Tax Deduction Gotchas: Know the rules

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Nothing may be more frightening to a small business owner than going to the mailbox and seeing an unexpected business envelope with a return mailing address from the IRS! To avoid receiving a notice of an impending audit, tax experts highlight three areas that can sometimes trigger interest:
  • Charitable Giving: Itemization of all goods you provide is the key. And if you’re going to list cash donations in your deductions, be ready to provide the IRS with written specifics surrounding these donations. That’s why it’s always best to write a check.
  • Cell Phone: With multiple lines connected to one plan, it’s hard to separate out what’s business and what’s personal. But the IRS requires you to do just that. If you take just one big deduction and an audit finds too many personal calls, the deduction won’t be allowed, tax experts say.
  • Mileage Deduction: At 53.5 cents per mile driven in 2017 for work or related to volunteer work for a qualified nonprofit, this deduction can be significant for some. The key, again, is to itemize. Good records are all the IRS requires. The good news is there are some terrific smartphone apps that help you easily track your mileage – and other business expenses as well.