Tax Write Off
If you’ve ever heard anyone use the term “tax write off” it’s important to first understand what the term means. What is and what isn’t tax-deductible is quite a complicated matter that depends on your status and your salary. However, the short answer to tax write-offs is that if you are purchasing an item for your business; you do not have to pay tax on it…..you can write off its tax!
That does not mean of course that the shop will give it to you for the untaxed price, but rather when you purchase an item for your business you must always keep the receipt and where applicable get a tax-receipt. When at the end of the fiscal year your accountant is dealing with your taxes, he will take all of these receipts and you will be able to get your tax back from those items.
There are limits to what you can purchase for your business and claim the tax back on. The general rule is that it must be something that will aid the business in its development. Therefore, for example, a two week holiday for you in Bermuda, whilst it may refresh you and help you work harder, would not fall under the category of something eligible for a tax write off. If however, you were flying to Bermuda to meet an important client, tax write-offs could be claimed on all your expenses, relating to this meeting including the flight and hotel.
Applying for tax write-offs is not something that you want to get into trouble over; a fraudulent application is taken very seriously by the IRS. Tax write-offs are a means of making things easier for businesses and they are not meant as a means of making a quick buck or two; this should always be born in mind. The IRS website is a mind of information on this subject and if you use it as a guide you will have no problems what so ever.
For more infomation on accounting choose from the list below. |
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Banking - Business Finances - Economics - Insurance - Investing
Major Purchases - Personal Finances - Stock Market - Taxes
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