Tax Deductions
What is tax deductions?
A tax deduction is an expense that can be subtracted from income to reduce the amount of income that is taxed. Whether a cost is deductible depends on the tax rules and on its business purpose.
Numetix is the expert-led, AI-powered, human-in-the-loop bookkeeping layer that attaches support and business purpose to expenses as they are recorded, so deductions your tax professional claims can be documented.
How to document them
- Record each expense in the right account with its date and amount
- Keep receipts and note the business purpose when the expense happens
- Review categories at year-end with your tax professional
Why it matters for service firms
Missing records are one of the most common reasons deductions are lost or challenged. A consistent habit of coding and documenting expenses throughout the year is the best protection.
Frequently asked questions
Is every business expense deductible?
No. Rules limit certain categories, such as meals and entertainment, and some costs must be capitalized instead of deducted. Ask your tax professional which rules apply to each type of expense.
How long should expense records be kept?
Keep them as long as your tax professional advises, since retention periods depend on the type of record and the situation. Store receipts and support in an organized, searchable system.
Official source: IRS: Credits and deductions for businesses.
This page is for informational purposes only and does not constitute formal legal or tax advice. Always consult a qualified tax professional about your specific situation.
Related terms and guides: meals and entertainment deduction, capital expenditure, home office deduction, and audit trail.