There are a plethora of write-offs available that will help you keep more money in your pocket and pay less to the IRS. If you're eligible for any of these, don't forget to claim your deduction the next tax season.
If you work from home, you are eligible to write off your home office-related expenses. This includes a percentage of your house rent or mortgage payment, home insurance, maintenance charges, depreciation charges, and other utilities. Besides these, if you purchase items that are strictly for your business, such as a work desk, a computer, a printer, or anything similar, you can write those off. So whether you work out of your own place or a rented one, don't forget to make the most of these available write-offs.
If you work from home, your phone and internet expenses that have been incurred for business needs are eligible for a deduction. But again, you have to keep a tab that you're claiming only the expenses spent on business needs, and not for personal needs. You cannot claim the entire expense on your personal mobile phone, as it's inevitable that you'll make non-work-related calls from your personal number. So in this case, you are eligible for a partial deduction. But if you have a separate phone that's dedicated to your business and is only used for running your business, you can write off its expenses in its entirety.
Did you take any business trips this year? It could be for meeting a prospect or a client, or for acquiring a skill to hone your business skills, you can write it off while filing taxes. For a trip to be eligible, it must be away from the city where your business (or your tax home) is located. Make sure to preserve your records carefully to avoid hassle during tax audits. If you combine your work trip with a personal trip, you can only deduct expenses incurred on business needs. While the entire travel expense for business can be written off, you get only a 50% deduction for meals.
Do you use a personal vehicle for business needs? It's eligible for a write-off. But again, you can deduct only the expenses you have incurred for your business, and not for personal usage. There are two ways you can go about this. The first is to take the standard deduction offered by the IRS. For 2022, the Standard Mileage Rate is 58.5 cents per mile. The second way is to keep a record of all of your vehicle expenses (spent on business purposes only) including miles driven, car registration fees, car insurance, repairs, etc.
If you have made any charitable contributions in the previous fiscal year out of pocket, you can write it off on your deductions. It could be something like dropping off gifts at a children's shelter or providing meal ingredients to a non-profit – these are eligible to be written off. You can also claim vehicle expenses as a part of this deduction (at 14 cents/mile), in case you drove your vehicle for charitable purposes.
Previously, you could claim a deduction on a student loan only if you paid it by yourself. But now, you can claim a deduction even if someone else repaid your loan. The eligible deduction is up to $2500 of the interest amount paid. However, the person (other than the student) paying off the loan cannot claim any deduction, as the loan is not their liability.
To promote the use of green energy, the IRS gives you tax credits when you make your home eco-friendly and energy-efficient. For details about eligibility conditions, refer to the official energy incentives information published by the IRS.
The IRS allows you to deduct expenses spent on educational purposes. This one's applicable only when you take a course or learn a skill related to your field of work, and will help you run your business better. But remember, expenses incurred on learning something new in an unrelated field are not eligible for a write-off.
In the last fiscal year, did you take help from a financial advisor or a tax consultant? Or did you use any application to keep a tab of your expenses? All of these can be written off, so make sure you have your receipts handy.
Self-employed individuals who do not enjoy the benefits of employer-provided health insurance can claim their entire health insurance premium as a write-off. Besides your own premium, you can write off the health insurance premium paid by you for your spouse, children, and dependents.
These are some of the write-offs taxpayers often miss out on, so don't make the same mistake while you file your own taxes! You need to preserve valid documents and receipts furnishing the expenses, so you can defend yourself in case there is a tax audit.
And if all of this sounds too tedious or you don't have the time to sit and spend hours on figuring out your taxes and deductions, Accountants Now is here to help. Our tax experts will take care of everything on your behalf, be it bookkeeping, personal taxes, business taxes, or handling IRS debt. You get top-tier consultation from leading tax professionals, with the entire process streamlined for you to stay worry-free. For any queries, feel free to reach out to us.
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