Research Write-Offs To Reduce Tax Bills

By Steve Thompson, Contributing Writer

With the economic crisis in full swing, business owners and workers are looking for the most tax deductions and write-offs they can find.

Saving money on taxes can free up a significant amount of cash, and itemizing might save you money over taking the standard deductions.

However, it is important to remember that deductions and write-offs that work for one person might not be applicable to your situation. Working with an experienced CPA or checking your facts with the IRS will save you headaches in the future.

Bad Debt
According to 4HB.com, bad debt can be converted into deductions and write-offs with the IRS. Bad debt occurs when you extend credit to someone, offer a payment plan, but never receive the money you are owed.

The most important thing with this deduction is that you must have significant proof of the debt.

Make sure you've saved the invoice or invoices that you submitted to the other individual or entity -- and don't forget to include any payments they made toward the principle of the debt.

Cancelled checks can be used for this purpose.

Eco-Friendly Appliances
If you've replaced any of your home appliances this year with Energy Star products, you might qualify for deductions and write-offs on your taxes.

The government wants U.S. citizens to save money and help the environment with appliances that use less energy and generate less pollution. According to EnergyStar.gov, "insulation, replacement windows, nonsolar water heaters, and certain high efficiency heating and cooling equipment" may qualify.

You also can obtain deductions and write-offs if you've bought a new home or upgraded your current home.

Relocating
There are no deductions or tax write-offs if you've simply picked up and moved cross-country, but you can get some tax relief if you've moved more than 50 miles for a new job.

PeopleJam.com reports that both moving and travel expenses are often deductible. Just remember that you cannot benefit twice from moving expenses.

Many companies offer reimbursement for moving and travel expenses incurred by new employees, so if your boss has paid, Uncle Sam doesn't want to get the bill, too. This only applies if you've moved for a new job on your own dime.

Business Meals
PeopleJam also advises consumers to consider business meals for deductions and write-offs.

For example, if you're taking a candidate for a lunch interview or entertaining sales clients at dinner, the bill might be deductible. Of course this only applies if you pick up the tab and business is actually discussed.

The most important thing to remember about business deductions and write-offs for taxes is that only half the bill is usually eligible for deductions, and this will vary depending on how much you spend and whether the meal seems legitimate.

Peppering your taxes with lots of these write-offs might arouse suspicion with the IRS.

Finding little-known tax deductions and write-offs can seem like a big relief when April rolls around, but you have to be careful. Make sure that you verify exactly what is deductible and what isn't; you'll also want to read the fine print.

Some deductions are limited by scope or other criteria, and the IRS doesn't tolerate mistakes.