Allowable Business Deduction On S Corporation Income Tax Returns

Understanding S corporations and their deduction on income tax returns is vital for small business owners. S corporations are taxed differently than other business entities, so it’s crucial to know how to take advantage of your deductions. You can deduct certain business expenses from your income tax return as an S corporation. These deductions can help reduce your overall tax liability and save you money.

Allowable deduction with S corporations can be taken for various business expenses that organizations experience as they continue with their regular business operations. Unfortunately, business owners sometimes don’t understand the possible deductions that organizations in S corporations get in their operations. 

1. Advertising and Marketing Expenses

In this category, some of the standard deductions that are taken advantage of include salaries, commissions, and related payroll taxes for employees engaged in marketing and advertising activities. These also include outside advertising agencies that might be contracted to work on specific marketing campaigns. In addition, service charges for designing and maintaining a company website can also be deducted.

2. Business Travel Expenses

Regarding business travel, the IRS allows S corporations to deduct various expenses. This can include airfare, lodging, meals, ground transportation, and even business-related entertainment expenses. It’s essential to keep good records of all business travel expenses to take advantage of these deductions come tax time.

3. Business Vehicle Expenses

If you use a vehicle for business purposes, you can deduct a portion of the operating expenses on your income tax return. This includes things like fuel, oil changes, repairs, and maintenance. You can also deduct the depreciation of business vehicles over time. However, you must show that the vehicle is used primarily for business purposes to take advantage of these deductions.

4. Office Expenses

S corporations can deduct a variety of office expenses on their income tax returns. This includes office rent, utilities, furniture, and equipment. In addition, office supplies and services can also be deducted. Although a majority of office expenses can be deducted, some exceptions apply, so it’s important to talk to your accountant or tax advisor to make sure you’re taking advantage of all the deductions available to you.

5. Computers and Office Equipment

S corporations can deduct the costs of computers and office equipment that are used for business purposes. This can include the cost of purchase, repairs, and maintenance. In addition, the depreciation of these items over time can also be deducted. However, you must be able to show that the equipment is used primarily for business purposes to take advantage of these deductions.


As you can see, there are a variety of deductions available to S corporations on their income tax returns. By taking advantage of these deductions, you can save money on your taxes and reduce your overall tax liability. If you have any questions about these deductions, be sure to talk to your accountant or tax advisor. They can help you maximize your deductions and save you money come tax time. Contact Medina & Company Consulting, Inc. for help with your taxes.