Tax Saving Strategies to Use This Tax Season!
The Most Popular Business Tax Write-offs and Tax Saving Strategies to Help You Save BIG This Tax Season!
If you’re ready to start saving hundreds of dollars on taxes each year, you may want to keep reading!
Common Overlooked Tax Write-offs
Did you know that small business owners can turn common everyday expenses into business tax deductions?
Small business owners overpay in taxes because they’re often not aware of the many tax benefits available to them. Yikes! Here are some often overlooked (but crucial!) business tax deductions you can use to lower your tax bill and start saving a ton of money on taxes.
If you’re a small business owner then you probably use a space in your home for business. This can be a home office or a spare room, garage, or basement used to store inventory. The thing is, since you’re using a space in your home for business, parts of your home expenses can be deducted.
So let’s say your home office is 30% of your homes total square footage. This would mean that 30% of your home expenses could then be deducted as a home office business expense. If your rent is $1,000 a month, then you’ll be able to deduct $300 a month in home office expenses. 30% of your home maintenance expenses and even utilities may now be deductible.
This can result in huge tax deductions for small business owners. And if you purchased furniture for your home office like a desk, chair, or even a filing cabinet, then you’ll be able to deduct these expenses as well!
Don’t forget to deduct your subscription payments as business expenses! This is another one of those commonly overlooked tax deductions. For example, if you use Adobe pdf for business documents, your Adobe subscription may be deductible! This includes any Microsoft subscription fees, website hosting fees, and even professional membership fees.
You’re probably always emailing, texting, or calling your customers/clients on your cell phone. This is considered a business expense! If you use your phone for business then you can deduct your business use as a business expense. It’s important to keep in mind that you must allocate out any personal use from your deduction.
For example, if your phone bill is $100 a month, but you use your phone 50% for business, then you’ll be able to deduct $50 ($100*.50) a month as a business deduction. This can also apply to the cost to purchase a phone for business or any necessary accessories needed for business purposes.
Deductions for travel related expenses can be a HUGE area for potential tax savings. Heading to a conference to network with like-minded individuals in your industry? This could be a tax deduction! Going out of town to attend a training to improve your skills? This could also be a tax deduction!
The things is, when you travel for work, almost all of your expenses while you travel may be deductible. Your flight, hotel costs, transportation to/from the airport, and even business meals can be deductible! Travel costs are usually pricey and are a great way for small business owners to lower their taxable income.
Access more small business tax write-offs HERE!
Key Tax Season Reminders
Beneficial owners - Starting January 2024, you must file information with FinCen about the individuals who own or control a company. In 2021, Congress passed the Corporate Transparency Act, which creates a new beneficial ownership reporting requirement to make it harder for bad actors to hide or benefit from shell companies or other opaque ownership structures. Starting January 2024, you must file information about the individuals who directly or indirectly own or control a company with FinCEN (also known as the Financial Crimes Enforcement Network). Companies created before Jan 1, 2024, will have until Jan 1, 2025, to file the initial beneficial ownership information report. Companies created on or after Jan 1, 2024, will have 90 days to file. Companies created on or after Jan 1, 2025, will have 30 days to file.
1099K Rule Change Update - For those who don't know, payment processors like Stripe, Cashapp, Venmo, and Paypal will start sending out tax forms called a 1099-K to anyone who processed more than $600 in business income. After receiving feedback from taxpayers, tax professionals, and payment processors, and to reduce taxpayer confusion, the IRS announced a delay of the new $600 Form 1099-K reporting threshold for payment processors for calendar year 2023. This means that the IRS will treat 2023 as an additional transition year and you’re only required to get a 1099-K if you made more than $20,000 in business income for the year. 2024 will have a threshold of $5,000 as part of a phase-in to implement the $600 reporting threshold.
Tax Return Deadlines - Individual tax returns are due April 15th. If you file an extension, your return is due October 15th. As a reminder, a tax extension does not give you additional time to pay your taxes. You must pay all taxes due by April 15th to avoid fees and penalties. If you will be filing an S Corporation return or Partnership return, your business return is due March 15th. (Tip: You have until April 15th 2024 to contribute to an IRA and have it count towards the 2023 tax year).
Organize your Tax Documents - Most income is taxable, including unemployment compensation, refund interest and income from the gig economy and digital assets. Taxpayers should gather Forms W-2, Wage and Tax Statement, any 1099s, miscellaneous information, and other income documents before filing their return.
Tax Filing Toolkit - The Pachira Financials Tax Filing Toolkit is available for free during tax season to help small business owners looking for free tax tips, resources, and money saving strategies. For more updates on Pachira Financials tax filing resources check out our Taxes Page.
Tax Hacks To Lower Your Tax Bill
Don’t forget these key tax strategies and reminders:
If you get a 1099, you don’t have to pay taxes on the total amount. Don’t report your 1099 income without including your tax deductible write-offs.
If you forgot to max out your retirement accounts, you still have time. The deadline to contribute to an IRA is 04/15/24.
Check for state and local tax benefits. For example, some states provide tax benefits for college savings plans. The IRS isn’t the only tax agency you should be aware of!
If you buy an electric vehicle you can receive huge tax incentives like the clean vehicle tax credit. You can get up to $7,500 from the IRS.
If you rent your primary residence for less than 15 days a year, you don’t have to pay taxes on the rental income. Rent your primary residence to your business to store inventory or host an event. The rent you pay yourself is deductible for your business and nontaxable to you!
Hire your child and pay them less than $13,850 a year. They don’t have to pay any taxes on the income since the standard deduction is $13,850 and you can deduct the total amount as a business expense.
Want more Tax Tips, Resources, and Support? For a limited time the Pachira Financials Tax Filing Toolkit is completely free to help small business owner’s prepare for tax season. Get yours here!
Remember to always consult with a financial advisor or tax preparer prior to making any tax or financial decisions.
