If you are self-employed, there
are a number of common tax deductions that are available to you, many of which you may not even be aware of. Taking advantage of these deductions can significantly reduce how much you will be obligated to pay during tax season.
Here is a list of some of the most frequent deductions for those who own their own businesses:
Transportation and Business Travel Expenses
Keep in mind any time that you
go on any business-related trip there are multiple tax deductions that you are entitled to. While these include the obvious transportation costs such as taxis, parking charges, airfare and, trains, most other fees that you incur are often covered in part as well. This can include anything from your meals to your hotel room, and even your dry cleaning.
If you are uncertain about any additional costs, check with a tax professional, as some charges may be covered in full while others only partially.
Home Office Workspace
If you conduct your business from your house (and it is your principal place of business) you can include this with your deductions. Depending on the size of your workspace you can deduct a percentage from your rent or mortgage. This can also be applied in a similar fashion to your homeowners’ insurance. While this is a great way to reduce your taxes, keep in mind that the IRS does place restrictions on the size of the home office you will be able to report.
Writing off technology expenses is another great way to save money, as these charges often amount to a large portion of your overall spending. These include anything that you have obtained in order to carry out your business such as computer accessories and upgrades, fax and copy machines, and software, just to name a few.
If you use your house to conduct any or all of your business you are entitled to deductions on not only your utility bill but for your internet and phone as well. However, keep in mind that the IRS often requires that you provide a separate phone number that is used strictly for business for this to apply.
Work and Business-Related Supplies
Most people do not realize that everything from your desk and chairs to pencils and postage stamps can be tax-deductible and how quickly the costs of these items can add up. This can also include the cost of any marketing material that you may have, as well as business cards or letterhead.
Knowledge-Based and Training Expenses
Anytime that you attend a workshop, seminar, or class that corresponds to your line of work you can write off these costs. Magazine or newspaper payments, as well as association fees that help you with your business, are also included.
Your company’s website can also be deducted by looking at web hosting payments and the price of the site’s domain.
Other common deductions include copyright fees and any yearly charges applied for a business credit card. Similarly, fees charged from the bank or institutions – such as PayPal – can be subtracted. If you are paying for your health insurance using your business this can be written off as well. Any expenses that you may incur while preparing your taxes, such as tax software are commonly missed deductions. Also, remember that any time you partake in a business lunch or offer client gifts these can generally be written off for up to 50% of the cost.
Paying attention to all of these deductions can help significantly reduce your taxable income when you file. Make sure to keep detailed records of any expenses related to your business throughout the year and ensure that you are taking advantage of each and every deduction, no matter how small.