7. Software Deductions
Software normally must be written off over three years because it will serve your business for more than one year. Section 179, however, allows small businesses to fully deduct off-the-shelf software the year it is purchased, as long as it is used the same year.8. Charitable Deductions
Partnerships, S corporations and limited liability companies all require that their members file the company's taxes on their personal forms, including charitable donations. Donations are "passed through" members, like the organization's income. C corporations are entitled to corporate deductions.Individuals can deduct between 30 percent and 50 percent of their adjusted gross income to qualifying 501(c)(3)charities and foundations. Corporations can deduct up to 10 percent of their taxable income, according to the Better Business Bureau's Wise Giving Alliance. If you want to contribute $250 or more and receive a deduction, you must have a letter from the organization verifying your donation.
If your business makes a non-cash donation, such as giving a car or a computer, figure out how much you can deduct. The deduction will decrease if you've already received a tax break for the donated property or if it has lost significant value. Check both Publication 551 and the Section 179 deduction.
9. Advertising Deductions
Advertising and promotions directly related to your business are deductible as miscellaneous expenses. See Publication 535 to write off advertising and other costs.10. Legal and Professional Fee Deductions
Accountant and attorney fees are deductible as business expenses, but you cannot deduct professional fees for purchasing business assets such as equipment. Those charges are included as costs of the purchase. Sole proprietors can write off fees from tax professionals on Schedule C or Schedule C-EZ. For sole proprietors, any additional expenses can be deducted on Schedule A of your 1040.Check with a tax professional for more guidance on interpreting these IRS options.
Tiare Rath is a freelance journalist and a former personal finance columnist for MarketWatch.com.
