By Sergio Salinas.
As the 2026 U.S. tax filing season approaches, millions of freelancers, independent contractors and small business owners are preparing to submit their annual returns for the financial year, but many could be paying more tax than necessary, a tax expert says.
Sergio Salinas, director of tax at leading U.S. bookkeeping service, Acuity.co, powered by Sorren, says many deductions are missed because small businesses do not consistently track their expenses throughout the year, or the payee doesn’t realize the items are tax-deductible in the first place.
From start-up costs to even health insurance premiums, Acuity says identifying overlooked expenses early can make a meaningful difference to a company’s tax returns.
Home office deductions
“The home office deduction is also commonly overlooked,” explains Salinas, “You may be able to deduct a portion of expenses such as utilities, electricity, cellphone bills, and even mortgage interest or rent based on the percentage of the home used for work.
“There’s also a simplified method that allows a deduction of $5 per square foot for up to 300 square feet of office space, capping the deduction at $1,500.”
Vehicle Related Expenses
Mileage: Salinas explains how mileage is tax-deductible when used for business purposes, but tracking it can be difficult. He said, “Mileage requires a log or tracking app to document business travel, so if that record isn’t kept throughout the year, the deduction is often lost.”
Parking fees: Salinas explains how most businesses overlook other travel-related expenses. He said, “Mileage is the vehicle deduction most business owners are familiar with, but related expenses like parking fees and tolls are also often deductible when the travel is business-related.”
Car purchases: “For certain vehicles assembled in the United States and purchased after 2024, up to $10,000 of interest on the loan may be deductible.” Salinas said, “In some situations, if the business owns the vehicle or is financing it, a portion of expenses like vehicle loan interest or insurance may be deductible, too.”
Startup costs
“In many cases, businesses can deduct up to $5,000 in startup costs in the first year, with the remaining costs capitalized and amortized over 15 years,” explains Salinas. “Expenses like legal fees to form the company, market research, early advertising, training, and other setup costs can all qualify.”
“In some cases, expenses that might seem personal can qualify as business deductions depending on the type of business. For example, professional hair and makeup for brand photoshoots, clothing, or even gym memberships may qualify if they’re directly tied to the work being done.
Health insurance premiums
“If you’re a single-member LLC or sole proprietor, you typically can’t deduct health insurance directly as a business expense, but you may still be able to deduct those premiums on your personal tax return as an adjustment to income,” said Salinas.
“For businesses structured as S corporations or C corporations, the tax treatment may require the owner to receive compensation through payroll in order for the expense to be deductible.”
Education and professional training
“Education expenses that maintain or improve skills related to your current business are generally deductible. That includes professional training, certifications, conferences, books, and industry subscriptions,” said Salinas.
Bank and payment processing fees
“Bank fees and payment processing fees are deductible business expenses. That includes monthly bank charges, merchant fees from payment processors, and credit card processing fees,” said Salinas, “These expenses usually show up clearly in the company’s profit and loss statement.”
Technology and software tools
“Most technology tools used to run a business are deductible. That includes things like cloud storage, cybersecurity software, AI tools, project management platforms, and CRM systems,” said Salinas. “Whether it’s a subscription or a one-time purchase, if the technology is being used for business operations, it generally qualifies as a business expense.”
Retirement contributions
“For smaller or self-employed businesses, contributions to accounts like a traditional IRA may reduce taxable income on the owner’s personal tax return,” Salinas said. “For more established businesses that offer plans like a 401(K), company contributions toward those plans are typically treated as a deductible business expense.”
Bad debts and unpaid invoices
Salinas said, “Bad debt deductions generally apply to businesses using the accrual method of accounting. In those cases, revenue may have been recorded before payment is received, so if the payment ultimately never comes in, the unpaid amount can potentially be written off as bad debt.
“For businesses using the cash method, which is common for early startups and freelancers, income is only recognized when cash is received, meaning unpaid invoices wouldn’t be taxed in the first place.”
How to File Your Next Tax Return Like a Pro, with Help from Acuity.co
Salinas says keeping accurate financial records is key to ensuring these deductions are captured during tax season.
Salinas said, “Keeping the books clean throughout the year makes tax season far more manageable. With accurate financials, businesses can stay compliant, avoid penalties, and make sure they’re capturing the deductions and credits available to them.”
“Working with a tax professional helps ensure that deductions aren’t missed and that the business is set up correctly from the beginning. A tax advisor can ask the right questions during the preparation process and identify deductions a business owner may not have thought about.
“They can also help evaluate things like entity structure or accounting method, which can have a meaningful impact on how the business is taxed as it grows.”
You can find help with your bookkeeping on the Acuity website, here: https://acuity.co/bookkeeping/ The full expert led commentary, is here https://acuity.co/12-overlooked-tax-deductions-many-business-owners-miss/
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