When you own a business, paying federal and state taxes is a lot different than paying them on behalf of yourself. You’re likely dealing with a much larger sum of money, and if you’re operating in more than one state, you have to pay separate state taxes—all to say it can be a confusing and stressful time. The good news is, tax season happens at the same time every year, so you have ample time to prepare for how to handle the inevitable. Plus, there are a handful of both transportation specific and general business costs you might be able to deduct from your taxes, which could end up saving you a significant amount in the long run.
General business deductible expenses
Starting a business is daunting. It’s a huge expense in terms of both money and time, and at the end of the day, it’s always a risk. In fact, a 2019 survey found that more than 50% of small businesses fail in the first year. This staggering stat shouldn’t deter you—it should motivate you. Once you start digging into why these businesses have failed, you’ll find that a majority simply weren’t prepared properly. If you can equip your business with the tools to succeed and understand why businesses in your industry have failed before, you’ll be in a good place to succeed. Something that many small businesses don’t realize is that a significant amount of their expenses are actually tax deductible. Here are some expense deductions that are worth taking advantage of if you qualify:
If you don’t run your business out of your home, you have to purchase office supplies for your company to run smoothly. Some of the most expensive equipment includes computers for each employee, along with any phones, printers, and other electronic assets your business might need to function. These things can all be tax deductible, in addition to office furniture and signage.
If you rent an office space, any utilities you pay at the building, including water, electric, trash, and phone bills are tax deductible. It’s important, however, to note that with the emergence of more businesses operating remotely, your own personal home’s water and electricity would not become tax deductible.
If you run a NEMT business, vehicle insurance is top-of-mind, but it’s not the only insurance your business requires, and it’s not the only kind that’s tax deductible, either. Most businesses purchase some of or all of the following types of insurance: health insurance, business continuation insurance, property insurance, liability coverage, malpractice insurance, and workers’ compensation costs. All of these insurance costs can be deducted in part or in full.
If you rent a building or office space to run your business, you can deduct that cost from your taxes. If you run your business from home, you may be entitled to deductions, but you’ll have to take an eligibility test to confirm.
NEMT specific deductible expenses
NEMT rules and regulations vary from state to state, so it’s important to ask your state Medicaid agency if they know of any additional deductions. In the meantime, NEMT providers across the nation can benefit from these tax deductions at their business:
Vehicle maintenance can be anything from oil changes and inspections to new tires and internal issues. These things may or may not be tax deductible, but they’re worth keeping track of in case they are. It’s important to keep receipts for any vehicle maintenance you receive to prove later on that you paid the exact amount you’d like to receive off your taxes.
The easiest way to track your miles so that you can deduct them from your taxes is by multiplying the IRS standard mileage rate, which is currently $0.56 per mile, by the number of miles driven to get the total amount you can deduct. If you’re using non-emergency medical transportation software, it’s easy to track every mile driven right within the system.
Parking and toll fees
In some cases, drivers will have to pay for parking while they wait for a patient to complete their appointment. This could be considered tax deductible as a medical expense, since it might make sense for the driver to stay versus leaving and coming back post appointment. Additionally, if a driver has to take toll roads to get to a passenger’s home or appointment, these might be tax deductible, as long as they weren’t already paid for by insurance or the client.
Build a business you’re proud of with RouteGenie
Whether you’re striving to develop a small, local NEMT business or one that spans across multiple states, you need medical transportation software on your side. Don’t continue limiting yourself by operating manually. Sign for your free demo and make the switch to modern NEMT software.