Bad debt write offs for small business taxes consist of deductions for debts that have not been repaid to you. If you lent out money or property that was previously filed in your taxes and have not received it back, it's considered a bad debt, and the debt may be deductible on your taxes. Read on for a few types of these bad debts that you can write off.
1. Cash Loans
The most common type of bad debt write off is a cash or money loan. If you loan out money to a third party, whether an individual or another business, and that party does not pay off the debt in the allotted time, you are eligible to deduct that money from the tax return, but only for the calendar year in which the debt was to be paid. This does not work for loss of projected income.
2. Property Loans
If you loan out property that is owned by your business and it is not maintained properly or is destroyed for some reason, this may also count as a bad debt. The distinction is different for different types of items and in unique locations, so it's important to consult with a representative from the IRS or an accountant before you claim the property as a bad debt write off on your tax return.
3. Land Loans
In some cases, if you loan at the physical space of your business or a piece of property that the business owns and that property is not maintained or returned, you may be able to also write this off as bad debt or another deduction on your tax return.