Summer is prime time for business travel, vehicle purchases, and retirement planning. Learn which deductions apply to you and how to document them properly so they hold up under scrutiny.
Vehicle Deductions: Actual Expense vs. Standard Mileage
If you use a vehicle for business, you have two options: deduct actual expenses (gas, insurance, repairs, depreciation) or use the IRS standard mileage rate (67 cents per mile for 2024). The standard mileage method is simpler but may not give you the largest deduction if you drive a newer, more expensive vehicle. The key rule: you must choose your method in the first year you use the vehicle for business. After that, you're generally locked in. Keep a mileage log — the IRS requires it regardless of which method you use.
Business Travel: What's Deductible and What Isn't
Business travel is deductible when the primary purpose of the trip is business. Transportation costs (flights, rental cars, hotels) are 100% deductible. Meals during travel are 50% deductible. Personal days tacked onto a business trip are not deductible. If you're traveling with a spouse who isn't an employee of your business, their expenses are generally not deductible. Document the business purpose of every trip — a note in your calendar or expense report is sufficient.
Solo 401(k) vs. SEP-IRA: Which Is Right for You?
Self-employed individuals can contribute significantly more to retirement accounts than W-2 employees. A Solo 401(k) allows contributions up to $69,000 in 2024 (plus a $7,500 catch-up if you're 50 or older). A SEP-IRA allows up to 25% of net self-employment income, up to $69,000. The Solo 401(k) generally allows higher contributions at lower income levels. Both reduce your taxable income dollar-for-dollar. If you don't have a retirement plan set up yet, now is the time.
From the Firm
Our team recently completed advanced training in IRS representation and tax controversy. If you've received a notice from the IRS or are facing an audit, we can represent you directly before the IRS. You don't have to face it alone — and you shouldn't. Call us as soon as you receive any IRS correspondence.