Don't Overlook These Deductions
An excerpt from James M. Kramon's Smart Business for Contractors: A Guide to Money and the Law
Don’t overlook these deductions
• Home-office deduction available to most contractors who have no office
• Expenses related to work that is done at home, such as paper and fax supplies, seperate phone and fax bills, drinks in your office refrigerator, and other miscellaneous items.
•Section 179 Property deductions. Contractors often depreciate items that qualify for this special treatment as expenses. Contractors also often fail to plan for the purchase of Section 179 Property to provide them with maximum deductions.
• Cash purchases, sometimes even including gas for the business truck or generator. Especially when you pay cash, get a receipt and write on it what it was for.
• Items that you buy when shopping for groceries. Since many supermarkets carry some of the items contractors use for their work, it’s easy to pick them up and forget to keep track of them.
• Expenses for casual business meals. You don’t have to be wearing a suit for the meal to be deductible. If there’s a real business purpose to the meal, it’s typically deductible.
• Special deductions related to building or improving certain types of structures. These rules are fairly complicated, but materials available from the IRS and, of course, information from your accountant will explain them.
• Items purchased from other contractors in the course of doing jobs. These are easy to overlook.
Jim Kramon is a founder of Kramon & Graham, a 30-person law firm in Baltimore, Maryland. Jim and his firm have represented small contractors and tradespeople for over 30 years.
