7 tax deductions Castle Rock small businesses routinely miss.
The Augusta Rule, accountable plans, SEP-IRA, vehicle, home office, retirement contribution timing — what we find sitting on the table at every cleanup.
By Kali Gilliland · April 22, 2026
Every year we onboard new clients in Castle Rock, Highlands Ranch, Lone Tree, and the rest of Douglas County who have been preparing their own returns or using a generic prep service. The pattern is consistent: legitimate deductions worth thousands of dollars are getting skipped, year after year, because nobody walked the owner through what was actually available.
Here are the seven we find most often. None of these are aggressive positions. They are deductions Congress put on the books, and the IRS expects you to use them.
1. The Augusta Rule (Section 280A(g))
If you own a home and you operate an S-corp or C-corp, you can rent your personal residence to your business for up to 14 days a year at fair market rates — and the rent is tax-free to you personally. The corporation deducts the rent as a business expense.
Use cases: quarterly board meetings, annual planning retreats, off-site team workshops. Document with rental agreements, meeting minutes, and a comparable-rate analysis (a single phone quote from a meeting venue in your area is usually enough). Realistic deduction range: $300 to $1,500 per day depending on home and location, totaling $4,200 to $21,000 per year.
A Castle Rock contractor we onboarded last year had been holding monthly "team strategy meetings" at his house for three years and had never claimed Augusta Rule. We documented the prior 14 meetings (under the safe harbor day count), priced comparable venues at $650/day, and recovered roughly $9,000 in legitimate corporate deductions on amended returns.
2. Accountable plan reimbursements (S-corp owners)
If you operate as an S-corp and you pay personally for business expenses (mileage, home office, internet, cell phone), you should be running an accountable plan. The corporation reimburses you for documented expenses, the reimbursement is tax-free to you, and the corporation deducts the full amount.
This matters because S-corp owners cannot deduct unreimbursed business expenses on Schedule A anymore (the 2017 tax law killed that). Without an accountable plan, those out-of-pocket expenses generate zero tax benefit. The plan setup is a one-page document. Most owners we onboard do not have one in place.
3. The full SEP-IRA contribution
SEP-IRA contributions are capped at 25% of compensation (up to an annual cap that's around $70,000 in 2026 — confirm current). Most owners who contribute do so reflexively at 10–15%, leaving real room. The contribution is deductible against the current year's income and grows tax-deferred.
For a Castle Rock S-corp owner with $120,000 of W-2 salary, the maximum SEP contribution is $30,000. At a 32% effective tax rate, that's $9,600 of federal tax saved on the contribution alone — and the full $30,000 grows tax-deferred. The deadline to contribute is the corporate return due date including extensions, so there is room to plan after year-end if cash flow allows.
4. Vehicle expenses (the right method)
Most self-employed owners default to the IRS standard mileage rate (67 cents/mile in 2024). For trades, real estate, and contractors who put serious miles on a truck, the actual expense method often produces a bigger deduction:
- Vehicle purchase price (depreciated, possibly with Section 179 in year 1)
- Fuel, maintenance, repairs, tires
- Insurance premiums
- Registration and DMV fees
- Lease payments if leased
For trucks above 6,000 lbs gross vehicle weight, Section 179 plus bonus depreciation can write off the entire purchase in year 1. A $58,000 work truck purchased in Q4 can become a $58,000 deduction the same year. The math: standard mileage rate vs actual — we run both annually and use whichever is bigger.
5. Home office (real, not theoretical)
The home office deduction is one of the most over-feared deductions. The IRS audit risk has not been elevated since 2013. The simplified method gives you $5/sq ft up to 300 sq ft ($1,500 max). The actual-expense method usually beats that for owners with dedicated office space:
- Mortgage interest or rent (proportional to office sq ft / total home sq ft)
- Property tax (proportional)
- Utilities (proportional)
- Repairs to the office area (full)
- Internet (% used for business)
- Depreciation on the office portion of the home
The "dedicated and exclusive use" test is the only hard rule. A corner of the dining room does not qualify. A converted basement room used only for work does.
6. Health insurance (self-employed)
Self-employed owners can deduct 100% of health insurance premiums for themselves, spouse, and dependents — above the line, on the front of Form 1040. This is a deduction Schedule C owners and S-corp shareholder-employees both can claim, with mechanics that differ slightly. For S-corp owners, the premium has to be added to W-2 wages and then deducted on the personal return — a paperwork dance that gets skipped routinely.
7. State pass-through entity tax (PTET) election
Colorado offers an elective pass-through-entity tax that lets the entity pay state income tax on the owner's behalf. The benefit: the entity's payment is fully deductible federally, working around the $10,000 SALT cap on personal returns. For high-earning S-corp and partnership owners in higher federal brackets, this can be worth several thousand dollars per year.
The election is annual and has filing deadlines that vary by entity type. We model it during Q4 tax planning and elect when the math supports it.
| Deduction | Typical annual benefit |
|---|---|
| Augusta Rule | $2,000 – $15,000 |
| Accountable plan reimbursements | $1,500 – $8,000 |
| SEP-IRA (max contribution) | $5,000 – $20,000+ tax savings |
| Vehicle (actual method) | $3,000 – $20,000+ |
| Home office | $1,500 – $6,000 |
| Self-employed health insurance | $2,000 – $10,000 |
| PTET election | $1,500 – $8,000 |
Most Castle Rock owners leave $5,000+ on the table every year.
None of these deductions are aggressive. They are codified, standard tax-planning moves that require documentation and a tax preparer who is paying attention. Get a year-end review and recover the easy wins before April.
Want a deduction audit on your prior year? We review your last filed return, identify what was missed, and amend if it's worth it. Call (720) 333-7274 or request a quote.
Frequently asked questions
Can I claim Augusta Rule if I work from home full-time?
The Augusta Rule applies to renting your home to your business for short-term use (board meetings, retreats). It is separate from the home office deduction. You can claim both — they apply to different facts.
How far back can I amend a return?
Generally 3 years from the original filing deadline. So a 2022 return filed by April 2023 can be amended through April 2026. State amendments often follow similar windows. If we find missed deductions during onboarding, we calculate whether the recovery is worth the amendment cost.
Do these deductions trigger audits?
No more than any other legitimate deduction. The IRS audits returns based on multiple factors — disproportionate deductions vs income, schedule C losses several years running, certain industry codes. Properly documented Augusta Rule, accountable plan, and home office deductions are not audit triggers.
I file my own return on TurboTax — am I missing this stuff?
Likely yes for the entity-specific items (S-corp accountable plan, PTET election, Augusta Rule with proper documentation). DIY software handles the basics well but does not prompt for the planning moves that require setup and documentation outside the form itself.