20 Little Known Tax Break Tips

Let's face it--being your own boss is a 24-7 job. From the moment you wake up to the time your heavy, weary head hits the pillow, you are on the clock. Wouldn't it be nice to find a few extra ways to save on your small business and self-employment taxes? Take in these 20 tax break tips and the extra time you'll save searching for eligible deductions can be used for something perhaps a little more leisure-like.

1. Donate Old Inventory

A lot of artists have a shelf or two--or more--of older inventory that simply did not sell. Consider donating to a qualified charity, as you can then deduct the gift on your taxes. Keep in mind the fair market value of each donated piece, as those worth more than $500 have more strict reporting rules to follow. You can even donate old supplies or equipment. This helps others in need, saves a few bucks on your taxes, and helps clean up your studio too!

2. Business Lunches Count

Did you know you can deduct 50 percent of business-related meals? If you are an artist who commissions work, why not order some take-out and invite a potential client to your studio for lunch and a tour? You may win them over with your hospitality, and later on you can deduct half of the meal on your taxes. You were going to eat lunch anyways, right?

3. Home Office Deductions

Don't let Uncle Sam scare you into not taking your fair share of home office tax deductions for your home-based business. If your office or studio--or both--are located in your home, you can make a legal claim, which is based on the percentage of your home used for business. It is important to note the space must be exclusively used for business purposes. So a guest room that doubles as a home office doesn't count, but an office with a daybed that you lay on while you sketch ideas does.

4. Bad Year Carryovers

Let's say it's been a rough year and your expenses were more than the income you earned through your handmade business. You can carry over some of those deductions to a future year! Some examples include capital losses, home office deductions, and net operating losses. These carryovers can help you reduce your taxable income in future years (up to 20 years) or you can carry back the loss for up to two years for a refund.

5. Start-Ups Save a Lot

Sometimes entrepreneurs are so wrapped up in getting their business off the ground that they fail to keep adequate records of money that may have been spent before their first sale was even made! Keep in mind that expenses such as advertising, transportation, consultant fees, travel, and legal/accounting fees apply. You can deduct up to a whopping $5,000 in start-up costs and up to $5,000 in organizational costs as long as your costs do not exceed $50,000.

6. Bank fees Add Up

You know those little annoying fees that you pay your bank to access your own money? Fees such as checking account charges, ATM withdrawal fees, and other bank services you pay for are tax deductible! Of course, you won't get every cent back, but every penny aids the bottom line in your handmade business.

7. Interest Payment Help

If you bought equipment and supplies using a credit card or small business loan, rejoice in knowing your burden is a little lower after you learn the interest you paid is a deductible business expense.

8. Health Credits

Based on a sliding scale, eligibility for this credit can be determined by using Form 8941. Businesses with fewer than 10 employees that each earn less than $25,000 each annually benefit the most from this credit. If your business did not owe taxes, you may be able to carry this credit forward.

9. Section 179 Property

Some property is eligible for a full deduction and can be categorized as expenses in the year they were first used by your small business. These include property used for manufacturing, transportation, production and off-the-shelf computer software, to name a few.

10. Rented Equipment

If your capital was low and you rented equipment to conduct business instead of buying, you can fully deduct rental expenses! These can be items you rented on a long-term contract, such as printers and copiers, but also can be what you spent on a van you rented when you set up shop at that large out-of-state art and craft show.

11. Software Subscriptions

Software subscriptions are often overlooked as deductible expenses. If you are a graphic artist or photographer, for example, these necessary subscription and recurring licensing fees can really add up.

12. Gifts that Give

Many small businesses elect to periodically give gifts to their employees. This can come in the form of a holiday gift, or even a thank-you gift doled out for extraordinary effort on a large or extensive project. Guess what? The cost of those gifts is 100 percent deductible, up to $25 per year for each employee.

13. Educational Expenses

Self-employed business owners can deduct most of their educational costs on their taxes. If you took courses to maintain and improve your skills for your current work, it's a deduction! Inclusions are tuition, books, supplies, lab fees, and travel.

14. Medicare Premiums

If you are an older handmade business owner and operate your business after qualifying for Medicare, your Medicare Part B and Part D premiums, Medicare Advantage plan premiums, as well as any supplemental "medigap" premiums can be deducted as health insurance premiums. Plus, you don't have to itemize or be concerned about the 10 percent of the AGI (adjusted gross income) test.

15. Retirement Plans

Make the government assist in funding your retirement by taking advantage of tax breaks for your contribution into IRAs (individual retirement plan) such as a solo 401(k). Money you put away last year for retirement is tax exempt--up to $18,000 if you are 49 or younger and $24,000 per year if you are aged 50 or older. You can also kick in up to 25 percent of your business earnings, for a total up to $60,000 if you are 50 or older ($54,000 if younger).

16. Business Phone and Internet

Even if you don't claim the home office deduction, you still can deduct business phone, fax, and internet expenses so long as you only write off the expenses directly related to your business. For example, if you spend 50 percent of your time online for business purposes, you can deduct 50 percent of the cost of that service on your taxes as a business expense.

17. Hire Your Kids!

If you are a sole proprietor, you can hire your own minor children and not pay any payroll taxes! Plus, if their unearned income is less than $6,000 per year it isn't subject to federal income taxes. How does the math compute? If you pay your teen just under $6,000 for work (they must actually do the work) instead of branching out and hiring an employee, you'll save about $1,500 to $2,000 per year.

18. Shared Use Vehicles

Even if you do not have a dedicated business vehicle, you can deduct the business use of your personal vehicle. This is a great way to save on your tax liability without having to purchase a second vehicle. The easiest way is to keep a log of when you used your vehicle for business reasons, what the activity was, and the miles driven for that task. Then you can claim those miles driven with a standard per-mile deduction. For 2016, this deduction is 54 cents per mile.

19. Credit Card Convenience Fees

The IRS (Internal Revenue Service) says that fees you are charged by credit card companies to process payments, or "swipe fees," are a deductible business expense. Guess what? So are annual fees and late fees.

20. Get It While You Can

The little-known energy efficient commercial building tax deduction has gone away in 2017, but if you catch it now, it might be worth filing an amended return. If you had qualifying energy-efficient equipment installed prior to January 1, 2017, you may be eligible for a deduction amount of 30 cents to $1.80 per square-foot of your commercial property that received the improvements. If you've cut total energy costs by 50 percent due to new interior lighting, a building envelope, or cooling, ventilation, or hot water systems you may be eligible for substantial savings.