Self-employment can be hard, but if it was easy, everyone would do it, right? Whether you are trying to get ready to file your taxes, figuring out estimated taxes, or are gearing up for next tax season, take a look at these tax tips for the self-employed. You won’t want to miss reading about some of the most overlooked tax deductions for business owners.
Work Expenses and Related Fees
What does it cost to run your business? You can deduct office equipment such as printers and computers, as well as replacement ink and toner. What about the paper you’re printing on or your company letterhead and business cards? All of those relatively small and possibly overlooked costs can be deducted from your taxable income. Just make sure they are costs dedicated solely to your business.
In the age of online media, costs and fees are looking different every year. Do you pay for your website hosting and domain name? What about online banking fees or online payroll software costs? Make sure you don’t skip those expenses when you file your taxes.
Your Home Office Situation
You’re able to take the home office deduction for the space you use in your house as a home office as long as it is a dedicated work space for your self-employed business. The IRS allows you to deduct part of your home expenses like rent or mortgage interest as it relates to the amount of space you use in your home exclusively for your office.
Because your office is within the walls of your home, you are also able to write off part of your home insurance and your utility bills. The amount, again, depends on the size of your office.
You may also be able to deduct your home office using the simplified home office deduction, which is up to a flat $1,500 based on up to 300 square feet of office space used at $5.00 per square foot.
Note: If you have been working from home during the past year or so for your employer, you are not eligible for a home office deduction. This home office deduction is only available to self-employed taxpayers.
Travel and Education
For the self-employed, keeping up to date in your field of speciality isn’t always so easy. For most of us, training and education comes at a price. We have to pay for the conference or the class, as well as for travel and lodging for conferences away from home depending on the length of the conference.
Luckily business travel, education, and training expenses may all be tax deductible. Even taxi, shuttle, and parking costs are tax deductible. If you rent a car when you arrive at your destination, the expense is deductible as long as the car is used exclusively for business.
Also, keep in mind that you can deduct your car expenses either using the standard mileage rate, which is 67 cents per mile for 2024, or actual expenses like lease payments and repair costs, depending on the business use of your car. If you put an SUV in service that is rated between 6,000 pounds gross vehicle weight and 14,000 pounds gross vehicle weight, you may be able to deduct up to $30,500 in 2024. The SUV also must be the first year you put the car in service and you must use the vehicle at least 50% of the time for your business.
Hardware and Software
Did you buy a desktop computer, a laptop, a monitor, an iPad, or any other piece of technology to help grow your business? It all may be deductible as long as it is used strictly for business purposes!
What about computer software? If you didn’t buy a new computer this past year, but you had to update your current software or purchase new software to get the job done, you can write that expense off. This is an especially important deduction to remember because software gets expensive rather quickly.
Everyday Supplies and Office Furniture
Remember back in the day when you worked in a cubicle at some big office? Remember how many pens you lost? How many Post-It pads did you go through? How many highlighters, paperclips, and staplers did you use? You don’t think about the costs of such items when you’re an employee. But when you’re self-employed, you realize how quickly those everyday items add up. As long as these items are used strictly for business, they are all deductible.
Don’t forget your home office furniture. Your desk, your chair, your printer stand, and even your trash can are all able to be deducted on your tax return. Just remember to keep your receipts!
No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund – guaranteed.
