important for business owners. The IRS defines education expenses as “anything that maintains or improves a skill crucial for your current work”. It’s not about getting another degree; it’s about enhancing what you’ve got. Keep in mind, if it veers into a skill for a new trade or business, there are different rules. But if it betters your current game, write it off.

 

3. Home Office Deduction vs. Corporate Rent Strategy

 

The home office deduction – a classic, right? Well, not exactly. While it’s common, it might not be your best bet. It tends to trigger IRS scrutiny and doesn’t always yield a significant tax break. A much better option is the Augusta Rule, aka Corporate Rent. Rent your house to your business for up to 14 days per year, and voila! A smarter strategy that often translates to better tax savings.

 

For more information on everything we’ve quickly covered, watch the video below:

 

 

Remember, the tax code is your ally. If you’re navigating these deductions and feel a bit lost, don’t worry – that’s what the pros are for. Reach out to us, and let’s keep more of your hard-earned money where it belongs – in your pocket, instead of the IRS’s.

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