Shrinking what you owe Uncle Sam
By now, you should have received your 1099s from your clients or gathered all schedules and other forms you need to prepare your taxes. It probably seems like a daunting task ahead of you, especially if you are still trying to pay what you owed from last year. You certainly don’t expect to get a refund, but it would be nice to shave a little from what you may owe.
You may already know to deduct the cost of equipment, inventory and those business lunches, but there are other items you may not have considered to lighten your tax burden. For example, did you know that you might be able to deduct the losses you incur when clients don’t pay what they owe you? Some deductible bad debts may include:
- Loans to clients
- Loans to suppliers
- Credit extended to customers
- Loans guaranteed to other businesses
If your financial troubles stem from any of these issues, you may find comfort in taking even that small deduction when possible.
Other ways you may lighten the tax load
If you rent an office, share co-working space or work from a room in your home, you may be able to deduct a portion of your costs from your taxes. You may also be able to deduct a percentage of utilities, interest on your business debt, and even magazine subscriptions that you purchase for customer use or for the professional development of your staff.
Some tax credits may be available for you, too. For example, if you hired a veteran to work for you, the federal government offers incentives you can claim on your taxes. The credits are even higher if you employ a veteran who became disabled in the line of military duty.
When every little bit is still not enough
After taking advantage of every possible deduction and credit, if you still find yourself with a massive tax bill to add to what you may already owe the IRS, it may be time to get some professional help. Since tax laws change each year, you don’t want to try deducting something that is no longer allowed or miss a really good deduction that may be new this year. A tax attorney can help you with that.
Your tax attorney can also explain various options for dealing with the IRS about overdue taxes or any taxes you might owe after completing this year’s return. Allowing an attorney to advocate for you with the IRS may save you from dealing with the threats and aggressive collection methods of the government.