Tax Deductions and Credits

  • Common Business Deductions
  • Tax Credits to Watch
  • Stay Within the Rules

Preparing Tax Returns

Tax deductions and credits are tools that help reduce your business’s tax bill. While deductions lower your taxable income, credits directly reduce the amount of tax you owe. Knowing what you’re eligible for can lead to big savings and better cash flow.

“Deductions reduce your income. Credits reduce your tax. Both reduce your stress.”

1. Common Business Deductions

There are many allowable deductions businesses can claim, including:

  • Office rent and utilities
  • Employee wages and benefits
  • Business-related travel and meals
  • Marketing and advertising costs
  • Software, subscriptions, and supplies


Keeping detailed records and receipts is key to claiming these deductions correctly.

2. Tax Credits to Watch

Credits are even more powerful than deductions because they reduce your tax liability dollar-for-dollar. Some useful credits include:

  • Small Business Health Care Tax Credit
  • Work Opportunity Tax Credit (WOTC)
  • Research and Development (R&D) Credit
  • Energy-efficient Equipment Credits


Not all businesses qualify, but if you do, it can make a significant difference in your return.

3. Stay Within the Rules

To take full advantage of deductions and credits, your records must be accurate, and your expenses must be ordinary and necessary for the business. Using accounting software or working with a tax advisor helps ensure you stay compliant while maximizing your benefits.

Key Takeaways 

✅ Deductions lower taxable income; credits reduce your tax bill
✅ Common deductions include rent, wages, travel, and advertising
✅ Tax credits offer direct savings but have eligibility rules
✅ Good recordkeeping is essential to claim deductions and credits legally
✅ Work with a tax pro to ensure compliance and savings
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