The COVID-19 pandemic has thrown a wrench in many businesses’ financial planning and tax preparation over the course of this year, but the 2021 tax season is on its way nevertheless. Just because the IRS pushed back its filing deadline to July this year does not mean it will do so again in 2021, so it’s important for you to be on the ball and ready to file your business taxes before the April deadline this coming spring. In part, this means being prepared to claim the deductions for which your Union City, NJ business qualifies.
Here are a few examples of some of the business deductions you should look into prior to 2021:
- Advertising: You are able to fully deduct advertising and promotion expenses, including website design, business cards, print advertising and digital marketing.
- Business travel: This was probably a down year for business travel, but if you did do any kind of business-related travel, you will still be able to write off the majority of your expenses, so long as you can justify them as being truly business related.
- Charitable contributions: If your business contributed to any charities or nonprofit organizations over the course of 2020, you can still claim those as deductions on your taxes. There may even be a temporary increase in the deduction amount via the CARES Act.
- Depreciation: If you have any assets that you purchased this year, you are able to deduct the entire cost. But rather than doing that in a single year, you’ll do so over time as the value of the item depreciates. This can be a bit tricky, but it means you may still be able to claim deductions for valuable assets you purchased several years ago.
- Energy efficiency: If you took any steps to make your business more energy efficient over the course of the last year, there may be some options for you to make some deductions based on that equipment. This could include solar power, geothermal heat pumps, wind turbines or other energy-efficient appliances.
- Home office: This is going to be a big deduction for a lot of people this year, as more Americans have spent the year working from home than ever before. If you have an area that is dedicated entirely to your job, you are able to deduct $5 per square foot for up to 300 square feet as a simplified version of the home office deduction. You can also deduct many of the tools and equipment you use at home to perform your job duties.
- Mortgage interest: Are you paying off a mortgage on a business property you own? If so, you can deduct the interest you paid on that mortgage throughout the year.
- Office supplies: As previously stated, any office supplies you use for your business can be deducted from your taxes, including printer ink, pens, paper or other supplies you need for your business operations.
Want to know more about the available deductions you have as you go through business tax preparation for 2021? Kedean’s Generation can help. Contact our accounting firm in Union City, NJ today to learn more about business tax deductions.
Categorised in: Tax Preparation