| Are you a small business owner who\'s frustrated | | | | correct. So what do you do now? All the above-listed |
| about taxes? You face a mind-boggling array of | | | | business income tax returns include a line called |
| choices when it comes to figuring out what is and is | | | | \"Other expenses\" or \"Other deductions\". On |
| not deductible on your income tax return each year. | | | | Schedule C, it\'s line 27. On Form 1120S, it\'s line 19. On |
| And just when you think you\'ve got this tax system | | | | Form 1120, it\'s line 26. And on Form 1065, it\'s line 20. |
| figured out, new laws are passed and it feels like | | | | This is where you get to report all the other deductions |
| you\'ve got to start all over. Perhaps the best place to | | | | that are not specifically mentioned on the previous |
| begin this journey is the income tax return itself. | | | | lines. You simply attach a separate statement that |
| Depending on what type of entity you own, here are | | | | itemizes the remaining business deductions. Then add |
| the main income tax forms: Schedule C (sole | | | | up all those other deductions and transfer the total |
| proprietorship), Form 1065 (partnership), Form 1120 (C | | | | from the attached list to the main part of the tax |
| corporation), and Form 1120S (S Corporation). Note: If | | | | return. This \"other deductions\" list can be as long as |
| you own a limited liability company (LLC), you\'ll use | | | | you need it to be. There are dozens (even hundreds) |
| one of those four forms, depending on how you | | | | of legitimate deductions for your business that the IRS |
| choose to be treated for tax purposes. These tax | | | | didn\'t think necessary to include on the main page of |
| forms are an excellent way to begin the process of | | | | the tax return. And now it\'s up to you to find out what |
| answering the question: What\'s deductible? Notice | | | | they are. There are plenty of good resources to help |
| that on each of these forms, there may only be 15 or | | | | you compile that list of bona fide deductions. The IRS |
| 20 specific expense categories, or line items, to help | | | | website has many free publications that explain |
| you know what to deduct. For example, on Schedule | | | | deductions, depending on your entity: Publication 334 |
| C, starting with line 8, you have advertising, car and | | | | (sole proprietorship), Publication 542 (C corporation), |
| truck expenses, commissions and fees, depreciation | | | | Publication 541 (partnership). For S corporations, there |
| and section 179 expense, and so forth. This list | | | | is no separate publication, so start with the Form 1120S |
| continues to line 26, wages. And that\'s it. Only 19 | | | | instructions. Admittedly, IRS publications are not known |
| expense categories. Are those the only 19 deductions | | | | for readability or comprehensiveness. So if you are |
| you can take for your sole proprietorship? Or how | | | | serious about finding out what you can deduct, do |
| about Form 1120S. The expense section starts with line | | | | yourself a favor and spend $15 or $20 on a few |
| 7, compensation of officers, and continues on to line 18, | | | | well-written books about small business tax deductions. |
| employee benefit programs. And again, that\'s it. Only | | | | Here are three of my favorites: \"422 Tax Deductions |
| 12 expense categories. Obviously there must be more | | | | for Businesses & Self-Employed Individuals\" by |
| than 12 deductions you can write off for your S | | | | Bernard B. Kamoroff, \"Small Business Taxes Made |
| corporation. So if you\'re thinking, \"These tax forms | | | | Easy: Increase Your Deductions, Reduce What You |
| give me only a handful of deductions to identify, but fall | | | | Owe, and Boost Your Profits\" by Eva Rosenberg, |
| short of providing a comprehensive list\", you are | | | | and \"Lower Your Taxes Big Time\" by Sandy Botkin. |