Six Tax Deductions Texas Small Businesses Miss Every Year
Every filing season we meet owners who have done the hard part — they kept records, they filed on time, they paid what the software told them to pay. What they did not do is claim everything the tax code already allows them to claim. The deductions below are not aggressive positions. They are ordinary, well-supported, and they turn up missing on returns we review more often than any others.
1. The Home Office, Claimed Properly
The home office deduction has a reputation for drawing attention, and that reputation keeps people away from it. The rule itself is narrow but clear: the space has to be used regularly and exclusively for business. A spare room that doubles as a guest room fails. A corner of a room used only for work passes.
You can take the simplified rate per square foot, or you can apportion actual costs — mortgage interest, insurance, utilities, repairs — by the share of your home the office occupies. The second method takes more bookkeeping and is usually worth more money.
2. Vehicle Mileage You Never Logged
Business mileage is deductible, and almost nobody records all of it. The trip to the bank, the supply run, the drive to a client's office and back — those miles add up to real money across a year, but only if there is a contemporaneous log to support them.
A mileage log written in January for the previous year is not a record. It is a reconstruction, and it will not hold up if anyone asks. Use an app that timestamps trips as they happen.
3. Startup and Organizational Costs
If you launched the business in the last few years, the costs you incurred before you opened the doors did not disappear. Market research, legal fees, incorporation costs, and initial advertising can be deducted up to a limit in the first year, with the remainder amortized.
4. Retirement Contributions That Cut This Year's Bill
A SEP-IRA or Solo 401(k) lets a profitable owner move a substantial amount of income into a retirement account and take the deduction now. The contribution deadline for some of these plans runs past the end of the tax year, which means this is one of the few decisions you can still make after the year has closed.
- SEP-IRA — simple to administer, contributions capped as a percentage of compensation.
- Solo 401(k) — higher effective ceiling for many owners because of the employee deferral.
- SIMPLE IRA — lower limits, but workable once you have employees.
5. Health Insurance Premiums for the Self-Employed
Self-employed people who pay their own medical, dental, or qualifying long-term care premiums can generally deduct them above the line, which means you get the benefit whether or not you itemize. The deduction is limited by your net business income and is unavailable for any month you were eligible for an employer plan through a spouse.
6. Professional Fees and Continuing Education
Licensing, professional association dues, trade publications, and training that maintains or improves the skills your business needs are all deductible. Education that qualifies you for a new profession is not — that distinction is where most of the disputes happen.
Where to Start
Pull last year's return and read the expense schedule line by line. If a category is blank, ask why. Some blanks are correct. The ones that are not are usually worth more than the cost of asking.
If you would like a second set of eyes on it, we review prior-year returns for new clients as a matter of course — and amended returns are available for three years from the original filing date.