Being self-employed means taking on costs and risks that you don’t have when you work for someone else. While most self-employed people celebrate the freedom of not having a boss, they often cringe at the sight of their taxes.
With the high rising costs of doing business and securing your own health insurance, it is important that you get all the tax write-offs you are entitled to in order to thrive and survive.
Here are some tax deductions that can benefit self-employed individuals and small business owners alike.
The cost of any workspace that is especially devoted to your business, whether you own or rent it, can be deducted as a home office expense. This allows you to deduct a portion of your utilities, repairs, home improvement and rent or mortgage payments to your home.
To calculate your deduction, measure your work area and divide it by the square footage of your home. Then, multiply that by the home’s expenses for the year.
Health insurance premiums
If you are paying for your family’s health insurance out of your pocket, then you can deduct 100% of your premiums as an adjustment to your business income.
Vehicle and mileage
The IRS also allows you deduct the cost of using your car for your business. Keep a record of the miles you drive business-related activities and deduct the dollar value of business miles travelled on your tax return. Be sure that personal and business use is completely separated.
Phone and internet
You are also entitled to deduct your phone and internet expenses. If you only one have phone in the house, it means that the phone is used for both personal and business purposes. That said, you shouldn’t deduct the entire monthly bill. The key is to deduct the expenses that are directly related to your business.
Think about any classes, workshops, seminars you’ve attended to improve your job or business. All of these are tax-deductible. Also, don’t forget, books, magazines and other research materials.