Business Tax Deductions
As we enter mid-March, taxpayers begin to become very interested in deductions. Following are a few that you may be entitled to claim.
Rent or lease payments
Costs of goods sold
Payments to independent contractors [file form 1099]
Credit Card Interest for business charges
Business-related meals and entertainment
Bank fees on business accounts
Interest payments on notes
Excise and fuel taxes
Real estate tax paid on business property
Special local assessments for repairs or maintenance to business property
Promotional costs that create goodwill such as sponsoring a youth team
Business association dues
Credit bureau fees
Telephone calls made on trips
Self-employment tax [if applicable]
Sales Tax Deduction Option
The American Jobs Creation Act of 2004 provides all taxpayers with the option to claim a deduction for state and local sales taxes instead of state and local income taxes. If you purchased a high cost item during 2004, you may find that the total sales tax you pay far exceeds your state income tax payment. If so, you should determine whether you should claim a larger deduction by using the IRS Optional State Sales Tax Tables found in IRS Publication 600.
The new sales tax deduction is a windfall for taxpayers in Alaska, Florida, Nevada, Texas, Washington, South Dakota and Wyoming. These states do not tax the income of their residents, which makes the sales tax deduction a very valuable deduction indeed! Regardless, taxpayers in all states should the possibility of claiming a sales tax deduction.