Small business tax tips for deductions

Small business tax advice for owners

The last thing most small business owners want to do is worry about their taxes. To help lessen that worry, the IRS recently shared a few tips and resources available for small business owners to make sure they are getting all the deductions they deserve.

Home Office Deduction

If you work from a home office, there are two options available for those considering claiming the home office deduction.

Using the regular method, business owners compute the business use of the home by dividing the expenses of operating the home between personal and business use. Direct business expenses are fully deductible and the percentage of the home floor space used for business is assignable to indirect total expenses.

Or you can reduce your paperwork and just use $5 per square foot used for business in your home. The maximum allowable square footage is 300 so the maximum deduction using this method is $1,500. 

For both methods, self-employed taxpayers file Schedule C, Profit or Loss From Business (Sole Proprietorship), and compute this deduction on Form 8829, Expenses for Business Use of Your Home, and farmers claim it on Schedule F, Profits or Loss from Farming, Line 32.

Further details on the home office deduction and the simplified method can be found in Publication 587, Business Use of Your Home, on

Credit for hiring

To help encourage businesses to take a chance on an employee who has been out of the job market for a while, the Work Opportunity Tax Credit offers a break for hiring long-term unemployment recipients and other categories of workers with employment barriers.

The Work Opportunity Tax Credit is a long-standing income tax benefit that encourages employers to hire designated categories of workers who face significant barriers to employment. For any employer considering this option, the WOTC may be able to help.

Here’s how it works.

The Work Opportunity Tax Credit is generally based on wages paid to eligible workers during the first two years of employment.

There are now 10 categories of WOTC-eligible workers. Besides long-term unemployment recipients, the other categories include certain veterans, recipients of various kinds of public assistance, felons who have had their rights restored, vocational rehabilitation referrals among others.

Eligible businesses claim the Work Opportunity Credit on their income tax return.

If you think you might qualify for a tax credit or have questions about claiming your home office, contact us today.