BUSINESS EXPENSES

Question and Answer

Q: Can I deduct all my business expenses from my tax return?

 

A: You can deduct all ordinary and necessary business expenses on your tax return. However, there are some limitations and exclusions, so it’s important to consult with a tax professional to ensure that you are claiming all the deductions you are entitled to.

Not all business expenses are deductible on your tax return. The IRS has a number of rules and regulations that determine which expenses are eligible for deduction. In general, an expense is deductible if it is both ordinary and necessary for your business. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your business.

Some common business expenses that are deductible include:

  • Cost of goods sold
  • Rent
  • Utilities
  • Insurance
  • Payroll
  • Advertising
  • Travel expenses
  • Meals and entertainment expenses (subject to certain limitations)
  • Depreciation of business assets

There are also a number of expenses that are not deductible, including:

  • Personal expenses
  • Capital expenses (expenses that are incurred to acquire or improve property that will last for more than one year)
  • Fines and penalties
  • Lobbying expenses
  • Illegal bribes and kickbacks

If you are unsure whether an expense is deductible, it is always best to consult with a tax professional.

Here are some additional tips for claiming business deductions on your tax return:

  • Keep good records of all of your business expenses. This includes receipts, invoices, and other documentation.
  • Be organized and keep your records in a safe place.
  • Follow the IRS rules and regulations for claiming deductions.
  • If you are audited by the IRS, be prepared to provide documentation for all of your claimed deductions.