Small businesses are prone to miss employee benefit write-offs. These deductions can make the difference in owing and not owing taxes or paying more in taxes than you are required. That is why it is vital to have a good idea of what these write-offs may be. Tax preparation is much easier if you understand the process.

Deductions You Can Claim

Paying employees adds up to more outgoing cash so why not take advantage of all of the tax return deductions you can legally claim? The IRS dictates that expenses claimed must be necessary and ordinary. In addition, what you pay must be reasonable in comparison to the job being performed. There are some limits and restrictions so it is always best to consult with a professional CPA.

Most business owners understand how employee wages and taxes are allowable write-offs. However, there are some lesser known employee benefits you can claim on your tax return that you won't want to miss:

• Sick or disability pay: As long as these loss of pay items are not paid by another source, you can claim them. 
• Reimbursement or direct pay of travel expenses: If your employee is traveling for your business and has such expenses as hotel, flights, gas, meals, parking, tolls, entry fees, car rental, Uber, subway and any other travel related items, you can claim these on your tax return. Again, the costs must be reasonable and your business must pay or reimburse for the expenses in order to claim them.
• Health insurance premiums or HSA contributions: Health insurance premiums are a fairly well understood tax write-off. However, HSA or Health Savings Accounts are somewhat new and some employers may not be aware of the deductions you can claim if you set up this type of account for your employees. HSA accounts are meant as reimbursement plans for deductibles, co-pays and those items not covered by high-deductible health insurance. Employees contribute tax-free to the plan but employers may help out as well. There are limitations that change every year so do your research before you move forward with this one.
• Adoption or daycare assistance: Some employers provide a program to reimburse employees for adoption or dependent care expenses. This financial assistance can be claimed on the employer's tax return as it is a fringe benefit.
• Education assistance: Another fringe benefit that some employers offer is education reimbursement. If an employee is attending school while working for your company, you can provide reimbursement for the cost of classes and books. 
• Awards: This would include anything given to an employee for his/her service. It could encompass length of service, safety and achievement awards. These gifts must be intangible such as cash, cash equivalent, gift cards or certificates. The IRS is specific about what these awards can consist of, how they can be given and maximum allowable amounts. Consult with a CPA for a better understanding.

Work With Our Team 

Chandler & Knowles, CPAs is a full service firm. We can help you with all of your small business write-offs and tax preparation. Contact us today to get started.