9 Tax deductions for self-employed
Being self-employed comes with a lot of responsibilities, including the responsibility to accurately file your taxes and claim all the deductions you qualify for. Here are nine tax deductions that self-employed individuals should keep in mind:
- Phone and internet costs: If you use your personal phone or internet for business purposes, you can deduct a portion of these expenses on your taxes. Keep track of your usage and the percentage of time you use these services for business purposes.
- Health insurance: Self-employed individuals can deduct the cost of their health insurance premiums on their taxes. This includes coverage for yourself, your spouse, and your dependents.
- Meals: If you entertain clients or customers as part of your business, you can deduct 50% of the cost of these meals. Just be sure to keep accurate records of who you entertained and the purpose of the meeting.
- Your car: If you use your personal car for business purposes, you can deduct the cost of gas, oil changes, repairs, and other expenses. Keep accurate records of your mileage, including the purpose of each trip, and the date and odometer reading.
- Subscriptions: If you subscribe to business-related publications or online services, you can deduct the cost of these subscriptions on your taxes.
- Business mileage: In addition to the cost of your car, you can also deduct the cost of business-related mileage. The current standard mileage rate for 2021 is 56 cents per mile.
- Rent: If you have a separate office space for your business, you can deduct a portion of your rent on your taxes. The percentage of your home that you use for business purposes should be proportionate to the size of your home.
- Educational expenses: If you take courses or attend seminars to maintain or improve your business skills, you can deduct the cost of these educational expenses on your taxes.
- Home office: If you have a dedicated space in your home that you use exclusively for your business, you can claim a home office deduction. This includes the cost of utilities, repairs, and other expenses related to the space.
In conclusion, being self-employed comes with a lot of responsibilities, including the responsibility to accurately file your taxes and claim all the deductions you qualify for. By keeping in mind these 9 tax deductions for self-employed, you can reduce your tax bill and keep more of your hard-earned money. Remember that keeping accurate records and consulting with a tax professional is always recommended.