Tax season is fast approaching, and you might wonder how to get all the necessary deductions and credits you’re entitled to. The great news is that there are plenty of ways to lower your tax bill even if you don’t itemize on your return!
The bad news is that some of these benefits will only apply for this year—and others may not apply at all, depending on your situation.
Still, it’s worth investigating what might be available so small business owners can plan accordingly.
So, here is a small business tax deductions checklist for them.
Health insurance payments
You may deduct the cost of health insurance premiums for yourself, your spouse, and your dependents. You could also deduct the amount you pay for long-term care insurance if you’re not reimbursed by someone else for it, and you weren’t able to be reimbursed because you were receiving benefits under Medicare Part A or Part B.
Self-employed health insurance costs. This deduction allows small businesses to write off some of their business expenses as medical and dental costs on Schedule A (Form 1040).
Retirement account contributions
If employees save for retirement, their tax savings would be even greater if they put money into a traditional IRA or Roth IRA.
Their employer may offer a 401(k) plan, and the government gives them an income tax deduction.
Small business personnel can also save money in 529 plans for college expenses and HSA accounts to pay for current medical expenses and deduct those contributions from their taxes.
Long-term care insurance premiums
Premiums for such plans are tax deductible and depend on one’s age and the type of plan that one has:
- It is deductible if you’re under age 65, have a modified adjusted gross income (MAGI) of $100,000 or less, and pay to instate premiums. The MAGI limit increases to $120,000 if filing as head of household or as married filing separately; it also increases by another $1,000 if you’re blind or disabled.
- Deductible even though MAGI exceeds $100k/$120k if self-employed; otherwise, must meet other requirements (see above).
If small business employers require a move, they may be able to deduct these expenses. They can deduct the cost of moving their household or office goods from one location to another and traveling from their former residence to the new office.
Moving expenses include:
- Transportation costs
- The cost of packing and transporting one’s possessions
- The storage fees for items that could not be packed until the date of shipment
- Packing expenses such as boxes, tape, bubble wrap, moving blankets, and dollies
Student loan interest
One could claim an above-the-line deduction for the student loan interest one paid during the year if one paid more than $600 in interest.
You can only deduct up to $2,500 of your student loan interest each year.
Your MAGI must be less than $80,000 if you’re filing separately or $160,000 if filing jointly with a spouse to qualify for this deduction.
You could deduct the total amount of your charitable donations in 2022.
You can donate to any qualified organization under section 170 of the Internal Revenue Code, which includes religious and educational institutions. You also could deduct travel expenses related to your donation if you drove or traveled with your car for more than 50 miles from home.
Investment fees and expenses
- Investment fees, such as annual maintenance fees, and investment expenses, such as commissions to buy and sell investments, can be deducted from your taxable income.
- You can only deduct investment fees and expenses if they are for investments held outside of retirement accounts.
Going through this small business tax deduction checklist is one of the best ways to make sure you’re on track to get the biggest refund possible. Hiring a professional expert will make it clear how much money could come back into your account each year.
If you’re interested in hiring a professional accountant, why not take a look at Accountants Hull? They offer a range of services, including bookkeeping and financial advice. Their experienced team is made up of qualified accountants, who will ensure that all your finances are kept in check. They will also help you understand your obligations to HMRC and make sure you’re compliant with applicable regulations. Furthermore, they can also provide valuable tax planning advice and support in areas such as payroll, VAT and pension planning. The team at Accountants Hull also looks after self-employed clients, giving them the guidance they need to get their businesses off the ground. With Accountants Hull on your side, you can be sure that your finances will be taken care of in a professional manner. So why not reach out and get in touch today?