Most of us have heard of a tax write off or of writing off an expense, but what exactly does that mean? It does not mean that you get that good or service for free. Instead, it means that the value of that good or service is deducted from your taxable income.
People who own their own business will be able to advantage of many tax write offs. Any time that they purchase business equipment or pay for a service that relates to their business, they get to write off that expense.
So, if you run a computer repair business and your business income for the year is $50,000, if you buy computer equipment for $2,000, then your taxable income for the year drops down to $48,000. As long as the expense is deemed a legitimate business expense, business owners can write it off.
Although self employed people benefit from tax write offs, it is unfortunate that employees really don’t get to benefit from them. However, many employees also have small businesses on the side, and any expenses pertaining to their small business can be written off.
If your business is home-based, you can write off basic expenses such as heat, water, Internet, etc. to the extent that you use it for your business. There are many tax advantages to having your own business, so if you are a business owner, be sure to talk to your accountant in order to ensure that you are taking full advantage of the tax write offs that are available to you.
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