Entrepreneurs are always on the lookout for ways to increase income and save on expenses. One method of saving a significant amount of money is to claim all the write-offs that you are entitled to at tax time. Here are some possible tax deductions for entrepreneurs that you may not be aware of.
Healthcare Tax Breaks
Contributions that you make to a Health Savings Account are tax-deductible. As of 2020, you can put up to $3,350 in an HSA as an individual or $7,100 for a family. You can then use the funds in your HSA tax-free for qualified medical expenses at any time.
Educational Tax Breaks
If you have a student in college at least half time, you can save up to $2,500 through the American opportunity tax credit. Besides this, the lifetime learning credit can save you up to $2,000 if you or your dependent is taking classes towards a degree. Even continuing education classes that you take to enhance your occupational skills qualify for this credit.
Retirement Savings Tax Breaks
Putting funds into a retirement savings plan such as an IRA or 401(k) may make you eligible for the saver’s tax credit. To qualify, your income must be below $32,000 as an individual, $48,000 as a head of household, or $64,000 for married filing jointly. To claim this credit, add Form 8880 to your tax return.
Childcare Tax Breaks
If you need childcare help while you work such as a nanny, daycare, preschool, or programs before and after regular school, you can qualify for the childcare tax credit. Lower incomes receive larger credits, but the credit does not have a maximum income limit.
Tax Breaks for the Self-Employed
If your business status is self-employed, you can deduct the expense of driving to meetings, visits with clients, and other work-related activities. These transportation costs qualify as business expenses. Make it easier to keep track of the business-related miles by using an appropriate app.
For more advice on tax write-offs for entrepreneurs, contact Kasher Capital.