It’s tax season, and that means time to make the most of your self-employed deductions. Here are some of the biggies – make sure you’re taking full advantage of these deductions.
Whether you rent or own, deducting your home office can be a big help at tax time. In order to be as accurate as possible, it’s best to measure the space you utilize as your office and figure out the square footage of your office in relation to the rest of your home. Take that percentage, and use that to figure out how much your deduction will be for the home office.
See the IRS guidelines for detailed instructions on how to determine your home office deduction.
Vehicle Mileage vs Expenses
Mileage is the easiest to calculate when it comes to choosing how to determine your expenses in this category. Simply keep record of each mile driven for business and you’ll be able to write off every mile. You can find the current standard mileage rate on the IRS website. Currently, it’s $0.545 per mile.
Vehicle expenses include gas, oil changes, maintenance, car registration fees. You’ll need to calculate the percentage of time you drove your vehicle for business, and you’ll use that percentage to determine the total deduction allowable.
Any time you are travel for business or entertaining clients, a meal will be a tax-deductible business expense. Your deduction will only allow 50% of the total cost, but every bit helps at tax time. Remember to keep your receipts as verifiable proof.
If you are self-employed (and were not eligible for a spouses insurance plan), the costs paid towards your own health insurance premiums (including vision and dental) can be deducted.
Retirement Plan Contributions
Set up your own IRA! Depending on what type of plan you pick, your deductions will be different.
See more about types of IRAs and retirement planning for the self employed HERE.
And we’re just getting started. There are several more intricate deductions that can be applicable to certain self-employed people, and the rules are always changing.