Tax write-offs are as important to business owners, freelancers, and consultants as making a profit. It’s thanks to the Internal Revenue Code we can write off ordinary and necessary expenses, meaning we can stretch our dollars further in order to boost our income and propel our businesses closer to success.
For the uninitiated, this can all be a little confusing, so let’s start from the top. Firstly, there are two types of write-offs: tax deductions and tax credits, which you shouldn’t mix up despite how similar they seem.
Tax credits are most straightforward, as they cut off a certain amount of your taxes. Do you owe $6,000 but you have a credit for $2,000? Then you only have to pay $4,000. Simple, right?
Tax deductions could be a little more confusing, but they can be helpful by moving you to a lower tax bracket, meaning you’ll owe reduced taxes. If you made $60,000 and your deduction is worth $3,000, your income will be reduced to $57,000.
Now, with that out of the way, let’s look at 12 common tax write-offs to help your business flourish.