What are Tax Deductions?
Tax deductions are the claims which decrease the aggregate amount of tax payable by considering the expenses, costs, and investments made by the taxpayer.
In simpler words, tax deductions save you from paying unnecessary taxes. They allow you to save some extra bucks which can be used elsewhere for business or personal purposes.
Why do you need to know your costs?
If you are running a business or even doing a job, you spend a lot of money on things such as bills, clothes, conveyance, marketing, investment, etc. Most of the taxpayers do not know but almost all of these things can be considered as tax deductibles.
Tax deductibles are the items, purchases, expenses, or costs which can be used against the tax. Due to this, it becomes important to keep a track of your expenses, investments and other purchases records as a proof. These transaction records are used to calculate tax deductions and become helpful while filing tax returns.
Costs/Purchases which increase Tax Deductions
Here, we have made a list of tax deductibles which can help you in the longer run.
-
Costs while Starting-up your Business
The cost of starting up a business can be claimed against tax payable. Starting up a business is already a hectic task and the costs can spread all over the place. Therefore, the purchases of computers, software, company registration, domain purchase, personal investments, and so on are considered as tax deductions. This is applicable up to 7 years before the company starts operating properly. However, go through the terms and conditions carefully as certain starting up costs are not considered as tax deductibles.
-
Utilities or Office Supplies
Any utility or office supplies including paper, glues, printers, files, etc. can be used to increase the tax deduction claim. In simple terms, all the equipment which are solely purchased and used for business purposes are considered tax deductibles. Therefore, keep the bills of all in order to use the benefits of tax deductions.
-
Bills
You might already know that electricity-water bills, rent, and council tax are tax deductibles when you work from office. However, a proportion of house bills can also be claimed for tax deductions if there are proper proofs. In case you work from home, the bills of broadband, water, electricity and so on can be claimed against tax. For example, if only 25% of the total bills are used for business or work purposes, then only 25% of the bills can be claimed as tax deductible.
-
Repair and Maintenance Costs
The repair and maintenance of office related equipment such as computers, furniture, workplace, printers, etc. are also tax deductible. Moreover, the maintenance costs like office rent, lease, cleaning and other help in increasing the tax deduction claims too.
-
Expenses on Training or Lifelong Learning
The cost or fees of conducting training sessions for yourself or your employees are also tax deductible. The only condition is that the training should directly relate to the business and work. Other common or general learnings which are beneficial for life are also considered while claiming the tax deductions.
-
Interests on Loans or Bank Charges
If you have taken a loan to start your business, then various charges along with the interest get included in the tax deductions. All the legal and financial payments for business growth and progress are a part of operating cost. Thus, included in the tax deductibles.
-
Donations
Another popular and unknown factor of tax deductions is donations or charity. Until and unless you own a solo business, the donations and charity contributions are considered under the tax deduction claims. So basically, by doing a noble task you can save some bucks and create a win-win condition.
-
Cost of Advertising & Marketing
Advertising and marketing costs are again considered as operating expenses which are a must for all the businesses. Therefore, the money spent on advertising and marketing can also be used against the payable tax. It can include social media ads, trips to increase networks, so on and so forth.
-
Company or Work Clothes
Well, last in the list and also the least known tax deductible expense is expenses made on clothes. Obviously, it doesn’t mean raiding a store and putting it against the taxes. It only includes the purchase of company uniform, or specific work related attire.
So, these were the 9 things which can become your tax deduction claims. However, it is suggested that in order to claim these deductions, keep proper records and proofs of the expenses.
Also, if the tax season causes you a lot of stress, then you can read our experts-suggested tips to get you through the tax season easily.
Written by – Priyanka Rampal
Meanwhile, follow us on social media to get helpful insights on finance management and tax filing!
