7 Things That Are Not Tax Deductible for a Business Owner
One big part of owning a business is knowing how to lower your tax bill using deductions and tax credits. Certain expenses are not tax-deductible for a business owner. Tax laws require that all deductible expenses are acceptable and required for the type of business you’re running.
How Can I Be Sure?
Having an experienced accountant like Venus Michael keeping your books will help you identify all of those qualifying expenses and keep you prepared for the upcoming tax season. Let’s talk about seven of the things the IRS doesn’t consider deductible on your tax return, no matter what type of business you own.
1- Fines, Penalties, & Taxes
Any money you owe to the IRS for federal or state taxes is not deductible. Back taxes or late fees owed don’t count as deductible expenses. Tickets and fines you receive from government agencies cannot be written off on your tax return. If you receive a parking ticket while you’re in a business meeting, that does not qualify as a deductible expense.
2- Business Attire
Specialized uniforms and gear are usually deductible when they are required. Uniforms with the company name or safety gear may be covered. Anything you can wear after work doesn’t qualify as a tax deduction. If you need a new lab coat that is probably deductible but an expensive outfit for your next big meeting isn’t. Looking sharp for business functions is important, but the IRS won’t pay for your expensive suits or dresses.
3- Home Office
There are some specific rules about deductions made for home office spaces. If the room you are using isn’t used exclusively as your workspace, it will not qualify as a tax deduction. If you want to create a nice home office, make sure you follow IRS guidelines so you can deduct the cost as a business expense.
4- Political Contributions
If you decide to support your favorite candidate with a donation, don’t expect the IRS to pay for it. Supporting political leaders that back your industry can be very beneficial to your business, but you won’t be able to use your donation as a tax deduction.
5- Start-Up Costs
Substantial purchases like the equipment you purchase to get your business started are not deductible expenses. Machinery that is brand new and will last many years cannot be written off on your tax return. Eventually, you may find ways to deduct certain expenses as things wear down over time.
6- Commuting Costs
You cannot submit your commute costs as a tax deduction. Your travel to and from home is not a deductible expense. Travel to check up on work sites or clients may be an allowable deduction, but commuting costs are not.
7- Personal or Companion Expenses
Costs for things that you aren’t using strictly for your business are not considered tax-deductible. Leisure trips with loved ones and home phone line bills do not qualify as deductible expenses. If you are bringing a friend along on a business trip, your travel ticket would be an allowable deduction, but your companion’s ticket isn’t.
Be Prepared, Consult a Professional
An experienced professional can help you stay on top of your business taxes. Many expenses that are essential to running a business are non-tax deductible. If the IRS deems them unnecessary, they cannot be deducted. A professional accountant can find all of the deductions and credits your business is eligible for and make tax time a breeze. Call Venus Michael Account-Ability today; she can help determine which tax deductions your business qualifies for.