Business Taxes: What is deductible?
If you own a business, you are likely aware that you must pay business taxes. While filing business taxes may be a little more complicated than personal income taxes, most businesses are eligible for a long list of deductions. In this article, we’ll talk about a few of the major business deductions available for your business.
Any deductions must be taken in the year in which it was paid. And, of course, the deduction must be business related. Personal taxes do not qualify. Federal income taxes – the taxes you pay on your business income – also are not able to be deducted. State income taxes may be able to be deducted. This depends on the state where you own your business and the type of business.
Deductible Business Taxes
- Payroll taxes. The business portion of payroll taxes is deductible if your business has employees. However, this doesn’t include amounts withheld from employee’s paychecks for the FICA tax. So, if you’ve withheld $10,000 from your employees for FICA tax, you will pay an additional $10,000 as your employer portion. This employer portion amount is deductible.
- License taxes. Business, city, and other licenses are tax deductible.
- Travel expense taxes. Travel expense taxes cover a range of travel-related items such as airfare, hotel, and meal taxes.
- Property taxes. The cost of property taxes is deductible when the tax is based on the assessed value of the property. The IRS prohibits tax deductions for what they deem “local benefits” that tend to increase property value. These include assessments for sidewalks, sewer lines, and public parking facilities.
- Vehicle expense taxes. You can deduct registration taxes on your business vehicle(s) as well as gasoline tax (if you are claiming actual expenses versus mileage on your taxes) among other vehicle expenses.
- Miscellaneous taxes. These items add up, and shouldn’t be overlooked. Miscellaneous items could range from certain office supplies to things like membership dues.
There are, of course, many more items that are deductible on your business taxes. This article can get you started on your business tax deductions and a phone call to Manhattan Commercial Capital’s financial experts can help you along the way.