Hopefully, the light at the end of the tunnel will continue to brighten. For many small business owners, getting through economic pain of the pandemic is still an uphill climb.
More than any other year, lowering your taxable income is a big priority. As a business owner, there are plenty of opportunities to reduce your tax liability through standard and itemized deductions.
With so much happening over the last year, the IRS modified some deadlines that small business leaders should be aware of. Read on to see what’s new this tax season and how your business can maximize its return in 2021.
Home office
Due to stay-at-home policies, chances are you put in plenty of remote hours from the home office. Don’t forget to enjoy some relief through home office deductions. Many are surprised to learn that mortgage, rent, utilities, property taxes and other home costs can sway your tax burden.
Travel
Yes, although travel expenses may not come immediately to mind, they can come in handy in 2021. The IRS considers any ordinary and necessary travel costs as acceptable scenarios for deduction purposes.
The costs for travel by car, airplane, bus and train are approved expenses. Other fare, vehicle expenses, meals, lodging and business-related expenses are covered. So, it’s important to keep detailed records of all your costs, including dates and mileage.
Education
Did you take some time during the pandemic to get in some training or learn a new skill? The costs can be deductible.
As long as you can show that your new skill, training or certification relates to your business dealings, it’s tax deductible.
And if you extended learning opportunities to your employees, you could deduct those costs too.
Rental space
Even if you don’t work out of a home office, rental expenses can be deducted. Rental payments for your place of business qualify. Just remember that any amount paid for real estate you do not own can be deducted.
Advertising
With so many changes, you probably tried new marketing and advertising tactics to reengage your clients.
No matter what new advertising expenses you took on last year, they are tax deductible in 2021. The IRS allows businesses to deduct what is called goodwill advertising expenses. In order to qualify, they cannot be related to lobbying activities.
The tax filing deadline for payments is extended to May 17 for individuals and sole proprietors and single owner LLCs.
Contact us if you need any help getting your taxes in order.
