Many people aren’t aware that they can deduct medical expenses on their income tax returns.  This could help reduce your tax bill.  So if you itemize your deductions on your federal tax return look at the possibilities of claiming your medical tax deductions.  Many people could also qualiy for medical tax deductions for home improvements.  This could include yourself, your spouse and any dependents.  Here are some easily overlooked medical tax deductions that you may qualify for:

· Premiums paid for long-term care insurance, medical and dental
· Medical insurance deductibles and co-payments
· Fees paid to doctors, dentists, chiropractors, and mental health physicians
· Payments to hospitals, long-term care facilities and services, nursing services and lab fees
· Cost of prescription drugs and insulin
· Price of prescription eyeglasses or contacts, hearing aids and false teeth
· Payments for acupuncture treatments
· Inpatient expenses at an alcohol or drug addiction treatment center
· Costs for smoking-cessation programs
· Participation in weight loss programs when they are related to a diagnosed disease, like hypertension or obesity
· Fees for laser eye surgery, crutches, wheelchairs, and guide dogs for the deaf or blind
· Transportation costs related to and necessary for qualified medical expenses

How to Claim Medical Deductions

You may only deduct medical costs if they are more than 7 1/2% of your adjusted gross income set by the Internal Revenue Service.  These are only the costs that were not reimbursed by your insurance company.  Make sure you obtain these records for proof of your out of pocket expenses.  You will need to file a 1040 form schedule A.  You can learm more about medical tax deductions on the IRS website online or ask your certified public accountant.

Federal Income Tax Medical Expense Deductions

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If you’re an entrepreneur you should know about hidden expenses when operating your business like maintaining equipment including cars or trucks that generates your income.  Maintenance costs can have an effect on your profit margin.  You should know that the IRS does allow certain businesses and the self-employed to take a car tax deduction if the vehicle is used for business purposes.

New Car Sales Tax Deduction 2010, 2011

If you use your vehicle for personal and business you must seperate the expenses between the two.  Personal expenses cannot be deducted but business can.  The expenses that are allowable are gas, oil, repairs, insurance, depreciation, taxes and licenses.   You may only take depreciation on your vehicle if used for more than 50% in the operation of your business which is an expense allowance over the estimated life of the vehicle.

There are two ways you may take a car tax deduction.  A business mileage rate which is 50 cents a mile since July 2010 or an actual method.  The business mileage method is taking the business miles driven in the calendar year and multiplying by the mileage rate.  If you elect to use this method you may not deduct maintenance or depreciation.  If using the actual method these would be the actual costs you accumulated within the year along with depreciation.

How to Use Car Lease Payments as a Tax

So if you’re searching for additional deductions for your business don’t forget take a look at a car tax deduction to help you reduce your tax liability.  The IRS consistantly changes their tax codes for business vehicles, make sure you have the updated information for the year you are filing.  If unsure if you qualify for any vehicle deductions seek professional help with a certified public accountant.

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 Property Tax Deductions 

Owning your own home has alot of tax benefits, itemizing expenses like interest you paid on your mortgage.  Since the Housing Assistance Tax Act in 2008 you can take a tax deduction for a portion of the property tax that was paid, even if you just take a standard deduction.  The additional deduction you can claim is the lower of these options:  real estate property taxes paid within the year to your state and local governments or filing single, $500, filing jointly, $1,000.

Real Estate Tax Deduction

Can all homeowners take the property tax deduction?  Most of the people who have paid off their mortgage or close to paying off their mortgage and homeowners that did not have enough mortgage interest to deduct in 2009.  You may still qualify for the property tax deduction if you purchased your home in 2009 and qualified for the home buyer tax credit.

Business Property

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How to Calculate Federal Income Tax to Pay to the IRS

How much you can take for a standard deduction depends on your filing status.  For a single filer the amount is $5,700, married couple filing jointly $11,400, head of household which could be a single parent with children can claim $8,350.  Over the age of 65 the amounts are different.  The IRS added extraordinary tax deductions in 2009 for the taxpayers that used the standard deduction may include federal tax deductions for real estates taxes that were paid, $500 single, $1,000 married.  They also included a sales tax deduction on a new vehicle as long as it was purchased after 2/16/2009 but before 12/31/09.

Online Federal Tax Tips

Looking to deduct medical expenses, not so easy.  You may only use this deduction if they exceed 7.5% of your income.  Also, some people pay toward their health insurance through their employers checks, these are not deductible since it is deducted out of untaxed money.  There is a list of allowable medical deductions which is long but good record keeping is a must.  Some may include expenses such as co-pays, glasses, dental work, nursing home care costs and even mileage getting to and from medical appointments.

State Legislators Can Take Special Federal Tax Deduction

When filing your tax returns you can review the 2010 Federal Income Tax Brackets (IRS Tax Rates).  When in doubt always seek professional tax help.

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Current Allowable Automobile Mileage Tax Deduction 2010

Vehicle Tax Deduction-Claim It January 2010

If using the actual expenses, determine the costs to operate the car for the part of the business use.  This will include gas, oil, insurance, licenses, registrations fees, repairs and tires.  Depreciation or lease payments that are attributed to the portion of total miles driven for business miles.  The IRS requires that you must keep adequate records to support your statement if you elect to take a car tax deduction.  Purchasing a mileage log book at your local office store can be very helpful in recording your mileage.

Recovery: Vehicle Tax Deduction

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Many people in a trade or business usually wonder about a list of tax deductions.  What can I deduct and what is allowed.  The most important is the expenses you incur in operating a trade or business as long as it is operated to make a profit.  An expense is considered to be ordinary and necessary. 

Keep good book keeping records by seperating your business expenses into catagories like, capital expenses, expenses for the cost of goods you sell and personal expenses.  Capital expenses are normally captialized and depreciated over a 7 year period then being fully deducted at one time, these are known as assets.  An accountant can advise you on which way they should be deducted.  Expenses for cost of goods would include any raw material, labor costs, etc… in manufacturing the products. 

Also on the list of tax deductions can be any business start up costs you incur.  Any business assets you purchase and improvements can be deducted.

List Of Tax Deductions | Self Employed 
List Of Tax Deductions | Self Employed

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If your place of business is in your home you may deduct part of your home expenses, which includes utilities, repairs, mortgage interest, insurance, property taxes, etc…  You may only deduct a percentage of your expenses which is calculated on the square footage space that you use to operate your business. 

Included on the list of tax deductions is the business use of your vehicle.  If you use your vehicle for business and personal you may only deduct your portion based on the actual mileage.  If your mileage is 10,000 miles per year and 2,500 miles were driven for personal use, your deduction would be 75% for business use.  A well maintained mileage log must be keep when this deduction is taken.

Get Information On Small Business Tax Deductions

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It is a good idea to hire a certified accountant that can assist you in the list of tax deductions that are allowed under the tax laws.  This will help in advoiding an audit which can be triggered by deducting items that are not allowed.

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Basics of Tax Deductible Business Expenses

Basics of Tax Deductible Business Expenses — powered by eHow.com

Get to recognize the high seven tax deductions for home businesses.  These must qualify as an expense that is incurred by conducting or business associated with a trade or profession and type of expense that is ordinary and or necessary in operating the business.  A  tax deductible expense cannot be excessive given the set of circumstances pertaining to the expense.

You can determine what does and does not qualify for a tax deductible expense.  Search for your state revenue agency or IRS online.  Many government agencies will list guidelines that can help you to catagorize your expenses and determine which ones are tax deductible and which ones are not.  You should be able to print the documents that you locate online or request hard copies by phone to be mailed directly to you.

Often Overlooked Tax Deductions

Another option is to seek a professional accountant for income tax tips for year 2010.  Many attend refresher classes in December before starting to prepare tax returns for the tax year.  They not only know about the current tax laws and what is allowed for tax deductible expenses, but are knowledgeable on how state and federal agencies interpret certain deductible expenses.  This takes the guess work out of whether or not an expense is tax deductible or not.  Just taking the time to find out as much as possible on which tax deductible expenses are allowed will make it much easier and less frustrating when filing your annual tax return.

Expense Tracking Made Easy 

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I do have some experience in writing about home office deduction for small businesses.  We are a small business and work out of our home.  When filing your taxes and claiming a home office deduction the space must be exclusively for your business.  We have consulted with our accountant on which items are deductable, which items are not and the percentage of home space used for our small business.  Your deduction may be a room or space in a room as long as the space is identified as separate that you use for your home office deduction.

 The IRS states the following:
If you use a portion of your home for business purposes you may be able to take a home office deduction. Generally, in order to claim a business deduction for your home, you must use part of your home exclusively and regularly:
    •As your principal place of business, or
    •As a place to meet or deal with patients, clients or customers in the normal course of your business, or
    •In any connection with your trade or business where the business portion of your home is a separate structure not attached to your home.
    •For certain storage use, rental use, or daycare-facility use, you are required to use the property regularly but not exclusively.
Generally, the amount you can deduct depends on the percentage of your home used for business. Your deduction for certain expenses will be limited if your gross income from your business is less than your total business expenses.  There are special rules for qualified daycare providers and for persons storing business inventory or product samples.

The IRS is very clear on the exclusive use required by setting aside a space in your home for your business.  You may work a few hours or all day and six or seven days a week but don’t violate the exclusive use requirement by allowing your spouse or children to use the space for personal use, you may surrender the opportunity for the home office deduction.

My Home Office Deduction 

Having a business in our home vs renting an office space somewhere else in a building has reduced our overhead costs.  It has saved on rent, electric, heat and phone costs.  Would I recommend a home based business and taking the home office deduction, yes.  This benefit has given alot of small businesses a chance to grow and survive.  Don’t be afraid to take the home office deduction thinking is will trigger an audit by the IRS.  Alot of changes in the tax laws since the late 90s have made it much easier for people to start a small business and work out of the homes. 

How do you calculate the business percentage of your home?  The home office deduction is calulated on the square footage of the space used for your business divided by the overall square footage of your home.  If your space measures a 12 x12, the square footage would be 144 square feet.  If your home measures 28 x 40, the square footage is 1,120 square feet. Divide the space square footage by the home square footage, 12.8% (144 ÷ 1120).

What does the 12.8% percentage really mean.  You may be able to deduct a portion of your mortgage interest, property taxes, home owners insurance, electric, phone, heat and any general repairs and maintenance.  Any expenses to maintain or make repairs to the space is fully deductible. 

Home Business Tax Deductions (Home Office Deductions) 

What you cannot do is create a tax loss to cover other income.  Your home office deductions cannot go beyond your business income. When in doubt always check with your accountant to see which expenses you qualify for.  Having a professional advise you in the start up or existing business is never a bad idea.  They can give you direction that is beneficial to your home based business.

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Hire a professional to review your tax deductions.  Don’t just hire an accountant or CPA to prepare your taxes, ask for a complete review of the tax deductions that will work in your favor.  You don’t only need a tax preparer you need a tax planner.

Listed below is just a few tax deductions that are not well known, business owners may not know they can deduct:

Corporate Meetings:  Each year you need to update formal company documents which is required by law, financial records, appointed officers and minutes of all meetings. Combine your vacation and corporate annual meeting as an owner.  The entire trip can be tax deductible.
 
Rewarding Your Employees:  Rewarding your employees with a check is not deductible.  You may give an employee a tax deductible gift which may include golf clubs, high def TV, furniture, etc.  Any type of gift other than cash.  You may reward an employee for the length of time they worked for the corporation, achievement in sales, or even for safety. 

Gifts to Other Businesses:  Giving a gift to another business owner or employee (purchasing agent) has an unlimited amount.  Many businesses owners may purchase promotional items imprinted with their business name and logo or different types personal items like gym memberships.

Educational Seminars:  These are tax deductible.  Training for new software, further knowledge of business operations or even something totally different that has nothing to do with your current business.

Relocating Expenses:  If you’re planning to relocate an employee, the moving expenses are tax deductible, it can be on the other side of town of the other end of the country.

Retirement Plans:  Contribute money in your retirement plan for yourself and/or employees, tax deductible.

Home Office Deduction:  If you use your home exclusively and regularly you can claim a business deduction on your home.
      As your principal place of business, or
      As a place to meet or deal with patients, clients or customers in the normal course of your business, or
      In any connection with your trade or business where the business portion of your home is a separate structure not attached to your home.
      For certain storage use, rental use, or daycare-facility use, you are required to use the property regularly but not exclusively.
Generally, the amount you can deduct depends on the percentage of your home used for business. Your deduction for certain expenses will be limited if your gross income from your business is less than your total business expenses.

With so many tax laws, take the time to research a professional tax adviser and preparer.  Some tax laws change from year to year which most people are not aware of.  I have found it beneficial in having our certified public accountant that can assist us in any questions we have and advise us with tax deductions, what is deductible and what isn’t.

Home Business Tax Deductions 

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