Today's episode is all about getting you prepared for tax season. Making sure that you are maximizing your tax deductions and deducting things the right way so you are legally legit.
Things we talk about:
- All the things you need to consider for tax deductions that I don't want you to miss out on.
- How has COVID changed a few deductions including meals.
- The fees and overhead expenses you pay to run your business (that are deductible).
- How you can deduct uniforms but you can't deduct clothes that the IRS can consider for personal use (example a photographer wearing all black).
- The difference on claiming fuel for deduction versus claiming the mileage expenses.
Here are a few quotes:
"If you want to deduct your gasoline or you want to deduct your mileage, usually mileage always equates to more because it's considering the depreciation and value decrease on your actual vehicle and it's taking into account as well just standard fuel prices. So that's usually the one that I suggest."
"This COVID relief bill actually reversed some of those deduction criteria and it actually provides temporary full deduction on certain business meals. So with this new legislation, it's great because meal expenses incurred after 12/31/2020 and before January 1st, 2023 can be up to a hundred percent deductible, which is literally bomb.com!"
“One thing to keep in mind though, is the tax rules under the IRS limit the deduction for business guests to $25 per person per year. That has remained the same since like 1962, which is super unrealistic. They need to come back to the drawing board on this because $25 is definitely super, super small for business gift giving situations. So under 26CFR1.274-T3 it talks about the disallowance of deduction for gifts that exceed $25 and that's in general. The one thing I want to point out here though, is that legally speaking, there's exceptions to the rule like under the subsection B2, there are items that aren't treated as gifts."