Deducting Business Expense: Reasonable Expenses You Can Write Off

You spend a lot for your business. Thankfully, the IRS allows you to deduct business expenses to lower your taxable income. Said another way: the more deductions you have, the lower your taxable income and the less income tax you pay.

But what business expense qualifies for this deduction? What does the IRS consider as reasonable business expenses? We'll cover what every agent and broker needs to know.

What Are Deductible Business Expenses?

Most of the work involved in doing your taxes will go into determining what deductions you can take, how much you can take, and when you can take them. You don't have to become an income tax expert. But even if you have a tax professional prepare your tax returns, you need to have a basic understanding of what expenses are deductible so that you can keep proper records.

This takes some time, but it's worth it. There's no point in working hard to earn a good income only to miss deductions to which you are entitled and turn over more of your income to the government than required.

What Reasonable Business Expenses Can You Deduct?

Virtually any expense is deductible as long as it is:

• Ordinary and necessary
• Directly related to your business
• For a reasonable amount.