Deductible Business Taxes

If you own your own business, you're to be commended. Running your own operation is hard work, and keeping it going while making a profit is even harder. What's more, there are taxes to be paid and, depending upon your organization's structure and industry field, they can become quite prolific. These taxes can take a substantial bite out of your bottom line, but with a wise financial strategy they can also be used to your advantage. There's no need to pay more to the government than you absolutely have to. Below is a list of taxes you may be levied that can be deducted at the end of the year as business expenses:

Real estate taxes for improvements. These improvements must be ordered by the city or state for the general welfare of the public. For example, if the city levies taxes for construction to improve the downtown area where you business resides, you can deduct at least part of your tax payment as a business expense. But remember, the taxes must be deducted in the year that you made the payments. (Sometimes you can use the accrual method or pay taxes before they're actually levied, but this can be a bit tricky. Be sure to consult a tax professional before proceeding along those lines.)

State and local income taxes. Corporations and partnerships are assessed taxes by local and state governments. These taxes can be written off as business expenses in the year that they were assessed. However, at no time can you deduct federal taxes that have been paid. Individuals can deduct the same taxes if they itemize using Schedule A.

Foreign income taxes. If your business is assessed income taxes from a foreign country, they can also be deducted as a business expense. Individuals cannot claim a deduction for foreign taxes on income, because the income is not subject to U.S. taxes.

Unemployment taxes. If, as a business owner, you employ others, you may have to make payments to your state's unemployment fund. These payments can be deducted as taxes that are a part of your business expenses.

Excise taxes. Depending on the kind of business you engage in, you may incur excise taxes, which are taxes paid to the government on commodities you manufacture, use, or sell. They include environmental taxes, luxury car taxes, fuel taxes, communication taxes, manufacturer's taxes and others. These taxes, too, can be deducted as an expense of running your business.

Sales taxes. Businesses must buy equipment and services. When sales tax is paid for an item or service that is a legitimate deductible business expense for your operation, the sales tax is also deductible.

Self-employment tax. As a business owner, you are assessed self-employment tax. You're also allowed to deduct one-half of that amount from your taxable income as a business expense.

Business owners have a wealth of options for deductions on their tax returns. These deductions typically include the taxes that are paid in any given year as qualified business expenses. Consult your tax advisor more information.