Hiring Your Children

If your own children are working for your company, you can officially hire them. It's a win-win because you can write-off that working expense while you can guide your child through working and saving money simultaneously. Wages could be paid to children free of tax up to $12,000, so that means their taxable income within this limit is nothing. On the flip side, your business receives a deduction!

Educational Assistance Plan for the Children You Employ

If you're a small business owner, you could actually deduct a portion of your employed child's tuition. Start by creating an educational assistance plan for all of your employees. Afterwards, keep track of documentation proving that your child is a legitimate employee at your company. Finally, you can reimburse your child's tuition and book expenses for over $5,000. It's important to note that they have to be 21 or older and must not be a dependent on their taxes.

Home Office Deductions

COVID-19 has seen more and more people convert part of their homes into offices and if you're in this category you could qualify for tax deductions for various expenses that you've incurred. Home office expenses are 100% deductible but, for you to qualify, these expenses must be related to the running of your business and should exclude expenses related to the rest of the home. Common expenses in this category include:

• Purchase of home office furniture
• Renovations and repairs
• Office maintenance, for instance, cleaning, plumbing, and painting.

Automobile Deductions

Purchasing either new or used vehicles with the intent of business use and transportation commonly qualify for tax deductions. For instance, the Tax Cuts and Jobs Act allows 100% bonus first-year depreciation for assets (such as vehicles) new to you or your business. Your vehicle may also be eligible for a full deduction if you use it for business purposes entirely. 

Educational Expenses

Have you enrolled in an online class in a bid to improve your skills? Could you also be purchasing books and other industry-related journals? The expenses you incur in acquiring the skills you need to help you perform better in your business are tax-deductible but you need to provide evidence that the education you're getting is relevant to your business.

Students are also eligible for tax reduction for the interest on school loans. The maximum amount that they can get is $2500.

Advertising and Promotion

Advertising and promotion taxes are 100% deductible. These include such services as:

• Expert help with designing a logo
• Printing cards and brochures
• Paying for ad space in print and online platforms
• Launching a new website
• Sponsoring an event

Bottom Line

Since 1993, the office of Wayne W. Stanforth, CPA has been offering tax and financial advice to our clients in Central Connecticut. Our skilled team of accountants, agents and clerks can help you manage your business and understand your finances to reduce and minimize tax burden.

Contact us at (860) 628-4995 or email [email protected] for a free consultation. We respond to all requests within 24 hours.