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Commonly Missed Tax Deductions

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For every dollar you don't deduct, you could be paying up to 35% back to Uncle Sam. If the dollar has been spent, taxes shouldn't have to be paid on it. Think of the productivity of your business if you could put 35% of your income back into your business rather than in the hands of politicians. What kind of advertising campaign could you do with 35% extra cash flow every month. With a little organization and planning this can be possible.

Most business owners remember to take the big obvious deductions such as cost of goods sold, materials, tools, supplies, and employee expenses. But often times it is the small seemingly insignificant deductions that can make or break a company. Lone Peak Business Solutions has the 10 most commonly missed business deductions.

1. Advertising - Business cards, newspaper ads, information packets you hand out, free samples, flyers, product testing, videos and CD's.

2. Children - Money paid to children for helping with such things as delivering flyers, product, stuffing envelopes, cleaning office and car, etc.

3. Dues and Subscriptions - Dues to professional organizations and magazines that have to do with your trade or business.

4. Educational Expense - Classes or seminars that you take to improve your business.

5. Gifts - Gifts to clients and associates.

6. Laundry and Cleaning - This includes uniforms and Protective clothing and also your clothing when you are out of town.

7. Travel - Hotels, airfare, cab fare, parking, cleaning while away from home, trip log.

8. Home Office - A home office must be a separate room in your home to do business and accounting. Part of your living room or bedroom will not count. A percentage of utility Bills, home owners insurance, property tax, mortgage interest, refinance fees, repairs and maintenance, cleaning supplies, office decor, etc. are deductible. You find out the percentage by dividing the square footage of the office by the square footage of the entire house.

9. Mileage or Vehicle - There are two ways to take a vehicle expense. One is to take the mileage you use when picking up product, supplies, office supplies, meetings, handing out advertising or business cards, meals and entertaining clients, etc. The other way is to take the expense of using the vehicle: fuel, parts, mechanics, oil changes, etc. Along with taking expenses, you can also depreciate the vehicle.

10. Telephone - Cell phone, long distance calls on home phone, extra phone lines into home for business, fax or Internet.

Items such as paper clips, bank charges, credit card charges and home office expense seem small and unimportant at the time, but multiply those little things over a year or two and then multiply it times 35% and it can add up to quite a bit of money that should be in your pocket rather than in the government's pocket.

Along with keeping track of expenses it is important to evaluate your income and expenses on at least a quarterly basis. This allows you to determine if too much is being spent any one place. It allows you to determine if all the deductions that can be are being claimed. It allows you to determine how to better increase sales and decrease costs.

Commonly Missed Tax Deductions

With April 15th looming in the near future, many folks are scrambling to give Uncle Sam a good reason not to confiscate their hard earned pay. And while there are an assortment of arguments and deductions available to the creative taxpayer, an often overlooked one is the deduction for unreimbursed Casualties, Disasters, and Thefts.

Insurance doesn't cover everything all the time

Psst...come over here...a little closer...I want to tell you a secret. Despite your insurance agent's best efforts, not every claim you file is covered by insurance. "No %#@*" you say?!? "I pay all that money in insurance premiums and when (fill in the blank) happens, all I hear is "that's not covered" "Well, thanks for nothing!"

We're from the government and we're here to help

How many stories end with the IRS riding to the rescue? Well, none actually. However, the IRS can help ease the pain in the case of certain unreimbursed casualty losses. What is a casualty loss? A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Can you give me some examples? Damage to property due to floods, fires, earthquakes, car accidents, and tornados just to name a few. So what types of losses aren't deductible? Destruction done by a family pet, dropping and breaking fragile items, and anything you intentionally burn up or pay someone to destroy (NO KIDDING!!!) are all not deductible. What if my stuff was stolen? You're still in luck (sort of)! The IRS defines theft as the taking and removing of money or property with the intent to deprive the owner of it. The taking of property must be illegal under the law of the state where it occurred and it must have been done with criminal intent. Sounds great! Where do I sign up? Well, before you go getting all misty eyed over your new found affection for the IRS, let's take a deep breath. Like everything involving taxes, there are a few hoops you have to jump through. First of all, you have to itemize your deductions. If you fill out the 1040EZ, you're out of luck. The only way to claim these deductions is to file Form 4684 and attach it to schedule A on a regular 1040 form. Another thing to consider is that any payment you receive from your insurance carrier is not deductible. In fact, IRS publication 547 states that if you expect to be reimbursed for part or all of your loss, you must subtract the expected reimbursement when you figure your loss. What if I decide to not file a claim with my insurance company and instead take a deduction on my taxes? Good idea but the IRS won't allow it. If your property is covered by insurance, you must file an insurance claim for reimbursement of your loss. Otherwise, you cannot deduct a loss as a casualty or theft. The only silver lining here is that if your insurance company reimbursed you minus a deductible, your insurance deductible is deductible from your taxes. Confused yet? Can you help me make sense of this? PLEASE! Unfortunately, things get more complicated. For the the sake of brevity, I will forgo explanations pertaining to the $100 Rule and the 10% Rule. Just suffice it to say that these are two more calculations that are required before you arrive at the amount of your deduction. Instead, let me show you an example which will hopefully bring this togehter for you:

In June you had a car accident and your car was totaled. You did not carry collision coverage on your car. You paid $18,500 for the car. At the time of the accident the car was worth $17,000. The salvage value of the car after the accident was $200. Your adjusted gross income for the year the casualty occurred is $70,000. You figure your casualty loss deduction as follows:

1. Adjusted basis of car (cost in this example) $18,500

2. Value of car at time of accident $17,000

3. Value of car after the accident $200

4. Decrease in value (line 2 minus line 3) $16,800

5. Loss (smaller of line 1 or 4) $16,800

6. Subtract insurance $0

7. Loss after reimbursement $16,800

8. Subtract $100 $16,700

9. Subtract 10% of $70,000 AGI $7,000

10. TOTAL CASUALTY LOSS DEDUCTION $9,700

Although a $9,700 tax deduction may not be as desirable as a $17,000 check from your insurance company, in this case, it's better than nothing. So the next time you suffer a property loss that's not fully covered by insurance, you may still be elgible for some financial relief. And that could cause you to say something you've never said before "Thank you IRS!"

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About Author

Both Christopher Anderson & Eric Patrick are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Christopher Anderson has sinced written about articles on various topics from Debts Loans, Real Estate and Sell Home. Christopher Anderson is part owner of He wants to share his success as a business owner with others who desire to own their own. Christopher Anderson's top article generates over 40500 views. to your Favourites.

Eric Patrick has sinced written about articles on various topics from Small Business, Legal Matters and Tax Deductions. Eric D. Patrick is an attorney and Chief Operating Officer of Consumers Insurance Agency Inc. in Camp Hill, PA. Please contact us at

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