Jerry, all these big companies, they write off everything! 🖋️ Kramer, you don’t even know what a write-off is. And hey, maybe you’re just like Kramer…hopefully minus the crazy hair and questionable life choices. 🙈
Write-offs are a little tax trick that save small businesses and self-employed Americans mucho moolah. 💸 But, to make them work for YOU, you have to…know how they work. Lucky for you, we put together some quickie facts on the basics.
Here’s Five Fast Facts on tax write-offs:
- 📑 Write Away - For small biz owners and the self-employed, tax write-offs come in clutch. Things like paying employees and buying supplies require folks to front some big time cash. The good news? These are considered business expenses and what’s known as a “write off” by the IRS. In other words, they don’t count towards what you get taxed on. Write-offs can lower the amount of income tax you owe and could get you a smaller tax bill.
- 🤑 Money for Nothin’ - We know what you’re thinking: the IRS? Giving away free money? Yup. On an individual level, tax write-offs are used as an incentive for good financial behaviors, like saving for retirement. Write-offs for self-employed peeps and small biz owners mean more money to boost business and invest in growth.
- 💳 And Your Chicks for Free - So what counts as a write-off? Basically anything that you use to run your company. If you can prove you used the money to create and sell a product or offer a service, chances are you’re good to go. Marketing expenses, office supplies, and insurance premiums all count.
- 🛑 Not So Fast - Now here’s the catch. While a lot of people think business owners just write-off their entire lives, this is super…wrong. The IRS takes write-offs seriously and anything you do write off has to 100% be related to your business. That being said, people do try to get away with murder. Like when people put their kids on payroll even if they don’t *really* work in the fam business. Unless you want IRS agents at your door, don’t try it.
- 🫵 Prove It - When it comes to write-offs, you best have proof for all that pudding. If you work for yourself or have a small business, keep records of absolutely everything. Keep your business transactions in their own bank account and separate from personal transactions. Your records should also include all invoices and bank and credit card statements. Not sure about a write-off or two? Call a business tax guru.
🔥Bottom line: Does your home double as your office? Write it off. Self-employed but paying for health insurance for you and the missus? Write it off! Oh, and before you lick that stamp and send your tax return on its way, have a professional give it a once (or twice) over. Better safe than Uncle Sam Sorry!
What’s your favorite tax write-off?
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