Commonly Overlooked Tax Deductions for the Self-Employed
Every morning you wake up and make your own day. You don’t answer to a boss because you are the boss. Being self-employed is a dream for many; attractive for several reasons, not least of which is the freedom afforded by working on one’s own terms. However, one thing remains the same for both self-employed workers and conventional employees–all must pay taxes every year. Income tax for the self-employed is often more complicated than for others due to the absence of regular tax withholding from paychecks, but with a little knowledge on your side you can still get the most out of your tax returns. Remember these commonly overlooked deductions for the self-employed.
Home offices can be a highly valuable tax deduction that many self-employed taxpayers neglect to declare every year. Many taxpayers leave this out of their returns every year for fear of being audited, but this fear is largely unfounded. As long as your returns are accurate and honest, you have nothing to worry about. Home offices, whether rented or owned, can be written off as a tax deductible work expense, provided you can furnish proof of all expenses and facilities. A percentage of your rent, property tax, maintenance, and even utilities can be deducted from your income tax, resulting in a much better return every year.
Did you ever imagine you could write off entertainment as a tax deductible expense? Any time you are out entertaining clients or potential clients, whether it’s over dinner, drinks, a local tour or some other event, you have the opportunity to deduct these expenses from your taxes. As long as you are conducting business with the people you’re entertaining before, during, or immediately after the event, your entertaining expenses can be considered business related. Keep track of your receipts–many people try to push illegitimate claims here, so there is some risk of an audit.
If your work takes you on the road, you could have lots of potential tax deductions coming your way. If you are travelling outside of your city to meet with clients, find new customers, attend business related seminars, or any other matters related to your work, you may be able to write off your travel expenses. Transportation costs to your destination and around the city once you arrive will be deductible, as well as meals, lodging and entertainment costs such as those listed above. Keep accurate records of all expenses and be sure that you can confirm that your trip was planned for business purposes from the start.
Getting the most out of your tax return every year is a matter of knowing the rules and playing by them. Don’t try to pull a fast one on the IRS–file your taxes honestly and accurately, but know what deductions you deserve and don’t be shy about pursuing them. Tax settlement help is available in the unlikely event of an audit, but now that you’re self-employed you should be focused on reaping the benefits of your lifestyle.
Image source: mamiverse.com