While popular deductions like mortgage interest, charitable contributions, and medical expenses are well-known, many lesser-known write-offs exist that could significantly reduce your tax burden. At Froehling Anderson, we understand the importance of maximizing deductions to optimize your tax strategy. Here, we unveil some of these lesser-known personal and business tax write-offs that could potentially save you hundreds or even thousands of dollars.
Home Office Deduction: If you use a portion of your home exclusively for business purposes, you may be eligible to deduct related expenses such as utilities, internet bills, and even a percentage of your rent or mortgage interest.
Business Use of Your Car: Do you use your vehicle for business purposes? Whether you travel to meet clients, make deliveries, or run errands related to your business, you may be entitled to deduct the mileage or actual expenses incurred. It’s crucial to keep a detailed log of your business-related travels to substantiate this deduction.
Education and Training Costs: Investing in your professional development can be financially rewarding come tax time. Expenses related to workshops, seminars, professional courses, and even subscriptions to industry publications may qualify for tax deductions, provided they directly relate to your current business or profession.
Health Savings Account (HSA) Contributions: Contributions to an HSA are tax-deductible, and the funds can be used to pay for qualified medical expenses tax-free. Maximizing your HSA contributions reduces your taxable income and allows you to save for future healthcare costs.
Start-Up Costs: If you’re starting a new business, you can deduct certain start-up costs, including market research, advertising, and professional fees. However, these expenses must be incurred before your business begins operating.
Energy-Efficient Home Improvements: Eco-friendly upgrades to your home benefit the environment and your wallet. Qualifying energy-efficient improvements such as solar panels, energy-efficient windows, and insulation may entitle you to tax credits or deductions.
529 College Savings Plans: Are you planning for your children’s education? Depending on where you live, contributions to a 529 college savings plan may be deductible from your state taxes. Additionally, earnings in a 529 plan grow tax-free as long as the funds are used for qualified education expenses, providing a valuable tax advantage.
Depreciation Deductions: For businesses that own assets such as equipment, vehicles, or property used for business purposes, depreciation allows for the gradual expensing of the asset’s cost over its useful life. This deduction can significantly reduce taxable income, providing a valuable tax benefit over time. However, navigating the complexities of depreciation rules and methods requires careful consideration and expertise.
Cell Phone Expenses: The cost of business-related cell phone use can be deductible as a business expense. This includes both the phone itself and monthly service charges, provided the phone is used primarily for business purposes. To support this deduction, detailed records of business calls and usage are essential.
Bank Fees: While bank fees may seem like an unavoidable cost of doing business, they are often deductible as ordinary and necessary business expenses. These fees can include charges for account maintenance, wire transfers, and overdrafts, among others. By carefully tracking and categorizing bank fees, you can deduct them from your tax return, thereby reducing your taxable income.
Maximizing deductions requires careful planning, documentation, and a thorough understanding of the always-changing tax code. At Froehling Anderson, our team of tax experts is dedicated to helping you navigate the complexities of tax law and identify every available deduction. Don’t leave money on the table—contact us today to ensure you’re taking full advantage of all available tax write-offs.
