- You may only deduct sales tax charged to your business for goods and services. You may not deduct sales tax you collect from customers for goods and services you provide. Sales tax you collect from customers is remitted to the state. The tax you collect is not considered income and is also not considered an expense.
- You may deduct real estate tax for property your business expressly owns, meaning you have no personal use for, or interest in, the property. Do not deduct real estate taxes for your personal residence on line 23. If you have a net profit from self-employment, you may be eligible to allocate a portion of your personal residence real estate taxes on Form 8829, Business Use of Home. You may deduct the business portion of property tax for vehicles on line 23.
- Licenses and fees you pay the state to maintain an active status, either with the state registration division or for your professional licensure, may be deducted on line 23. Examples of fees may include the cost to maintain sales tax, food and beverage or occupational licenses; or professional certification licenses required by the state.
- Some taxes you withhold from employees and remit to government agencies on their behalf may be deducted. Examples of eligible employment tax expenses include federal unemployment tax (Form 940), employer matching portions of Social Security and Medicare taxes and employer contributions to state unemployment or disability funds. You may not deduct your own self-employment taxes, or any federal and state income taxes you withhold from employees. Although you remit the income taxes to the state, you are making the payment on behalf of the employee. The expense belongs to your employee, not your business.
Sales Tax
Real Estate and Personal Property Tax
Licenses
Employment Tax
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