5 Business Tax Deductions You Didn't Know You Could Make

Most individuals know they can count raw material expenses in small business tax deductions. However, this is just one of the many categories that is encompassed in the tax law. The laws are subject to interpretation, and you can deduct nearly any expense that directly contributes to the success of your business. The key is documenting your expenses and assuring you earn more than you deduct on an annual basis.

#1 Insurance Deductions

Both home insurance and car insurance can be partially deducted from a business income. This only counts, of course, if you use your home and your car for business purposes. Document how much you use each. For example, one room in your home may be a dedicated office. If this is 10 percent of the total square footage of your home, then 10 percent of your home insurance can be deducted from your taxable income.

#2 Mileage Deductions

Using your car for both personal errands and work errands can create a gray area in the mileage deduction category. However, all you have to do is keep a mileage log for every time you travel for work. This can be directly deducted. If you plan on deducting car insurance, track the total mileage you put on your car this year as well. The percentage you use the car for work can be deducted from your insurance.

#3 Travel Deductions

You may not be traveling 100 percent for business, but your trip can still be tax deductible. For example, a travel writer only needs to generate income off of one review in order to deduct an entire trip from taxable income. If you meet with one client, you can legitimately deduct a weekend trip. The key is to document when and how you served your business while traveling and always make sure the income you earned outweighed the deduction you claimed.

#4 Health Insurance Deductions

If you own your own business or are an independent contractor, health coverage is likely a very expensive part of your life. All of your health contributions are tax deductible. With an independent payer plan, all you have to do is keep track of the payments you make to the insurance company and turn them in as an itemized deduction at the end of the year. You do not need to use a health savings account, then, because your health expenses are already paid for with tax free dollars. 

#5 Loan Interest Deductions

Small business loan interest is a tax deductible expense. If you have a small business line of credit, the interest on this account may also be deducted depending on the income your business earns on an annual basis. Education expenses, including interest on large student loans, can be deducted if you qualify based on your income. If you use your automobile for work, even the interest on an auto loan may be tax deductible given certain circumstances. Ask an accountant about the multiple loans and debts you have to learn which may qualify for the deduction so you can pay tax free dollars toward these debts.