8 Expenses You Probably Didn’t Know Were Deductible (& A Tax Time Freebie!)
Whether you’re just answering the call of the freelance life or are a seasoned soloprenuer, we’re offering some free advice about expenses. Knowing what you can and can’t deduct will be massively beneficial come tax time. Sure, expenses aren’t our favorite topic, but there’s more to write off than you think. Tracking business-related eats, home office supplies, and the necessary tools you need to do your thing will save you some hard-earned cash and sanity when crunching the yearly numbers.
PayPal Fees —
Listen up, PayPal users. Your go-to system for invoicing clients and collecting dough takes a slice of that monetary pie. You can get it back, though! Credit card convenience fees are deductible because they're essential to conducting business. In other words, document and expense those PayPal fees!
Coffee with a Client —
If you’re one of those professionals that refuses to discuss business without a beverage in hand, you’re in luck. Start keeping a coffee log and receipts because you can expense 50% of your cappuccino spend. That goes for those client meals too!
First-year Start-up Costs —
What do we mean by start-up costs? Anything that contributes to getting your business off the ground. Levitation spells don’t count. Things like advertising and promotion, borrowing costs, equipment and supplies, insurance, license and permit fees, and research expenses too. You can deduct up to $5,000, which should make you feel pretty good right now.
Client Gifts —
Brainstorming client gift ideas? Before you shoot for the moon, stick to the magic number. Anything under $25 per person is expensable! There are plenty of thoughtful (and useful) items fit for showing appreciation to those keeping your books full and hands from idling. Check out 25 cool things we found within the write-off range!
Tax Prep Fees —
Sick of tax talk? Stay with us. The more prepared you are, the more money you’ll save in the long run. If the act of filing taxes makes you literally cringe, hire a professional. Yes, this costs money, but it’s also deductible. Other deductible tax prep fees include tax software, planning advice, representation in tax audits, and other legal counsel. Basically, if it’s tax-related, there’s a good chance you can deduct it.
Bonus Depreciation —
We appreciate depreciation. This accelerated tax-saving tool helps your business recover some of your property’s wear and tear or money spent on necessary upgrades. This annual allowance usually covers vehicles, furniture, equipment, copyrights, and computer software. Bonus depreciation lets your business cut in line. That means you can take an immediate first-year deduction on the purchase of qualifying property in ADDITION to other depreciation. Read up on requirements for depreciation deduction.
Hardware & Software —
Whatever tools you’re using to slay the work day are eligible for deduction. These include your laptop, Point of Sale (POS) system, tablet, camera, Adobe Suite, Microsoft Office, etc. Praise those magic devices and programs, but be sure to write them off. You should always write off the percentage that you use your tools, specifically for business. So, if you use for your laptop 80% of the time for work and 20% of the time for leisure, you can deduct 80%. A great way to avoid being audited (yikes!) is to avoid deducting 100% of large purchases, like laptops and ipads.
Staying at the top of your professional game isn’t cheap. Enrolling in advanced courses, studying trends, staying up to date in your field, and educating yourself by attending workshops and other events all add up. Your dedication to being a lifelong learner earns you a financial break.
Bottom line? You work hard. You hustle, and you should regain some of the spend come tax time. Be diligent about noting expenses, and tax time will bring less dread and more cash back. Need more tax assistance? Download our Pesky Tax Time: Quick Guide for free, below!
What are some other sneaky expenses you deduct? Let us know in the comments, below. ⇩
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