Congress passed the Tax Cuts and Jobs Act (TCJA) on January 1, 2018, a tax reform law that will impact taxpayers and small businesses throughout the United States. The good news for stressed out entrepreneurs? While the changes have already taken effect, tax returns filed this spring for the 2017 tax year will generally not be impacted by the new law.
However, buzz around the tax law changes continues to stay top of mind for many ecommerce entrepreneurs. They’re aware that they need to file for this year, but are simultaneously trying to prep their business to meet the criteria set by the for next year’s taxes while understanding how the reform will continue to affect them.
If this sounds a little bit like your own situation, take a deep breath and relax. We’ve rounded up a few of the biggest deductions that your business can take advantage of this year with a nod to what you can do to make next year a bit easier all around.
Figure out if you qualify for a home office deduction
If you run your eCommerce business from your home, you’re probably fairly familiar with home office deductions. Here’s a quick rundown for anyone new to this deduction. In order to qualify for a deduction, the IRS states that your home must be the principal place of your business and used regularly and extensively. This means your home is the principal location for where you do business and a part of said home is used exclusively for conducting business. A space designated as your home office that you spend the vast majority of your time working out of would qualify for a deduction. A couch you occasionally sit on to work, but mostly watch Netflix from would not. Once you have a space that qualifies for a deduction, you can begin your calculations using either the simplified option or the regular method.
Deduct travel expenses
If you temporarily travelled on behalf of your eCommerce business and weren’t reimbursed, now’s the chance to deduct those travel expenses. The IRS has created a helpful chart that allows you to determine what the deduction costs look like for those kinds of expenses. For example, if you stayed at a hotel, you would be able to deduct the cost of the hotel stay is your trip was overnight or long enough that, in order to properly do your duties, you needed to stop for sleep.
Take advantage of tracking your mileage
If your version of business travel involved hitting the road, the IRS recommends using the standard mileage rate to determine the deductible costs for using your car for purposes related to business. Starting January 1, 2018, the standard mileage rate for vehicles including cars, vans, pickups, and panel trucks is 54.5 cents. The rate for 2017 is 53.5 cents.
Work with a tax preparer
Disclaimer alert! I am not a professional tax preparer or CPA so unfortunately, I cannot tell you the next best move to make with your eCommerce business. However, what I can do is advise anyone with more questions about deductions or any other topics to schedule in an appointment to visit a tax preparer. Make sure to save your tax records and receipts from previous years, as you may be asked to bring these in as well. By meeting with a pro, you’ll be able to ask any questions you have about this year’s set of deductions and better strategize how you can prep now for tax season in 2019.
Have any questions about taxes? Ask them in the comments!