The Tax Deductions Your Accountant Should Be Finding (And What It Costs You When They Don't)

Business owners who work with a good accountant do not just get their taxes filed. They get a lower tax bill than they would have had otherwise.

That difference is not luck. It is a strategy, and it starts well before April.

The deductions below are not obscure loopholes. They are legitimate, commonly applicable, and consistently missed, either because business owners do not track them or because their accountant is not asking the right questions.

Section 179 and Bonus Depreciation

If you purchased equipment, machinery, technology, or qualifying vehicles for your business this year, you may be able to deduct the full cost in the current tax year rather than depreciating it over time. Section 179 allows up to $1,160,000 in deductions for 2023, with the amount adjusted annually. Bonus depreciation has been phased down. It was 100% through 2022, dropped to 80% in 2023, and continues to decrease, which means the window to maximize it is narrowing.

This is a planning decision, not just a filing decision. The timing of purchases matters, and so does whether you have enough taxable income to absorb the deduction. Many business owners buy equipment in December to reduce taxes without understanding whether Section 179 or bonus depreciation actually makes sense for their situation.

The Qualified Business Income (QBI) Deduction

If you are a pass-through entity — sole proprietor, partnership, S-corp, or LLC — you may qualify for a 20% deduction on qualified business income under Section 199A. This deduction alone can be worth tens of thousands of dollars annually for profitable small businesses.

It has phase-out thresholds, limitations for certain service industries, and W-2 wage tests that can reduce or eliminate it. Whether you can take it and how much depend on your income, your structure, and how you are compensating yourself. It is not automatic. It has to be calculated and documented.

Vehicle Deductions: Actual Expense vs. Standard Mileage

The IRS standard mileage rate for 2024 is 67 cents per mile. That sounds simple, but it is not always the better option. If you have a heavy SUV or truck used more than 50% for business, the actual expense method combined with Section 179 may produce a significantly larger deduction. The catch: you have to decide which method to use in the first year the vehicle is placed in service. Switching later is restricted.

If you use a vehicle for business and have not had this conversation with your accountant, you may have been leaving money on the table for years.

Retirement Contributions as a Tax Strategy

A SEP-IRA allows contributions up to 25% of net self-employment income, with a 2024 cap of $69,000. A Solo 401(k) has similar contribution limits but also allows employee contribution deferrals, which can be more advantageous depending on your income level. These contributions reduce your taxable income dollar for dollar, and the money goes into an account you control.

Most business owners are either not contributing at all or contributing the minimum without understanding what is possible. Running the numbers on a maxed SEP-IRA vs. a Solo 401(k) vs. a SIMPLE IRA can easily produce a $10,000 to $30,000 difference in your tax liability in a given year.

What Good Tax Planning Actually Looks Like

It is not a December phone call asking how much you should pay in estimated taxes. It is a mid-year projection in June or July, when there is still time to accelerate deductions, defer income, adjust payroll, or make a retirement contribution before the window closes.

If your current accountant is not initiating those conversations, they are doing compliance work. That is not the same thing as tax strategy.

Want to know what your actual tax liability should be, not just what you filed? Book a free consultation, and we will compare your last two returns.

Suggested Resources

- IRS Section 179 Deduction Info (irs.gov/publications/p946): current limits and qualifying property

- IRS Publication 560 — Retirement Plans for Small Business (irs.gov): SEP, SIMPLE, and Keogh plan rules

- QBI Deduction Overview (irs.gov/newsroom/qualified-business-income-deduction)