Some of the business expenses that you may be able to deduct for your business include:
Training and licensing expenses
Mileage or Actual Expenses for the business use of your car
Marketing and advertising costs
Travel, if you attend any out-of-town conventions, training sessions, or conferences
Meals you pay for when meeting with clients for business purposes. Under IRS guidelines, you can deduct 50% of the cost of business-related meals.
Home office, if you work out of your home. If you have a home office that represents 10% of the square footage in your home, you’ll be able to deduct 10% home costs like mortgage interest, property taxes, rent, and utilities.
The purchase of office equipment, such as a dedicated business computer, printer, smartphone, or fax machine.
Internet and cell phone expenses.
You may be looking for entertainment expenses in the list, however, entertainment expenses like treating your client to a sporting event were eliminated under the new tax law.
The Tax Cuts and Jobs Act (TCJA) of 2017 also made other changes to the tax code. You’ve probably read about much of it in the news, since it almost doubled the standard deduction, eliminated personal exemptions and may have limited other deductions.
But, it also introduced or increased some business-related tax deductions you should know about.
20% QUALIFIED BUSINESS INCOME DEDUCTION
The 20% Qualified Business Income (QBI) deduction is one of the biggest business-related tax changes under tax reform.
For the tax years, 2018 through 2025, the new 20% QBI deduction allows self-employed, S-Corps, and partnerships to deduct 20% of their qualified business income, which is income associated with business activity in the United States.
The Qualified Business Income Deduction is subject to a few limitations based on the type of income, type of trade or business you are in, and the amount of net income you earn, but in general, the deduction is available to eligible taxpayers whose 2018 taxable incomes fall below $315,000 for joint returns and $157,500 for other taxpayers.
If your income is above the $157,500/$315,000 taxable income thresholds, your 20% QBI deduction may be limited if your business is considered a service type business like the health, law, or accounting category to name a few. Any business where the principal asset is the reputation or skill of the owner is also included.
INCREASE IN EQUIPMENT DEDUCTION AMOUNTS
If you buy equipment in the course of doing business, the new tax law increased the maximum deduction from $510,000 to $1,000,000 for business equipment like computers, printers, and office furniture. The amount you can deduct is still limited to the amount of income from business activity..
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