As a business person or everyday taxpayer you may think that you have taken every conceivable tax deduction available to you. However, if you paid closer attention to recent amendments to the tax code you may have uncovered some additional special deductions for the most recent tax year. Yes, you already filed your tax return but the following information may encourage you to amend your return for more expansive deduction options.
Disaster donations – From time to time the Internal Revenue Service will rule that certain donations to help out with disasters can be made. In the case of the tsunami which devastated the Pacific Rim region all the way to Africa, you could deduct those contributions with either your 2004 or 2005 return, but not both. Yes, even if the donation was made in 2005 you could amend your 2004 return to show your contribution.
Sales tax – State sales tax can be a deductible expense. Did your accountant overlook this fact? Not all states charge for sales tax and maybe your business is based in a state where no tax is charged, but you purchased items in other states that were taxed. Check your receipts closely for the origin of each purchase!
Deducting the Business SUV – Companies can still get a tax deduction, for as much as $25,000, for an SUV purchased for the business. It used to be that the deductible amount was $100,000 but that amount was trimmed to the lower figure in 2004. If you have a non-SUV vehicle you can still deduct the larger amount.
Small Business Pension Plan – If you started a pension plan for your small business, you could end up with a sizable deduction for establishing such a plan. Geared toward helping small businesses with 100 or fewer employees, you need to consult the IRS’ guidelines to learn what your deductions are. This deduction includes the cost of implementing and maintaining the program as well as deductions for any educational retirement planning programs you establish.
Any four of these deductions alone could help you save a mint in taxes. Consult with your accountant to have him make the amendments needed and go over with him other possible deductions that may have been overlooked. You know that paying taxes is a fact of life, but you also know that the government has established some nifty deductions that no business or taxpayer should overlook.