Cash Flow 9 Tax Deductions You Can Get for Being Self-Employed

9 Tax Deductions You Can Get for Being Self-Employed

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Tax time is usually drudgery, especially for those who know that they will have to pay taxes. Business owners that are self-employed have the advantage to be able to claim many tax deductions in the form of business expenses. Claiming them can enable you to considerably lower the amount of money you owe the government, enabling you to keep more money in your pocket.

Here are 9 business expenses that the self-employed can take off their taxes. They include:

  1. Vehicle mileage and expenses

Whenever you take a business-related trip, which must involve overnight travel, your vehicle’s mileage and expenses incurred during that trip are deductible. For 2020, you can subtract mileage at a rate of $0.57 per mile. It does include the cost of parking. There are limits to what can be counted. In order to include mileage over a several day trip, you will need to make legitimate business-related dealings each day. Non business-related travel while on the trip cannot be included.

  1. Office expenses

The cost of renting a building or office space is deductible as a business expense. This includes all utilities and other necessary expenses to maintain the office.

If you have a home office, you can deduct the expenses used to maintain that office space. Calculations will need to be precise, because the IRS may audit you for making this claim. It needs to be based on the square footage of the office and proportional expenses for your home – such as for utilities, insurance, taxes, mortgage interest, etc.

  1. Office equipment

The equipment and supplies that you use in your office are deductible. This includes most anything that you use for your business. Many purchases may be deductible over a multiple-year period based on depreciation. It can include computers, printers, office desks and furniture, phone systems, specialized equipment, etc.

  1. Advertising

All advertising that you do for your business is tax deductible. This includes all of it – the cost of designers, website builders, marketers, SEO experts, printers, etc. You can also count the cost of mailing or distributing them, as well.

  1. Insurance

All insurances that you need to purchase for your business are also deductible on your taxes. This includes liability, commercial property, business income insurance, vehicle coverage, professional coverage, worker’s compensation, and you may also want data breach insurance.

  1. Health Insurance Premiums

If you have purchased your own health insurance policy and are not part of someone else’s health plan, you can deduct the cost of your premiums. If you paid for health insurance for your spouse and children, you can also deduct it, as well. The cost of other policies, such as dental and long-term care insurance can also be deducted.

  1. Education

The cost of obtaining more education to help you maintain or learn new business-related skills is tax deductible. It must be related to your current business and can include the cost of online or in-person classes. The cost of continuing education classes can also be included. However, you are not able to include the cost of classes needed to help you start a new business.

  1. Hotels and Meals

The cost for spending a night in a hotel on a business-related trip is fully deductible. All of your meals are, too, but they need to be reasonable. Meals are deducted at 50% of the cost on your taxes.

  1. Contributions to Retirement Plans

When you contribute funds to a qualified retirement plan, it also is tax deductible. Someone self-employed can contribute money to a SEP IRA, which will enable them to deduct up to 25% of their net earnings for the year.

 

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