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Wednesday, July 30, 2014

Tax Deductions for Business Expenses

Everybody hopes to minimize their tax liabilities and maximize their tax benefits. If you are planning on deducting business expenses in order to increase your tax return, there are a few important pieces of information to keep in mind.

If you wish to deduct a business expense, the expense must have two important qualities: it must be ordinary and it also must be necessary. An "ordinary" business expense is simply one that is commonly occurred in your industry. A "necessary" business expense is one that will help to grow or maintain your business. Below you can find further description of the three main categories of deductible business expenses.

Transportation Costs:
Transportation costs are the most common type of business write-offs. If you required to travel for business, the costs you incur while doing so can deducted as a business expenses. Examples of this would be plane, train or bus tickets.

Travel Expenses
Other common deductions are for travel expenses. The guidelines for deducting travel expenses are as follows: You can deduct up to 50% of your meal costs and 100% of your other lodging and travel expenses during a business trip.

Deductible travel expenses can include things like:
- Meals
- Cost of renting a car and gas once at your destination, alternatively the cost of public transportation to and from your work
- Work necessities such as computer rentals, WIFI, or secretarial services
- Cost of fax, telephone or internet usage

Entertainment Expenses:
Meals and most other entertainment expenses can be deducted at 50%, however, these expenses can not be "lavish or extravagant" and as always must be directly related to business. You can deduct business expenses while entertaining at home. Events such as sales seminars from home are legitimate business expenses even if they take place while at home.

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