6 Uncommon & Complex Tax Write Offs & Business Tax Deductions

What are some large business tax deductions that aren't that well known?  What are some advanced ways you can reduce taxes or what are some large tax write offs that business owners might not know about?

Well, we're going to quickly share some ideas for tax write offs that might be a little deeper and more advanced than what your typical tax accountant is going to talk about.

If your business needs aggressive tax planning, we would love to connect.

We're a Business CPA, Accounting, Bookkeeping & Business Tax company out of Des Moines, that helps small businesses across the country.

What do we focus on?

Handling all your accounting, bookkeeping & tax, with a laser focus on providing year-round, aggressive tax reduction planning.

Our clients never overpay in tax.

So, here are six other business tax deductions you might want to know about.

Before We Unbox the Complex Tax Write Offs:

We always make sure that you're implementing our fundamentals of tax reduction:

1 - Maximizing an S-Corp and your Reasonable Salary.

2 - Utilizing Benefits and Retirement Plans for Tax Reduction

3 - Hiring Your Family & Kids

4 - Investing in Real Estate & Using Depreciation and Cost Segregations

5 - Equipment Purchase Planning & Investing in Business Growth

We always make sure the basics are covered before we move onto these more complex tax write offs.

Major Business Tax Write Off #1 Qualified Business Income Deduction

Businesses can deduct up to 20% of their qualified business income. This deduction applies to many types of businesses including sole proprietorships, partnerships, S corporations, and some trusts and estates. For more details, see the IRS website.

Caution About the QBI: The rules for calculating and claiming the Qualified Business Income Deduction can be complex, especially determining what constitutes qualified business income. The phase-out thresholds based on income levels and the type of business can also affect eligibility.

Consultation About the QBI: Discuss with your accountant how your specific business type and income level affect your eligibility and how to maximize this deduction effectively.

Major Business Tax Write Off #2 Business Losses Limitation

The Tax Cuts and Jobs Act limits business losses to $250,000 (or $500,000 for joint filings), with disallowed losses carried forward as a net operating loss. More information can be found on the IRS website.

Caution Concerning Business Loss Limitation: There are strict limits on how much business loss can be used to offset income. Excess losses must be treated as a net operating loss and carried forward to future tax years, which could impact financial planning.

Consultation: Ensure you understand how to properly apply these loss limitations and the implications for carrying losses forward, which may require strategic tax planning over multiple years.

Major Business Tax Write Off #3 Work Opportunity Tax Credit (WOTC)

Available for employers hiring individuals from certain target groups facing employment barriers. Detailed guidance is available on the IRS website.

Caution About the WOTC: This credit has eligibility criteria based on the type of employees hired and requires timely filing of specific forms shortly after the eligible worker begins employment.

Consultation: Verify the eligibility categories of your employees and discuss the timing and documentation required to claim this credit.

Major Business Tax Write Off #4 Employer-Provided Childcare Credit

‍Businesses providing childcare benefits can claim a tax credit. Further details are available on the IRS website.

Caution About the Employer-Provided Childcare Credit: To qualify for this credit, specific expenditures on childcare facilities or services must meet IRS requirements, and there are caps on the amount of the credit.

Consultation: An accountant can help determine which expenses qualify and ensure that the calculation and claim processes are handled correctly.

Major Business Tax Write Off #5 Energy Efficient Commercial Buildings Deduction

Offers a deduction for building owners who improve the energy efficiency of their buildings by at least 25%. More information can be found on the IRS website.

Caution About This Deduction: The deduction requires that specific energy efficiency improvements exceed certain percentage reductions in energy costs, which must be certified by a qualified individual.

Consultation: Consult a professional to ensure that improvements meet energy efficiency requirements and to manage the certification process.

Major Business Tax Write Off #6 Advanced Energy Project Credit

A 30% tax credit for qualified investments in advanced energy projects that meet certain requirements. Learn more at the IRS website.

Caution About This: This credit is only available for specific types of energy projects approved by the Department of Energy, and it involves meeting detailed requirements including prevailing wage and apprenticeship requirements for the full credit rate.

Consultation: Discuss with your accountant the project’s eligibility, application process for the Department of Energy's approval, and compliance with wage requirements.