Write-Off

Nobody likes to be written off. In the spirit of not being written off, we’re going to tell you all three (yes, three) types of write-offs.

1. In the banking and investment world, a write-off is what banks do to their balance sheets when they have to press “delete” on a loan that they won’t be paid back for. For instance, if someone died and there’s nobody else responsible for the loan, or if someone just can’t pay and doesn’t have the assets to cover it, the bank has to get rid of (write off) that loan from their balance sheet on both sides. Banks legally have to have a reserve on hand for these cases, but it’s also just smart business-wise to keep on your feet. Not that banks are the best at doing that (*cough* 2008 *cough*).

2. You might be familiar with the term write-off during tax season. Write-offs are the same thing as deductions (literally the same thing). They’re things you can “write off” your taxes, so you don’t have to pay taxes on that portion of income. For instance, you can write off certain expenses and things like charity donations. Or, if you have dependents, there are write-offs for them, too.

3. Write-offs in business can generally mean the same thing as #1. It’s just when you have old inventory, or maybe something breaks, and it’s time to retire that equipment (or whatever it is). Businesses will write off those things during accounting time, keeping their balance sheet balanced. If you can convince your boss that you could really use some computers made after 2000, they would “write off” the old ones (yeah, good luck with that).