Top 10 Most Often Missed Business Tax Deductions

Calling the millions of dollars that are overpaid to the Internal Revenue Service (IRS) each year "a widespread epidemic," the Tax Recovery Group (TRG) released its list of the top 10 most often missed business tax deductions.

Failing to utilize these deductions accounts for the majority of businesses overpaying their taxes. According to statistics, businesses throughout the country overpay their taxes to the sum of millions of dollars each year. This list is the result of TRG's work with thousands of businesses over the years for which they have recovered millions of dollars from the IRS.

Listed in no particular order:

Personal Assets Converted to Business Use - In many cases when a person starts a business, he uses personal assets to get the business going. The best example of this would be using a computer bought with personal funds for business use. The fair market value of these converted assets can be a business deduction starting with the date of conversion.

Home Office Deductions - If a taxpayer runs a home office he is entitled to deduct expenses for the percentage of square footage the home office is occupying. Expenses include the combined total of mortgage interest, property taxes, utilities, repairs, etc. For example, if 250 square feet of a 1,000-square-foot house is being used for a home office, the taxpayer is entitled to deduct a quarter of the total expenses.

General Business Expenses - Often, a business owner will use his personal money or property for business expenses and will fail to deduct it. For example, one makes a trip to Staples to purchase some office supplies and pays for his purchase using his personal cash but fails to account for or deduct the expenditure.

Imputed Interest on Corporate Shareholder Loans - If a shareholder loans money to his corporation he is required to charge interest on it. The shareholder would be required to report the interest as income on his personal return, but the deduction on the corporate return can be used to reduce wages resulting in a refund of Social Security and Medicare taxes.

Meals/Entertainment Expenses - Similar to the general business expenses deduction, many times a business owner will use his personal money to pay for meals or entertainment expenses. This includes items such as entertaining clients.

Self-Employed Health Insurance - Tax laws allow most business owners some means for deducting health insurance benefits provided to the owner and his or her family. Many, however, fail to take advantage of this write off and therefore suffer financially.

Company Entertainment - Company holiday parties, barbecues or other forms of entertainment are often paid for with personal funds and are not accounted for or reimbursed.

Communications Expenses - Anytime a personal cell, telephone or Internet connection is used for business use it is an additional deductible expense.

Fuel Tax Credit - Fuel that a business uses for off-highway equipment or machinery is entitled to a fuel-tax credit. For example, if a landscaping company purchases fuel to power its lawnmowers or other equipment, it is entitled to a credit.

Automobile Expenses - Often, personal vehicles are used for business use but the individual will fail to deduct the mileage and other related automobile expenses.

"Although some of these deductible expenses may seem minor in a single instance, over an entire year they can add up to thousands of dollars that an individual business is unnecessarily paying the IRS," said Brace Barber, TRG President & CEO.

For more information visit http://www.trginc.us or call (800) 714-3504.