What are OTHER business expenses that you could deduct ? The ...

What ?other? business expenses are deductible? The generic term you see on your tax form may leave you scratching your head. Just what other expenses can you legitimately deduct?

While there is no hard and fast rule, examples include insurance premiums, legal and professional fees, supplies you use in your business, utilities, auto expenses, and the deduction for certain energy-efficient commercial building property. Sometimes, when people ask me this question, I respond back that if you wouldn?t have incurred the expense if it weren?t for the business, then there?s a pretty good chance you would be able to deduct that cost as a business expense.

Here?s a guide for less obvious items.

* Like all costs you incur in your business, ?other? expenses must be ordinary and necessary in order to be deductible.? In tax law, ?ordinary? means normal, usual, or customary in the context of your business.

For example, if you?re a commercial fisherman, boat insurance is an ordinary expense. Other business owners may have a harder time justifying a deduction for boat expenses, as much as they?d like to.

* An expense is necessary if it is appropriate and helpful to the operation of your business.

* Some expenses are only partially deductible. For instance, the cost of meals and entertainment must have a direct business purpose before you can claim a deduction. Even then, your deduction is generally limited to 50% of your cost.

* Certain expenses are specifically identified as nondeductible. Personal, living, or family expenses fit into this category, as do fines, penalties, political contributions, commuting to and from your job, and most lobbying costs.

Do you know what expenses are deductible in your business?

Steven A Feinberg, CPA of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, has more than twenty five years experience in Federal and New Hampshire issues, specializing in small business general, tax and payroll matters. For additional information on these and other current business and tax issues, email Steve at info@appletreebusiness.com or call (603) 434-2775.

Steven A. Feinberg ? www.AppletreeBusiness.com ? Get Appletree Blog via Email!

Filed under: Uncategorized Tagged: | income tax, Business, tax deduction, Small Business, IRS, bookkeeping

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