Shifting Personal Expenses Into Business Deductions Part 2

The following is part 2 of Shifting Personal Expenses Into Business Deductions. It will go over seven often overlooked business deductions.

Home Office Deduction

For some reason many people do not take this simple deduction. The key is to make sure that you have a segregated space as an office. Don’t try to write off the kitchen table as a desk. Yet, your office can be an area that is part of a larger room.

There are two different ways to take the deduction. The first way is to take it as a percentage of the square footage of the home. In many cases a better way to take it is to find out how much local office space is per square foot. Then multiply this by the square footage of your office. Many times this will give you the largest write off possible yet 100% legal.

Corporate Gym

Many people have gym equipment in their home. Why not have your company buy your workout equipment? If it has already been purchased you can simply reimburse yourself for the amount spent. What ever space this occupies can then be added to your home office deduction.

Supplies

Desks, printers, pens, pads, file cabinets, and day to day supplies are just some examples of the things that can be written off. In addition cleaning supplies used to keep the office clean can be written off.

Refrigerator

If you had an office building you would probably have a corporate fridge. You are also entitled to this for your home office. This does not require you to go out and buy a separate refrigerator. For example you could take one shelf of your home fridge and call it the “corporate shelf”. Put office snacks and refreshments on this shelf. This does not mean that you can go out and write off all of your groceries. But, you can go grocery shopping and write off 10 or 15 dollars of drinks and snacks that you put on the corporate credit card.

Supper Money

If you work for a big company and it is getting late the boss might come in and say “if you work through dinner time I will pay for your supper”. This is now a business deduction. You can also do this at home. If you work through a late night you can pay for it with supper money. A good approximation is to use this deduction 3 or 4 times a month for around 25 to 30 dollars.

Meals and Entertainment

A business meal can take place breakfast, lunch, or dinner. If a single person goes out for a meal, or if a married couple goes out the meal is not considered deductible. But if two couples or a single person and an individual go out and discuss business, 50 percent of that meal is deductible. Similarly, if you invite colleagues to your home and business is discussed than the cost of that meal is deductible. This can also occur at staff meetings. If used sparingly this can be a reasonable tax saving strategy.

Meetings Followed By Entertainment

This is a widely unknown deduction. If you and a friend talk about business and then play golf the game is fully deductible. Typically, you are not allowed to write of season tickets. Yet, if you have a meeting before each game the tickets can be written off. This also goes for shows, promotional events, and pretty much everything else you can think of.

Please stay tuned for part 3 of our series where seven more deductions will be discussed. Also visit us at pfbs.com for more tax saving strategies.