There are all sorts of benefits to being self-employed – it provides one freedom and flexibility, creativity and contentment, along with the chance to make more money. Being your own boss is definitely a bonus, too! However, there is one more very important benefit that comes with self-employment, and it’s an an unexpected one: more tax savings.
Huh? Let me explain with a personal story.
Back in the day, I practiced law (I no longer do; I came to my senses long ago, thank you very much), and when I first started out, I got a job at a big law firm making the big bucks, and with that job came big expectations. What they didn’t tell you, and what I did not know at the time, was that it would cost me a lot of money to keep up with that job. Nice suits were needed and were expensive, taking cabs to and from the courthouse added up, and training classes cost a lot of money. The rub was that none of these expenses were tax deductible, because I didn’t own the business and didn’t work for myself.
When I started my own law firm, I found that the unexpected benefit of becoming self-employed was that all of those business expenses were now tax deductible. Yes, this means that when you’re self-employed you can deduct things like auto expenses and marketing costs, but it also means that other things, can also now be written-off. This includes items such as:
- Professional licenses, association dues, periodical subscriptions: For instance, when I worked for the law firm, I had to pay state and local bar association dues. That was an expense I incurred that was deductible as an itemized deduction, but not fully deductible from my income like when you own a business.
- Trainings: One of the beautiful things about self-employment is that it requires you, from a tax perspective, to stay current, up-to-date, and smart about your industry. The cost of trainings (and associated travel expenses), webinars, and the like are all legitimate business expenses.
- Healthcare: Most self-employed taxpayers can deduct health insurance premiums, including age-based premiums for long-term care coverage. Write-offs are available whether or not you itemize, if you meet the requirements.
- Home Office: If you’re self-employed and work at home, you may be eligible for the home office tax deductions. If you are eligible for home office deductions, the tax savings can be well worth the additional work required to qualify. And remember, TurboTax Self-Employed makes it easy to determine if you qualify and how much you can write off.
For more tips on how to make your self-employment journey easier and better, check out TheSelfEmployed. And don’t worry about remembering all of this information, TurboTax Self-Employed will proactively uncover business deductions that you never even imagined were possible saving you money for your business.