7 Commonly Overlooked Tax Deductions that Could Save You Thousands

Chances are you're giving away money that’s rightfully yours. Experts estimate that millions of taxpayers overpay their taxes because they missed one or more of these commonly overlooked deductions.
Tax laws are complex and constantly changing, but you don’t have to fear missing out on these valuable deductions.
By Chris Allen, Jan 24, 2017

As a parent of two teenage daughters, I was recently introduced to a new term: FOMO.  If, like me, you’re not on Instagram or Snapchatting your ‘besties’, you may not know that it means “Fear of Missing Out.”  In the tax world, FOMO means missed tax deductions and opportunities—in other words, you’re giving away money that’s rightfully yours.  Experts estimate that millions of taxpayers just like you have overpaid their taxes because they missed one or more of these commonly overlooked tax deductions:

1. Bonus Depreciation or §179 Expensing Election

Bonus depreciation allows business owners to expense 50% of the cost of new equipment up front rather than depreciating the cost of the property over a number of years. The §179 election is even sweeter.  This election can deduct the entire cost of up to $500,000 worth of assets.

2. Self-Employed Health Insurance

If you are self-employed, your health insurance is an above the line deduction. This means that it directly reduces your adjusted gross income without being subject to the limitation on medical expenses or overall itemized deductions limitation.

3. Research & Development Tax Credit (R&D)

You may be thinking of test tubes and white lab coats, but this credit can be a goldmine for companies that design, develop, or improve their products or processes. New regulations expanded who qualifies for this credit.

4. Domestic Production Activities Deduction (§199)

If you perform manufacturing or production activities in the US, you may qualify for this additional Even construction, architecture, and engineering activities can qualify.

5. Cost Segregation Studies

If you own a real property, you may consider a cost segregation study. These engineering studies examine the nature of your assets to gain accelerated depreciation deductions, often increasing after tax cash flow.

6. Safe-Harbor Home Office

Some CPAs used to believe that the home office deduction was a “red flag.” However, the IRS has recently issued new regulations making it easy for you to claim this deduction and eliminating the need to keep detailed records of applicable expenses.

7. Retirement Plan Funding

From IRAs, Roths, SEPs, SIMPLEs, and 401(k) plans to complex defined benefit plans, the options for reducing your taxable income are numerous. Do you have the right plan for your business?

The tax laws are complex and constantly changing. But you don’t have to fear missing out on these valuable deductions. When you take advantage of the right tax deductions, you’ll save thousands of dollars in taxes—this year.

At BFBA, we make tax-planning simple so you can save money on your taxes the easy way.  Call today at (916) 924-0800 and see just how much you can save with these new tax deductions.

This article is intended for educational purposes only and is not a substitute for obtaining competent accounting, tax, legal, or financial advice from a certified public accountant, attorney, or other business advisors.  You should not act upon any of the information in this article without first seeking qualified professional guidance from your business advisors on your specific circumstances. The information presented should not be construed as advice or guidance from BFBA.