It’s the time of the year when a lot of people think about New Year resolutions. I’m one of those people.
What changes do you want to make in your life? New education or certifications to improve your skills? More income, wealth and/or less debt? Follow a healthier lifestyle?
The IRS may have some tax breaks for you, if you follow through on your resolutions.
Tax Deductions for Education
Let’s start with education and certifications. A friend of mine has a successful business helping large companies with their paid and SEO marketing. She is working on additional training and certifications for that business.
The cost for the classes is a write off! There are a couple of things to note about my friend’s situation.
#1: She has a business. If she worked as an employee, she wouldn’t be able to take any deductions as an employee. With her own business, she can write off education that helps her in her business.
If she didn’t yet have a business, education wouldn’t be a deduction. You can’t take a deduction for getting training that gets you ready for your business. But once you have the business, you can take a deduction for training that makes you better at what you already do.
#2: The certifications (and training) that she’s getting are in line with work she already does. If she was starting something brand new, it wouldn’t be deductible unless it somehow tied into work she already was doing.
I’m currently enrolled in a program through the AICPA (American Institute of CPAs) that will eventually get me the International Tax Specialist certification. That’s something I will use in my business and so it’s a deduction.
Your business can also set up a plan to pay for employees’ education up to $5,250 per year. The educational assistance plan doesn’t require that the education is related to work. Through December 2025, the educational assistance payments has been extended to paying for student debt (principal only) too!
Tax Deductions for Improving Your Finances
If you have a New Years resolution to improve your finances, what exactly do you want to do? Here are some common goals our clients have had, over the years:
Passive income. Money that shows up with little work on your park. It’s sustainable and gives you cash flow regularly.
More wealth. Many people have the goal to have a certain amount in investments. There is a feeling of accomplishment plus security if you have liquidity.
Less debt. Credit card debt. Student loans, Car payments. These are the kinds of debt that can just eat you alive, eroding your financial future with high interest rates and depreciating “assets.”
I don’t hate debt, but I don’t like it when all you’re doing is buying depreciating assets. Good debt builds assets and even better if it’s an asset that can afford to make the payments itself and give you more money in your pocket.
So how can the IRS help you with those kinds of financial goals?
The easiest way is for you to start a business. Instead of paying for your expenses with after tax money, you might be surprised how many expenses actually can become tax deductions when you start a business.
This can include expenses like your cell phone, cell phone plan, computer, ISP, auto, education, travel, meals and paying our kids. Of course, you need to have a business that is already operating, proof that the business expenses actually occurred and that you paid for them (or charged them to your credit card) and that the expenses were ordinary and necessary to the “production of income” for your business.
The more expenses you can turn from personal expenses to legitimate business deductions, the less tax you pay. And that tax savings can go a long way to helping you build other assets and reduce your debt.
Many of my clients invest in real estate to create passive income streams. Tax deductions mean they can often pocket cash flow and yet create tax losses to offset other income.
And best of all, the education you get learning how to do all these things – write off deductions, create passive cash flow with big tax deductions and turn your wealth into tax free income streams – is all tax deductible too.
If you have a business or real estate investment, you can take a deduction for the Wednesday Coaching classes. They classes are held on the 1st – 4th Wednesday at 5 pm Pacific. You can ask questions live during the sessions or send an email to. We discuss general tax strategies, real estate asset protection, cash flow creation and tax cutting strategies and business wealth building, cash flow increase and tax reduction moves.
Tax Deductions for a Healthier Lifestyle
What does a healthier lifestyle look like for you? Maybe it’s eating better. If you have meals for a business purpose (meeting with clients, fellow workers, prospects or vendors), you have a business deduction. Business meal deductions through 2022 are 100% deductible if they are from a restaurant. This could include picking up meals to go, as long as they are from a restaurant. Why not make the meals healthier AND get the tax deduction?
If you’re looking to get in shape with a treadmill, Peloton program and equipment, weights or the like, add a physical fitness work out spot to your work place and your business gets a deduction. That can even include adding a work out space for your home office.
Talk to Your Tax Professional Today!
What’s deductible? Just about anything can be deductible, depending on your business and what could be a normal deduction for that business. Talk to your tax professional today to find out how you can pick up more tax write offs as you build a healthier tomorrow for yourself.
We’d love to see you in the Wednesday Coaching classes too. This can be a great way to learn new ways to write off expenses along with other business tax strategies.