This post was originally published on March 20, 2019, and was updated on March 12, 2020.
There are a lot of websites that offer “hacks” to make life easier. Whether they are hacks for managing your time, your weight or your kids, everyone seems to have suggestions as to how to cut through all the irrelevant activities and accomplish your objective in as little time and with as little effort as possible. While there are no hacks in taxes (with the exception of hiring someone to prepare your tax return), there are some little-known tax breaks that could potentially reduce reported income for your small business.
7 possible tax breaks for your 2019 tax return
Investigate these seven areas to reduce your 2019 tax bill:
- Health insurance premiums.
- Retirement plans.
- Bank fees.
- Professional fees.
Let’s take a look at each potential tax break in more detail.
Editor’s note: Simplify tax time with GoDaddy Online Bookkeeping, which imports and organizes all of your business accounts together and generates income and expense reports.
There might be several instances where you were not allowed to take certain losses and deductions because you can only take these items in amounts up to the amount of income you had for the year. Net losses for the business and home office deductions fall into this category.
If this happened to you last year, and you had enough income to cover the carried forward losses or deductions, you might be able to use them to offset this year’s business income and reduce your tax liability.
You have the option to carry these losses forward indefinitely until they are all used. You can look over the IRS rules here.
2. Health insurance premiums
Did you establish a health plan through your business and pay the premiums for you, your spouse and children who are younger than 26 years old? You can deduct these premiums as a business expense.
“Well, of course I can pay for ads” you might be thinking. But did you know that advertising also includes the cost of business cards, creating and maintaining the company website, as well as the items with your company name and/or logo on it that you give away — such as pens, writing pads and golf balls?
Keep track of the cost of these items and record them as advertising costs on your tax return.
4. Retirement plans
You know you can’t work forever, so you need to start planning for retirement. Any contributions you make can be taken as deductions on your tax return. Don’t have a retirement plan? Sit down with a financial adviser to get one set up for your business.
If you have employees, this may be a great way to not only reward them but attract good employees for your business.
5. Bank fees
You know those couple of dollars your bank or credit card company charges you every month? Those are deductible on your tax return as long as they are related to your business. This is a bonus for setting up a bank account, and possibly a credit card, in your business’s name.
Speaking of credit cards, if you have been charged interest on a company credit card, you can deduct that interest as a business expense. While you want to minimize this cost, you will at least be able to get some benefit out of these expenses.
7. Professional fees
Remember when we talked about the hack of getting someone else to do your tax return? Well, if you do, the amount the CPA charges you is deductible on your return, as is the cost of legal fees or fees from consultants to help you with a problem you might have in your business.
While some people may not like the “hack” culture we live in, there are ways that you can hack your tax return. Take a closer look at these seven potential tax breaks to keep more money in your small business’s coffers this tax season.
The above content should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.