Tax Season Checklist: What Every Dry Cleaning Owner Should Review With Their Accountant

Tax season isn’t just about filing, it’s about strategy.

Too many drycleaning owners sit down with their Certified Public Accountant (CPA), drop off numbers, and hope for the best. Instead, come prepared with the right questions so you can legally minimize taxes and protect your profitability.

Here’s a focused checklist of key items to review:

1. The Augusta Rule (Section 280A)
If you own your home, your business may be able to rent it from you for up to 14 days per year, tax-free to you personally.
Your company deducts the rent.
You may not report the income (if structured correctly).
If you host planning meetings or leadership sessions at home, ask your CPA how to document this properly.

2. Hiring Your Children
One of the most overlooked strategies for business owners.
You may be able to:

• Pay your children a reasonable wage for real work
• Deduct it as a business expense
• Shift income into a lower tax bracket

Kids can help with social media, filing, cleaning, marketing projects, and admin work. Make sure payroll and documentation are handled correctly.

3. Section 179 & Bonus Depreciation
Did you purchase: 

• Presses, boilers, or finishing equipment?
• Delivery vehicles?
• Point of sale systems or software?
• Wash-dry-fold equipment?

You may be able to deduct the full cost in the year placed into service instead of depreciating it over time. Review every equipment purchase before filing.

4. Vehicle Strategy for Route Operators
If you operate pickup and delivery, vehicle deductions matter.
Discuss: 

• Mileage vs. actual expense method
• Depreciation options
• Section 179 eligibility
• Proper mileage tracking

Route vehicles are often one of your largest deduction opportunities.

5. Cost Segregation (If You Built or Renovated)
If you: 

• Built a new plant
• Renovated a location
• Installed major plumbing or electrical systems

A cost segregation study may allow accelerated depreciation and larger early-year deductions.

6. Qualified Business Income (QBI) Deduction
Many dry cleaning owners qualify for up to a 20% deduction on qualified business income.
Eligibility depends on: 

• Total income
• W-2 wages
• Entity structure

Make sure your CPA is optimizing for this deduction.

7. Reasonable Salary (S-Corp Owners)
If taxed as an S-Corp, you must pay yourself a reasonable salary.
Too high? You overpay payroll taxes.
Too low? You create IRS risk.
Review this annually.

8. Home Office Deduction
If you manage bookkeeping, route logistics, or marketing from home, you may qualify for a home office deduction if properly documented.

9. Energy Credits & Utility Incentives
High-efficiency boilers, HVAC upgrades, LED lighting, and water-saving equipment may qualify for federal, state, or utility incentives. Ask before you assume there’s no benefit.

10. Retirement Contributions
Don’t just reduce taxes, build wealth.
Discuss SEP-IRA, Solo 401(k), or other retirement options that can lower taxable income while strengthening your financial future.

Final Thought
Your tax meeting should be proactive, not just paperwork.
Come prepared. Ask strategic questions. Review every major expense and structure decision.
The most profitable dry cleaning owners aren’t just strong operators. They’re intentional planners.
 
While we aren’t tax professionals, and always recommend talking to your accountant about these deductions, I have been doing this long enough to share with you the legal and most common tax mitigation strategies.

Remember, tax law is meant to encourage growth in the business sector. Not taking advantage of these deductions would mean you are not using the law as it was designed.

Hope this was helpful!
Dave