It's Tax Season Again!
When you own a business there are a lot of things to consider. One of the the worst is taxes. There is an upside to the torchure that is tax season and it's called… “tax write-offs for the self-employed “. Yayy!
When it comes to taxes, there is a lot to know. As a business owner, things can get a bit more complicated because you work for yourself.
When you work for a company, your wages are subject to taxes. You fill out a W-2 form and the company does the rest. You can see on your check what has been deducted for state, federal and social security tax. It’s a no-brainer for the employee.
Most self-employed people receive their full pay for their services. Taxes are not taken out. This gives you an advantage when it comes to utilizing as much of your money as you can. But, tax time comes and your earnings will be subject to taxation.
Because you haven’t paid anything into the system yet, all of your money can be taxed. But, deductions in the form of tax write-offs can reduce your taxable income. This can change your tax bill.
Here are a few of the tax write-offs that you are eligible to deduct as a self-employed individual. A full listing can be found on the IRS website.
- Clothing– This is one that we rarely think about. But, if your job involves purchasing and wearing items that you don’t wear or can’t wear other than for your business, then you can deduct a portion of their cost. Usually, this applies to such occupations as landscapers, construction workers and the like.
- Home office – This deduction has tripped people up for years. Basically, you will need a dedicated office space in your home for your business. Conducting business occasionally from your computer in the family room doesn’t qualify that space for a tax write-off. But, when you have an office set-up, you are also eligible to deduct a portion of the utilities and the cost of the office supplies.
- Travel expenses – Often, you may have to visit conferences or even take meetings with clients. Keep good records of everything you do: airline tickets, meal receipts, gas receipts and other incidentals that you pay for. A percentage of it is deductible as long as it was incurred in the transaction of your business.
- Medical expenses – Because you are not employed by anyone, your medical bills are your responsibility. You can regain some of the premiums paid on your tax return. The exception to this rule is when a spouse is eligible for family insurance at their job and this could cover your medical needs.
You work hard. Make sure that you claim all tax write-offs that are due for your business.