WHAT IS A "WRITE-OFF"?
A write-off is a term for a tax deduction — a reduction in income that a taxpayer may claim on their tax return.
COMMON TAX WRITE-OFFS
There are multiple types of common tax write-offs, including:
BUSINESS EXPENSES
A staple in the tax write-off world, qualifying business expenses include office supplies, travel expenses, and employee salaries.
HOME OFFICE EXPENSES
Certain self-employed individuals can claim a home office as a tax write-off if used regularly and exclusively for business purposes.
CHARITABLE DONATIONS
Charitable giving allows taxpayers to reduce their annual tax bill while supporting a cause they believe in.
MORE DETAILS
Write-offs or deductions lower a taxpayer’s adjusted gross income (AGI) and, subsequently, the amount of taxes owed.
Business Expenses
To be considered tax write-off eligible, a business expense must be, in the IRS’s eyes, “necessary and ordinary” — the expense must be standard within the business's industry and be directly related to the taxpayer's business or trade.
Home Office Expenses
Certain self-employed individuals can claim a home office as a tax write-off if used regularly and exclusively for business purposes. Qualifying taxpayers can deduct a portion of their rent or mortgage and other home-related expenses like utilities, insurance, and repairs.
Charitable Donations
Charitable donations constitute another typical tax write-off. To be eligible, these donations may include money or property — and must be given to IRS-qualified charitable organizations. In addition, to claim a write-off on charitable giving, the taxpayer must possess a receipt or other proof of the donation.
Investment Losses
Investment losses occur when an investment, such as a stock or bond, decreases in value. For an investment loss to be considered tax write-off eligible, however, the loss must come as a result of a sale or exchange of the investment.
Vehicle Expenses
You can claim your car expenses as a tax write-off — if you use your car for business purposes. Qualifying expenses include things like gas, maintenance, and insurance. To make claiming this deduction as painless as possible, keeping all receipts related to vehicle expenses is imperative. Come tax time, you can either claim the actual expenses or take the standard mileage deduction.
How to Claim a Tax Write-Off
To claim a tax write-off, taxpayers must file certain forms with their tax return, depending on which write-offs they are trying to claim. These forms include:
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- Schedule A for itemized deductions
- Schedule C for business expenses
- Form 8283 for charitable donations
OVERCOME TAXIETY
Liberty Tax will walk you through the process, clear up any confusion and guarantee that you’ll get your largest possible refund* or your money back.
Contact your local Liberty Tax.
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