Each year, many business taxpayers overlook qualifying business expenses that are otherwise deductible, resulting in millions of dollars of overpayment to the Internal Revenue Service. Below please find a list of deductions that are commonly missed.
・Imputed Interest on Shareholder Loans
Interest paid on loan to the business is eligible for deductions even though the interest is taxable on the taxpayer’s tax return.
As a result, if the interest is mistakenly characterized as wage compensation, employment taxes may be reduced by recharacterizing the interest as interest expense.
Personal funds used for business meals may be eligible for deductions, subject to limitations.
・Personal Assets Converted to Business Use
The fair market value of personal assets contributed for business use is eligible for deductions, subject to limitations, starting from the date of conversion.
・Self Employed Health Insurance
All of health insurance premiums of self-employed taxpayers, their spouse and dependents are deductible. In the case of a long-term care insurance contract, the long-term care premiums are eligible for deductions.
Expenses incurred from the business usage of personal telephones, cellular phones, and internet connections may be eligible for deductions.
· Automobile Expenses
Automobile related expenses incurred for business purposes may be eligible for deductions.
In addition to the above list of commonly missed tax deductions, please note for the years from 2017-2026, miscellaneous itemized deductions that are subject to the two-percent-of-AGI limit are temporarily suspended.