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Bankrate's 2010 Tax Guide
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A dozen deductions for your small business

Which is better for you? Anticipate the times that your business will need these deductions the most. Both options are reported on IRS Form 4562.

4. Other equipment

Items such as computers, copiers, fax machines and scanners also are tax deductible. As with furniture, you can take 100 percent upfront or depreciate (this time over five years).

5. Software and subscriptions

The Section 179 provides another tax break in this area of business expenses. Previously, a company had to depreciate the cost of computer software over three years. Now, off-the-shelf software a business buys can be fully expensed in the year purchased.

The rules for deducting business and industry-related magazine subscriptions weren't changed. You can continue to take the total costs as a full deduction in the year spent.

6. Mileage

If you drive for business, the IRS wants to give you some of your money back. But Uncle Sam loves documentation, so keep a notebook in your vehicle to record the date, mileage, tolls, parking costs and the purpose of your trip.

At the end of the year, you have two choices. You can total the mileage and add in the tolls and parking to calculate your deduction. Once you have your mileage total, multiply it by an IRS-established rate to arrive at your deduction. For 2009 business tax purposes, the IRS allows 55 cents per mile for business miles. For 2010 automotive business travel, you'll be able to claim 50 cents per mile.

Or you can measure your business usage against your personal driving and deduct that portion of your auto-related expenses, says Zobel. Remember to include gas, repairs and insurance.

If you are leasing, include those payments. If you are buying the car, factor in the interest on your loan and depreciation on your vehicle.

And if your company's office is at your house, you get a bit more of a break. You can deduct the entire business-related mileage, from the minute you pull out of the driveway until you return home, says Gary W. Carter, author of "J.K. Lasser's Taxes Made Easy for Your Home-Based Business: The Ultimate Tax Handbook for the Self-Employed."

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If your business is not home-based, your mileage meter starts at your first business-related destination and ends at your last. You can't include the drive to and from home, says Carter, a CPA and professor at the University of Minnesota. In this case, try to schedule several business appointments on the same day to allow you to take the mileage between stops as a tax write-off.

7. Travel, meals, entertainment and gifts

Good news, small-business travelers. You might as well stay in a nice hotel, because the entire cost is tax deductible. Likewise, the cost of travel -- air, rail or auto -- is 100 percent deductible, as are costs associated with life on the road (dry cleaning, rental cars and tipping the bellboy).

The only exception is eating out. You can deduct only 50 percent of your meals while traveling. So stay at the Ritz-Carlton and eat at Wendy's.

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