Tax day is a week away. I know, it snuck up on me too.
If you’ve procrastinated filing your taxes, or would just like to read up on some general information regarding business expenses, this article is for you.
If your employees pay work-related expenses out of their own pocket, they may be able to deduct them. Generally speaking, employee business expenses are deductible if they are more than two percent of adjusted gross income.
Here are some other things to remember:
Expenses must be ordinary and necessary. Your employees can only deduct unreimbursed expenses that are ordinary and necessary to their work for your small business. An ordinary expense is defined as one that is common and accepted in the industry. A necessary one is appropriate and helpful to a business.
Examples of potentially deductible costs:
- Required work clothes or uniforms otherwise not appropriate for everyday wear.
- Supplies and tools to be used on the job.
- Use of a car for business purposes.
- Meals and entertainment for business use.
- Business travel.
- Business use of a home.
- Education that is work-related.
Know what forms to use?
How long should you keep the records?
The IRS suggests that you and your employees should keep good records for proof of income and expenses. They’ll help you be sure that you don’t overlook anything. Click here to find more details on what exactly to keep and for how long.
Don't want to handle taxes alone next year? When you sign up for PrimePay's payroll services, your taxes are essentially done for you as well. Click here to learn more.
Disclaimer: Please note that this is not all inclusive. Our guidance is designed only to give general information on the issues actually covered. It is not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Consult your own legal advisor regarding specific application of the information to your own plan.