Deprecated: mysql_connect(): The mysql extension is deprecated and will be removed in the future: use mysqli or PDO instead in /home/a26f9f83/public_html/articles/includes/config.php on line 159
Small Business Tax Deduction - Write-Off Bad Debts > NetSparsh - Viral Content you Love & Share

Small Business Tax Deduction - Write-Off Bad Debts

Practically every small business has receivables that it cannot obtain from clients. If your small business doesn't have any such receivables, consider yourself lucky. For those small businesses that suffer from uncollected receivables, solace can be taken from the fact you can claim a tax deduction.

Bad Debt Tax Deduction

A small business can write-off bad debt losses if it meets nominal requirements. To claim such a tax deduction, the following must be shown:

A. The existence of a legal relationship between the small business and debtor;

B. The receivables are worthless; and

C. The small business suffered an actual loss.

Proving there is a legal relationship between the small business and debtor is fairly simple. You must simply show that the debtor has a legal obligation to make a payment. Most businesses issue invoices or sign contracts with debtors and these documents suffice to prove the legal relationship. If you are not putting your business relationships in writing, you should begin doing so immediately.

Proving receivables are worthless is slightly more complex. A small business is required to show that the debt has become both worthless and will remain so. You must also show that you took reasonable steps to collect the receivables, but you are not necessarily required to go to court to meet this requirement. A clear example where you would meet this requirement is if the debtor filed bankruptcy.

While proving that you suffered a loss may sound like the easiest requirement to meet, the issue is a bit more complicated. The Tax Code defines the loss as an amount that is included in your books as income, but is never collected. A classic example of such a situation would be a manufacturer that provides products to retailers on credit. The manufacturer can show a real loss if the retailer files bankruptcy. Unfortunately, there is almost no way to claim a loss if you provide hourly services and use a cash accounting method. The IRS does not consider the expenditure of time and effort to be a sustained economic loss.

Small businesses suffer all to often from uncollected receivables. If you failed to claim such losses as a tax deduction during your last three tax filing years, you should file amended tax returns to get a refund.

Richard Chapo is CEO of http://www.businesstaxrecovery.com - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review.

In The News:

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news

CNBC

Do this now to avoid a tax surprise next spring
CNBC
Review your withholding now to make any necessary corrections and avoid a surprise tax bill in April. Unfamiliarity with credits, user error and failure to weigh state and local taxes may yield inaccurate results on the IRS's calculator. Consider your ...

and more »

Forbes

How IRS Taxes Kill Plaintiff's $289M Monsanto Weedkiller Verdict
Forbes
But even if Monsanto forks over the money, new tax rules will be as effective as Roundup in swallowing up most of Mr. Johnson's big verdict. Under President Trump's tax bill passed in late 2017, there is a new tax on litigation settlements: no ...

and more »

Lewiston Morning Tribune

Lewiston delays decision on forgone taxes
Lewiston Morning Tribune
The forgone taxes would be dedicated to fund the city's share of on- and off-site infrastructure improvements around the Warner Avenue property that contains Community Park and the future sites of the new Lewiston High School and the Lewis-Clark State ...


Fortune

Apple Has Appealed Its Taxes Nearly 500 Times Since 2004
Fortune
Apple has been awfully active over the last decade trying to get its tax bill down. In a deep dive into Apple's tax-appeal cases since 2004, the San Francisco Chronicle found that the company has appealed tax assessments in Santa Clara County 489 times ...
Apple fighting high property tax assessments in Santa Clara countyAppleInsider

all 3 news articles »

Forbes

Want To Cut The Taxes In Your Retirement Money?
Forbes
Many people investing in retirement plans such as 401(k), 403(b) and IRAs don't fully understand tax-deferred investing. Let's look at a few of the tax issues related to retirement planning and investing. Short-term tax vs. long-term tax aka capital gains.

and more »

Longview News-Journal

Gregg County officials continue exchanges over taxes, revenue
Longview News-Journal
The Gregg County Commissioners Court proposed maintaining the tax rate Monday, and scheduled public hearings for the mornings of Aug. 27 and Sept. 4. The proposal passed by a 3-1 vote, but not before last week's banter between County Judge Bill ...


WOAI

IRS seeking nearly $500B in back taxes
WOAI
The IRS says so far, it's in the process of sending more than 360,000 names of individuals who owe $51,000 or more in delinquent taxes. The program, part of the Fixing America's Surface Transportation Act from 2015, requires the State Department to ...
IRS Withholding Calculator | Internal Revenue Service - IRS.govIRS.gov
Fixing America's Surface Transportation Act or the FAST Act - FHWA | Federal Highway AdministrationFederal Highway Administration - US Department of Transportation

all 33 news articles »

MyStatesman.com

Georgetown keeps tax rate flat, but property taxes to rise
MyStatesman.com
Despite keeping the same property tax rate, the typical homeowner would see a $57 increase in taxes because property values have risen by an average of 4.9 percent. There also would be a $4.80 per month increase in the base electricity rate for ...
Better Understand Your Property TaxesTAPinto.net

all 6 news articles »

Consumers turning more pessimistic about wages, stocks, home prices, taxes
MarketWatch
The median expectation that taxes will go up in the next year — just months into a tax cut — rose for the fifth straight month, to 2.2% after the series low of 1.5% in February. Relatedly, year-ahead expected growth in government debt increased from ...


Reuters

UPDATE 1-Argentina suspends cuts in soymeal, soyoil export taxes
Reuters
(Adds details of treasury ministry statement). BUENOS AIRES, Aug 14 (Reuters) - Argentina has suspended its program of gradually cutting soymeal and soyoil export taxes for six months, the treasury ministry said in a statement on Tuesday, part of the ...

Google News

Organizing Your Taxes

Does this scene sound familiar? It's April 7. You haven't... Read More

About Income Taxes; Tidbits

1812The first attempt to impose an income tax on America... Read More

Tax Time Tune Up

Excerpted from the new book, "How to Do Space Age... Read More

IRS Reports Tax Gap of $300 Billion

The Internal Revenue Service is reporting that the difference between... Read More

Rental Property Tax Deductions

Own residential rental properties? This article discusses how income from... Read More

Taxation of Forgiven Debt: The 1099C & You

Often people fall on hard times and stop paying on... Read More

Tax Trap #3 -- IRS Penalties, Interest and Love Letters

As a small business owner or self-employed person, one of... Read More

Furnishing Evidence in E-Tax Compliance

Self-assessment relies on taxpayers voluntarily meeting their tax obligations. This... Read More

What to Do If You Can?t Pay Your Taxes

The end of tax filing extensions is quickly approaching. What... Read More

Small Businesses Filing Amended Federal Tax Returns to Recover Money

Small Businesses Filing Amended Federal Tax Returns to... Read More

History Of The Federal Income Tax

The powers of Congress, and the limitations set upon those... Read More

Hurricane Katrina ? How To Use Your Business Loss To Get A Refund on 2004 Taxes

With the massive losses caused by Katrina, the economy of... Read More

Fraudulent Tax Shelters ? KMPG Goes Down Hard

In the largest criminal tax case ever filed, KMPG has... Read More

A Taxing Investment

April 15 - The most dreaded day of the year... Read More

1031 Exchange Rules and Requirements

Following is a reproduction of the IRS's rules and requirements... Read More

IRS Certifies 2006 Toyota Hybrid for Clean Fuel Deduction

The Internal Revenue Service has certified the 2006 Toyota Highlander... Read More

Tax Audits: What Signs Make You More Likely to be Audited by the IRS?

It's a major fear for most Americans: A notice from... Read More

Business Tax Loophole: Leasing Assets To Your Corporation

While there are many equally valid reasons to incorporate, saving... Read More

Euro Tax Haven Threat

Media reporting of a new EU savings tax directive has... Read More

IRS Lock-In Letters ? What?s An Employer To Do?

Employers often ask employees to designate the amount of tax... Read More

Tax Trap #1 -- Waiting to Incorporate: What A Difference A Date Can Make

NOTE: This is the first in a series of 5... Read More

Another Tax Loophole

Just image, you are a small manufacturing company, business has... Read More

IRS Offer-in-Compromise, Hype or Hope?

"Settle for Pennies on the Dollar! IRS debts settled for... Read More

Tax Trap #4 -- The Quagmire of Depreciation

If you are a Small Business Owner or Self-Employed Person,... Read More

Surprising Truths About Tax Preparers

Choosing the right tax preparer for your business is a... Read More