http://derlandbahrcpa.com/federal-tax-deductions-list/ This presentation shares a federal tax deductions list of items that are allowed on a small business income tax return.

1. WHAT DEDUCTIONS CAN I
TAKE AS A SMALL
BUSINESS?

2. COST OF GOODS SOLD
!Inventory sold during the year.
!Labor that is directly related to your
product/service.

3. MILEAGE EXPENSE
! Mileage expense – any miles you put on your car for business are
deductible (56 cents per mile for 2014 – 10,000 miles = $5,600
! Commuting is not deductible (mileage to and from your main
office)
! Home office - if you work out of your home, then any business
mileage for business is deductible.
! Keep a contemporary mileage log. If you get audited, this is what
the IRS will look for. They do not like unsupported estimates
! Actual expenses? – some businesses prefer or are better off taking
actual expenses. Consult your tax professional.

4. ADVERTISING AND PROMOTION
!Advertising is a common expense for
small businesses.
!Yellow page ads, flyers, internet
marketing, ads in papers
!Any expenses you have to promote your
business

5. CONTRACT LABOR
!If you hire someone to do work for you (not an
employee)
!If you pay them over $600 you must issue them
a 1099
!Only include here if not recorded under cost of
goods sold

6. DEPRECIATION
! Large assets/purchases should be capitalized. (E.g., a
new computer or new desk)
! Record date of purchase, description of property, and
total cost including taxes and installation.
! Some of these assets can be expensed through special
depreciation or the Section 179 deduction. For more
info, talk to a tax professional

7. INSURANCE
! Any insurance you have for your business is deductible
(General liability, etc.)
! Life insurance you purchase through your business is
generally not a deductible expense
! Self employed health insurance is deductible on page
one of the 1040 (line 29 for 2014).

8. MEALS AND ENTERTAINMENT
! Must have a business purpose. (Entertaining Clients,
discussing business with employees, etc.)
! Only 50% of Meals and Entertainment is deductible.
! One - this is easily abused. Some people want to
deduct everything as a business expense
! Two – you have to eat anyway. Or you might enjoy
the Spurs’ game as well as trying to land a new
client

9. INTEREST
!Interest on Loans, etc. taken out to
maintain cash flows for your business

10. LEGAL AND PROFESSIONAL SERVICES
!Any fees you pay your accountant for
bookkeeping, payroll, tax prep.
!Amounts paid to an attorney

11. OFFICE EXPENSE
!Paper
!Calendars
!Pens, Ink Cartridges, etc.
!Any office related supplies or equipment
that is too small to be capitalized (i.e.,
depreciated)

12. RENT
!Rent for an office space
!Rent for machinery or equipment

13. REPAIRS AND MAINTENANCE
!Any repairs or maintenance to keep the
office and/or equipment up and running

14. SUPPLIES
!This is supplies not included in office
expenses or as part of cost of goods sold.
! It can include small tools, if you don’t
have enough for a separate category for
small tools.

15. TAXES AND LICENSES
!Any taxes or licenses you have to pay for your
business.
!Real estate tax on a business property.
!Sales taxes are normally excluded from Sales
and expense, but if you included them as part
of sales then you can deduct them as an
expense

16. TRAVEL
!You can take per diem rates for travel and
meals while away from home. Visit IRS.gov for
per diem rates.
!Conversely, you can take actual expenses.
!Either way, you are limited to 50% deduction
on your meals expense as noted previously.

17. UTILITIES
!Electricity
!Gas
!Water
!Television – if it is a legitimate business expense

18. PHONE AND INTERNET
!Landlines
!Cell phones - need to allocate based on
business use percentage
!Internet in the office is deductible
!Internet in a home office should be
allocated based on business use.

19. OTHER COMMON EXPENSES
! Continuing education
! Dues and Subscriptions
! Profession certification expenses
! Etc., all businesses are different. Any legitimate
business expense can be deducted. You may have a
category that is unique to your type of business. You
can just list it under other expenses.

20. OVERVIEW: COMMON BUSINESS
DEDUCTIONS
!Advertising
!Mileage expenses
!Supplies
!Office
!Legal and professional
!Phone
!Meals
!Insurance
!Rent
!Depreciation.
!Etc.

21. CONTACT A PROFESSIONAL TAX
PREPARER
!Contact a professional tax preparer for
more details or for more specific
questions
!If you’re in the Central Texas area, call
Derland G. Bahr, CPA - 254-432-5724 or
visit www.DerlandBahrCPA.com.