small business

Write-offs for business owners

How tax write-offs work

A tax write-off decreases the amount of taxable income you report to the IRS, which reduces the amount you have to pay in taxes. For example, if you made $100,000 in a given year on your small business, and were taxed at a 40% tax rate, you would pay $40,000 in taxes that year. However, if you were able to find $60,000 in tax write-offs, or business expenses, your taxable income would be $40,000. Therefore, you would pay $16,000 in taxes instead of the $40,000, saving you $24,000. So one can see the advantages of taking advantage of tax write-offs.

Tax write-offs to know about

The first step in saving money with a home business is to learn what tax deductions are available to you. You can learn about these by contacting the IRS by calling 1-800-tax-form or online at www.irs.gov. There are two tax guides that can assist you: #334 and #530, these are the home/small business tax guides that you'll want to look through.

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