Hidden Treasures

Are you taking full advantage of all of the expenses allowed you as a business owner?

Most business owners think they are pretty thorough, but there may in fact be deductions that you are overlooking. One possibility is that you may have business property classified improperly on Form 4562, Depreciation and Amortization.

Basically, the classification on this form determines over how many years the expense is amortized, and therefore how much of it you can claim each year as a deduction from your gross income. The shorter period over which the expense is amortized, the more of a deduction you get each year — and the less income you have to claim. You can reclassify property through a process called cost seg engineering, and even recoup money lost to overpaid taxes in previous years.

Obviously, this reduces the number of years you will be able to claim the expense, but it also reduces your net income — and therefore your taxes — during those years. Since you don't know the future — you might not have the business in ten years, or you might have sold the property and purchased new property by that time — it is important to take full advantage of the tax deductions allowed you now.