Maximize Your Tax Refund: Don't Miss Out on These Common Tax Deductions

Filing taxes can be an unpleasant financial burden that most people face. Depending on your income, you may owe the government a large sum. Fortunately, the IRS has created deductions for individuals, investors, and small business owners to help you save money. It is important to remember that no deductions are automatic, and you must be aware of them to claim them. Many people who file their taxes miss out on deductions which could save them a significant amount of money.

Having a tax professional take care of your taxes ensures you get the most out of eligible deductions. However, it's also important to understand the basics of taxes and what you owe. Even if you are comfortable managing your finances, hiring an accountant to do your taxes can be beneficial to ensure accuracy in all income, expenses, and deductions.

Here are tax deductibles you may have overlooked:

Bonus Depreciation

Buying items for your business can be a great way to lower your taxes. Currently, businesses can utilize bonus depreciation to deduct 100 percent of the depreciation costs of equipment in the same year of purchase. This rate will drop to 20 percent each year until 2026. Additionally, up to $500,000 worth of assets can be deducted in a single year, providing a large tax break.

Research and Experimentation Credit

The Research and Experimentation Tax Credit is an often overlooked deduction that many small businesses qualify for. Companies can use it to cover wages, supplies, contract fees, and other costs related to research activities. While some research activities may be excluded if your business has been operational for a certain time, you may qualify for this credit. 

For instance, if you have had average R&D expenses of $100,000 for the past three years, your credit base is $50,000. This year if you incurred $120,000 in R&D expenditures, that is $70,000 more than your base. This would entitle you to a 14 percent tax credit worth $9,800, which can be claimed in a lump sum or spread out over five years!

State Sale Credit

When filing tax returns in New Jersey, you can deduct your state or local income taxes. It is advised to consult with a tax professional to determine which will be more beneficial for you. If you file a Form 1040, you may be eligible for a state sales tax deduction and can itemize the deduction on Schedule A.

Vehicle Credit

Business owners, entrepreneurs, and investors can benefit from deducting the costs of using a vehicle for their business. Keep track of your expenses and mileage easily; QuickBooks can help you stay organized. Any business-related travel, such as off-site meetings, temporary workplaces, or other vehicle uses as part of the business, can be deducted. Depreciation and repairs for vehicles used primarily for business may also be deductible. To maximize these deductions, always consult a Certified Public Accountant.

In Closing

Complying with the law means paying taxes and enjoying the benefits of deductions where they are fit. Mention these credits to your CPA or let them read this article so your business can qualify for these valid deductibles on your tax returns!

Talk to Hawk Tax Solutions Today

Our firm aims to provide results-driven solutions that eliminate all the hassles of computing what you owe the U.S. government. We’ll help you claim any of the above tax deductions and more, so set up an appointment with a Hawk Tax Solutions expert today by clicking this link!