Don't Forget These Tax Deductions...

By Jan Zobel

As you begin gathering your records together in preparation for the April 15th tax deadline, you may be wondering which business expenses you can deduct.

Expenses can be deducted if they are ordinary and necessary. Ordinary means that someone else who has a business like yours would likely have a similar expense. Necessary means that you needed to spend this money in order to operate your business. In general, business expenses are deductible if they are costs you wouldn't have had if you didn't have your business. In other words, if you would have had this expense, even if you didn't have your business, it's probably not deductible.

A list of common deductible business expenses follows. You'll likely have expenses that aren't on this list. If they are ordinary and necessary for your business and you have the appropriate back-up materials (i.e., receipts and/or canceled checks), they are deductible.

- Advertising
- Accounting and bookkeeping fees
- Bank service charges (If you have only one bank account, these fees must be prorated between business and personal use.)
- Car and truck expenses (The standard deduction for business miles on 2006 returns is 44.5¢ a mile)
- Computer supplies and software
- Conferences and seminars you've attended
- Contract labor, including subcontractors and consultants
- Credit card annual fees for cards used in your business (as with bank charges, these fees will need to be pro-rated if you use the same card for business and personal expenses.)
- Dues
- Education related to your business (but not to enter a new occupation)
- Entertainment and business meals (these are 50% deductible)
- Equipment, including computers
- Freight
- Furniture for your office or home office
- Gifts to business associates (up to $25 per person per year is deductible)
- Home office expenses (The space must be used regularly and exclusively for business)
- Insurance (liability, malpractice, etc. but not disability.)
- Interest on business credit cards and loans (like bank charges, these fees may need to be pro-rated)
- Legal and professional fees, including costs for preparing the business portion of your tax return
- Licenses and fees
- Magazines and books that you need for your business
- Maintenance and repairs on equipment and office/store space
- Office supplies
- Online fees (these need to be pro-rated between business and personal use)
- Payroll taxes paid on behalf of your employees (not the portion withheld from their paychecks)
- Postage
- Printing and copying
- Rent of equipment or store/office space
- Small furnishings and equipment
- Small tools
- Telephone (You can deduct long distance business calls made from home even if you don't qualify for an office-in-home. Monthly service charges on a home phone are deductible only if you have more than one phone line.)
- Travel
- Uniforms or special work clothing (e.g. steel toed boots or coveralls)
- Utilities
- Wages paid to employees