The beginning of 2012 is less than a couple of months away, and the time to file the tax papers is drawing nearer. The tax season is a stressful period for most business owners since they are required to spare a considerable amount from their incomes, especially in the tight financial situation around them. However, what businessmen need to know is that while they do need to pay their applicable taxes, they are not required to overpay, especially with the permissible tax deductions that work in their favor.
Some of the commonly applied tax deductions on business are:
- Deductions on business vehicles
This deductible tax payment is for businessmen who might have bought a new vehicle for company’s use. The ratio, by which cars are getting depreciated in the current year, is much higher than what it was last year. The amount is added to the deduction permitted for the first year. The maintenance and fuel for the vehicle is also eligible for deduction, when the vehicle is being used specifically for business reasons. For businesses, which rely on different means of transportation, not only are fuel prices counted as deductions but they can also get compensation for parking fare and highway tolls.
- Tax compensation on healthcare
Small business owners, who provide at least 50 percent health insurance to their workers, can file for a tax compensation amount of up to 35 percent of the total health coverage expense. In 2014, employers can get a compensation of up to 50 percent on what they spend on employees’ healthcare.
Traveling for work and business matters can be partly be deducted from the taxes applicable on the business. The deductible expenses include the travel fare, hotel room rent and business meal with clients during the entire travel period. The important thing to remember is to save the receipts for whatever expenses were made during the trip and to maintain a record of everything they did there.
- Tax deductions for home-based businessmen
People running a home-based business might not be aware of the different deductible amounts they are eligible for when filing their tax papers. Equipment and hardware needed by their particular business is tax deductible, along with the amount they pay as ATM charges, credit card charges and bank fee. The office space at home, as well as the phone and internet connections, are also eligible for tax deductions.
It can be hard to find all of the deductions from your business, but when you do it will be well worth it. Filing for an irs extension could help you get more time to find all of the deductions for your business without being penalized. Overall business deductions can help you save a lot of money over the life of your business, finding and maximizing them is in your best benefit.