Business Tax Deductions from A to Z
Common Business Expenses You Can Deduct
Here is a list of common business tax expenses you can deduct, listed from A to Z. In some cases, expenses might need to be amortized (deducted over a period of several years), if they are startup costs or if they are related to the purchase of business equipment.
Some business deductions are more complicated than others, and some deductions must be taken with caution, because they can be misused or result in an audit 'red flag."
This article includes changes in business tax deductions included in the 2017 Tax Cuts and Jobs Act, effective for 2018 business tax years and beyond.
Disclaimer: The information in this article and on this site is intended to be general in nature, and is not intended to be tax or legal advice. Business taxes are complicated, tax laws change, and each business situation is unique. Consult with your tax advisor before making any business decisions or submitting business expenses on your tax return.
You can deduct expenses for a bookkeeper, accountant, CPA, or tax adviser to help you manage your finances and deal with tax issues.
You can deduct costs for advertising, publicity, and other marketing activities. This includes the cost of meals and entertainment at public events for advertising purposes.
This article on advertising costs also includes expenses that are sometimes confused between advertising costs and selling costs.
Deducting costs for business reference books, magazines and professional journals, and business-necessary software. These costs are deductible under the miscellaneous expenses category.
Deducing expenses for business use of a vehicle is complicated. You can deduct the cost of driving for business purposes, but you must keep good records.
Two options are available for costs of business driving: a standard IRS mileage rate that changes yearly, or actual expenses. This article explains the details of how to deduct business driving expenses.
You can deduct commissions paid to employees and to outside contractors. This article describes what payments are deductible to your business, and how to include payments on the recipient's tax return.
Your business can deduct dues for clubs and organizations, but not for social clubs (like golf clubs) or non-business clubs like airline clubs at airports. The club or organization must have a specific business purpose, like a trade organization or a professional organization.
Deducting the cost of employee education and training expenses for employees and for yourself as a business owner is allowed by the IRS. These costs are considered working condition fringe benefits,
Deducting the costs of providing employee benefits, such as health plans and retirement savings plans. Most employee benefit costs are deductible but there are some restrictions.
This article on employee benefits explains
- The requirements for these benefits to be deductible to your business
- When these benefits are taxable to employees
- How to report these benefits to employees, and
- How to include them in your business tax form.
Don't forget other employee expenses. The list of other employees expenses you can deduct includes:
- Tools and Equipment
- Subscriptions to trade, business, and professional publications, and
- Meal expenses, but entertainment expenses are no longer deductible.
Your business can the cost of business insurance, including professional negligence, business coverage, life insurance for key employees, and liability insurance.You can't deduct the cost of life insurance for someone in your business if you (the owner) are a beneficiary. Read this article on deducting insurance expenses for more details.
Deducting the cost of interest on debts of a business has been limited by the 2017 tax law. Beginning in 2018, businesses with average annual gross receipts of $25 million or more have their interest rate deduction limited to 30% of the company's EBITDA (earnings before interest, taxes, depreciation, and amortization).
Read this article on deducting business interest to find out what types of interest are deductible and which are not.
You can deduct the cost of legal and professional fees for your business. Any personal services provided by these professionals are not deductible. That means if your business tax return is part of your personal tax return, you will need to separate out the cost and pay the business part (for Schedule C, for example) separately.
If you have had a loss this year to your building or business property, from a disaster or other cause, you may be able to deduct part of these losses on your tax return. Losses from forced sales of equipment or your business may also be deductible.
This article describes what to do if you have business losses in a disaster.
Deductions for business entertainment expenses have been eliminated, effective in 2018, but most business-related meals can still be deducted at 50 percent.
You can deduct the cost of meals provided to employees for all-employee events, but not for meals at your business location. Read more about restrictions and how this benefit is treated for employee tax purposes.
Read more about the details of when meal expenses can be deducted and at what percent.
Line 27a on Schedule C is the place to include those miscellaneous expenses that don't fit in any other category. This article on miscellaneous business expenses provides suggestions for expenses that might be included in this category - so you don't miss any!
Your business can deduct costs of purchasing office supplies and materials and other office expenses This article explains the difference between office supplies and office expenses and how to deduct each type.
Any taxes you pay to local, state, and federal agencies may be deductible. Here is a comprehensive list of taxes you can - and can't - deduct so you can make sure you have recorded all of these taxes for deduction purposes. Income tax payments are never deductible.
Travel expenses can be deducted as business expenses, but there are many restrictions and qualifications. Business travel expenses must be separated from any personal part of your travel. You may - or may not - be able to take a spouse with you and deduct that person's expenses.
Read more details on deducting business travel expenses.
While almost all business expenses are deductible, don't forget there are some the IRS will say NO to. These include political donations, hobby losses, entertainment expenses, fines and penalties, and commuting costs.