Finding hidden tax deductions and credits is like striking gold in the wilderness of finance. Between cost control and profitability lies one effective way to increase revenue called tax deductions. The experts of tax preparation in Kearny, NJ, say there are several lesser-known strategies for reducing taxable income. This is a rundown of what some of them are that can help your company.
Home Office Deduction
The home office deduction is a neglected deduction for small business owners who conduct their operations at home. This is available to consultants and freelancers. There are two ways you can subtract a portion of your expenses if you’re using a part of your home solely for the business.
- Simplified Option – Deduct $5 for each square foot of the house used for business up to 300 square feet.
- Regular Method – Deduct a percentage of your home expenses (rent, mortgage interest, utilities, repairs, and insurance) based on the square footage of your workspace to the total area of the residence.
Startup Cost Deduction
The IRS lets you write off a part of your first year's operating expenses. Eligible startup costs are market analysis, fees for establishing your company, licenses and permits for the business, advertising rates, and expenses for employee training. Up to $5,000 are deductible, and the rest can be paid over 15 years.
Section 179: Deduction for Equipment
There’s an immediate tax deduction for depreciation available to business owners that can be applied at the start for the purchase of business vehicles (with weight restrictions), office furniture, machinery, computers, and off-the-shelf software. It’s called Section 179, and this knocks off a considerable amount of large expenditures for office staff that undergo devaluation.
Health Insurance Deduction for Self-Employed
Your health insurance premiums may be directly deductible from your gross income if you operate as a sole proprietor or as a partner. According to tax consultations in Kearny, NJ, your family’s insurance for health, dental, and long-term care is deductible and can lower your adjusted gross income and tax bracket. This is only if you are not eligible for employer-funded health insurance like, say, your spouse’s work.
Work Opportunity Tax Credit
Employers can receive a federal tax credit known as the Work Opportunity Tax Credit (WOTC) if they hire members of specific target groups who encounter employment barriers. They can be former veterans, long-term jobless individuals, and Temporary Assistance for Needy Families recipients. Employers can claim a tax credit equal to either 25% or 40% of the first-year wages paid to them.
Energy Efficiency Deduction for Commercial Spaces
You will qualify for a deduction if your company owns a building with energy-saving upgrades. Businesses that install energy-efficient heating, cooling, ventilation, lighting, and hot water systems in their commercial space can claim a deduction under Section 179D of the tax code. Projects finished in 2024 get a reduced financial burden of $1.88 per square foot, and that’s a substantial saving for large buildings.
The Search for Tax Advantages
The specialists of tax preparation in Kearny, NJ, explain that one way to keep your company’s hard-earned profits is to maximize tax deductions. It’s always a good idea to speak with the experts on such matters to make sure you make use of them without breaking tax laws. Visit the professionals at the offices of Nicholas J. Coco, CPA, for consultation. Call us at 201-955-3100.
