7 Things You Forget to Deduct on Your Taxes (+ 3 That You Can't)
When you own your own business, you don't have the luxury of filling out a quick form and handing it into your boss for reimbursement. You are the boss. And there are a lot more things that all of us entrepreneurs need to take into account when filing taxes for our small business. One of the major things that gets forgotten or not taken advantage of is deductions. Today, the amazing Amy Northard, the Accountant for Creatives, is filling us in about deductions!
There are so many deductions available to small businesses that it’s easy to overlook some of them. While you’re working on your taxes, keep these deductions in mind so you don’t miss out and overpay.
7 Things to Deduct
Mileage
If you drive to client meetings, to the airport for a business trip, or even to the post office to mail out Etsy orders, you should be tracking your mileage. Since the mileage rate is $0.535/mile in 2017, this can add up to a pretty sweet deduction if you drive frequently for your business. Look for an app that you can have on your phone to track the miles for you. A popular mileage tracking app is MileIQ.
Software subscriptions
Think about all the online services you use to run your business. So many of them have monthly or annual fees that can be easy to forget about. Do a clean sweep of your business bank account and see if you find any subscriptions that you’d forgotten about.
Meals with clients
If you grab coffee or a meal with a client while discussing business, make sure you keep your receipt and jot down a short description of your meeting on the back. P.S. You have to keep these receipts for 7 years, so find a safe place and organize them by month so you don’t go insane.
Education
Online courses, in-person conferences, eBooks, and physical books are all examples of education expenses that can be deducted. Yep, investing in education right here at Think Creative Collective is tax deductible.
Facebook ads
When you pay to sponsor a post or run ads through Facebook, these costs should be included as an Advertising expense. Those costs of doing business are write offs, not just things you have to pay for.
Hotel stays
The expense of staying at a hotel during a business conference or other business-related travel should be deducted. If you add on a couple extra personal days to your stay, be sure to leave that portion of the expense off.
Internet
If you have a home office, be sure to include your monthly internet costs in the home office deduction. This shouldn’t be deducted directly as a business expense, unless you have internet for an office space outside of your home.
3 Things You Can’t Deduct
Starbucks when you aren’t meeting clients
The IRS says we can only deduct our Starbucks addiction if we’re meeting with a client to discuss business. If you just needed to get out of the office and are working at Starbucks, those drinks are a personal expense. Sorry, Charlie!
Clothing
Whether you’re speaking at an event, or want to look a certain way when you work an event, if your clothing can be worn outside of work, the cost can’t be deducted. For example, if you’re a photographer and you always wear black to shoot weddings, you won’t be able to deduct the outfit as a business expense. Some common jobs that would have deductible clothing include postal workers and health care workers.
Gym membership
If being fit is a part of your business, it might seem like common sense that you should be able to write off your gym membership. I’m not just talking about fitness professionals. Bloggers, models, and speakers may rationalize that they need to look a certain way in order to be successful with their business. Unfortunately, the IRS considers this a personal expense.
There are many more deductions available to small business owners, but these are the ones we’re most often asked about. When trying to decide whether something is a business expense, think about whether it helped you to run your business or make your business better.
ABOUT THE AUTHOR
Hi, my name is Amy Northard and I’m the CPA for creatives. I help creatives like you all over the US navigate taxes and set up bookkeeping systems so they can get back to the part of business they love – the creative part.
Amy Northard, CPA - The Accountant for Creatives
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