Small businesses are again waiting for Congress to make deductions on the bills that will affect their tax deductions. Every year, many tax breaks expire while some are extended. When the time comes to prepare and file taxes, small businesses use the various deductions and credits allowed to them, which can potentially reduce their tax bill by thousands of dollars.
Some of the tax deductions that small businesses can claim without wait are the:
- Cost of transportation
- Expenses made in business advertising
- Expenses made on business utilities and office supplies
- Expenses made on office repair
- Cost of starting a new business in the first year
- Business entertainment expenses
- Travel expenses for business
Section 179 Deduction
The Section 179 deduction allows you to recover all or a part of the cost of certain qualifying property by deducting it in the year in which you place the property in service. You can choose to use the section 179 deduction instead of using depreciation deductions to recover costs. A property is eligible for this deduction if it is acquired for business use, and was purchased. Other qualifying factors also apply. The section 179 deduction has been minimized from $500,000 in 2013 to a maximum of $25,000 for years beginning after tax year 2013.
Deductions such as section 179 when added with other deductions contribute to thousands of dollars of savings for small businesses. Until lawmakers make the final decision regarding the extension of old deductions and the creation of new, small businesses are stuck with their 2013 tax liabilities.
Even though it is frustrating for small businesses to wait for the final word on certain deductions, the priority of the lawmakers is to satisfy the federal budget and the tax code. To absorb this uncertainty, small businesses make adjustments to their expenditures such as postponing purchases, rebuilding and/or repair.