Self-Employed 5 Money Saving Tax Tips for the Self-Employed Read the Article Open Share Drawer Share this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Pinterest (Opens in new window)Click to print (Opens in new window) Written by Philip Taylor Published Jun 7, 2024 - [Updated Jun 18, 2024] 4 min read Reviewed by Jotika Teli, CPA Lena Hanna, CPA 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. Table of Contents Work Expenses and Related FeesYour Home Office SituationTravel and EducationHardware and SoftwareEveryday Supplies and Office Furniture 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. Get started Previous Post Travel Write-offs for the Self Employed (What Can I Write-Off) Next Post What Are the Standard Mileage Rates? Written by Philip Taylor More from Philip Taylor 19 responses to “5 Money Saving Tax Tips for the Self-Employed” Thank you for hardware and software part, my all questions are clear now. q Reply I recently became an INDEPENDENT CONTRACTOR. I was told there was some type of GUIDE Book pertaining to the amount of $$ I should be withholding (Income/SS/Medicare Taxes) in hopes of putting it away per check and Not having to come up with it all at once when taxes due Reply I recently became an INDEPENDENT CONTRACTOR. I was told there was some type of GUIDE Book pertaining to the amount of $$ I should be withholding (Income/SS/Medicare Taxes) in hopes of putting it away per check and Not having to come up with it all at once when taxes aredue Reply Hi Jennifer, Take a look at these helpful articles regarding taxation of the self-employed and tips on deductible expenses http://blog.turbotax.intuit.com/2014/03/11/seven-tax-tips-for-the-self-employed/ http://blog.turbotax.intuit.com/2013/07/15/3-tax-tips-for-freelancers/ https://turbotax.intuit.com/tax-tools/tax-tips/Self-Employment-Taxes/Tips-to-Reduce-Self-Employment-Taxes/INF19708.html https://turbotax.intuit.com/tax-tools/tax-tips/Self-Employment-Taxes/Self-Employed-Federal-Income-Taxes/INF14455.html Thank you, Lisa Reply Hi Lisa, What tax deductions could my wife & I use to offset our taxes. We earn approximately $190,000 yr combined. Renting a house with 4 children. Are you considered owning your own business if you rent out a home to someone? I know you have to claim the income and can deduct expenses you put into the home yourself, but can I deduct my expenses of my home office where I keep track of the rental payments; sending letters; driving to the property to take care of maintenance; and all those “outside” costs of things I do “not” on the property itself? Reply Hi Kathy, If you are a real estate professional as defined by the tax code, it is possible to qualify for a home office deduction, but most people will not qualify. Mary Ellen Reply I provide health insurance for my son and myself is this a self employed tax deduction? Reply If you are self-employed and paid for health insurance for yourself and your family, it is considered self-employed health insurance and can be deducted as such, unless you or your spouse also qualify for medical coverage through an employer. Mary Ellen Reply Can a right off a portion of my cell phone bill and internet service bill for my home office? These are shared for business and personal use… Reply No, but you can write off the entire amount. Reply You cannot write off the entire amount, only the % used for business unless they are dedicated strictly to your business, and I don’t imagine they are. I do contracted work for a nonprofit that I interned with this summer. I set aside 20% of the income I receive from them each pay check. Am I considered self employed if I do contracted work? Reply You will receive a 1099 for the money that was paid to you. No taxes withheld, of course. That is what you will use in place of the standard W-2 form that is mailed to regular employees. Yes, you are an independent contractor and will need to file the appropriate forms related to being self-employed, along with your regular income from work sources if you have any. Pretty strict record-keeping is needed so you can make all the appropriate deductions on your taxes, so I hope you have kept a record of your work-related expenses, either by receipt (which you should keep anyway) and also perhaps a Quicken program on your computer that will also help track your expenses. There are a lot of items connected to your being self-employed that will be fully or partially deductible. If you are using a tax program like TurboTax, you will want to use the Home and Business edition that will walk you through the items you need and figure your taxes for you, including your state taxes. I get the one that includes a free state tax preparation. I efile my federal taxes with no cost. The state filing I do by printed return, as there is a fee associated with electronically filing the state, so I don’t spend that money. I print out my state return and mail it off. Just be sure to follow all the directions for keeping copies of your returns. I always keep a hard copy of my returns, as well as the ones on my computer. Good luck. Reply Received renewal notice for business Turbo tax. Tried to renew on line. It just does not work. Need a spot to check renew Reply I need it Reply Hi Joseph, The IRS will tax up to 85% of your social security benefits, based on your wages and other income. Louisiana does not tax social security benefits. Thank you, Mary Ellen Reply Hi, Joseph, Yes, you will be taxed on up to 85% of your social security income based on your total income. TurboTax will do the proper calculations for you. Louisiana does not tax your social security. Thank you, Mary Ellen Reply I am quailify for fully retirement but I still work full time making $56,000.00 per year, will my social security be taxed by the federal and state governemnt. I live in louisiana Reply Leave a ReplyCancel reply Browse Related Articles Self-Employed TurboTax and Create & Cultivate Bring You #Solopren… Self-Employed 6 Tips to Help Side Hustlers and Self-Employed Bosses S… Self-Employed Freelancer Taxes: Tax Tips for Freelancers Filing for t… Self-Employed TurboTax and Create & Cultivate Share #SolopreneurT… Self-Employed Self-Employed Tax Deductions Calculator 2023-2024 Self-Employed Self-employed? Taxes Just Got Easier Self-Employed Making Money by Streaming Your Gaming Sessions? Here… Self-Employed How Much are Medicare Deductions for the Self-Employed? Tax Planning 3 Tax Tips for Freelancers Expenses 5 End of Year Self-Employment Tax Tips
I recently became an INDEPENDENT CONTRACTOR. I was told there was some type of GUIDE Book pertaining to the amount of $$ I should be withholding (Income/SS/Medicare Taxes) in hopes of putting it away per check and Not having to come up with it all at once when taxes due Reply
I recently became an INDEPENDENT CONTRACTOR. I was told there was some type of GUIDE Book pertaining to the amount of $$ I should be withholding (Income/SS/Medicare Taxes) in hopes of putting it away per check and Not having to come up with it all at once when taxes aredue Reply
Hi Jennifer, Take a look at these helpful articles regarding taxation of the self-employed and tips on deductible expenses http://blog.turbotax.intuit.com/2014/03/11/seven-tax-tips-for-the-self-employed/ http://blog.turbotax.intuit.com/2013/07/15/3-tax-tips-for-freelancers/ https://turbotax.intuit.com/tax-tools/tax-tips/Self-Employment-Taxes/Tips-to-Reduce-Self-Employment-Taxes/INF19708.html https://turbotax.intuit.com/tax-tools/tax-tips/Self-Employment-Taxes/Self-Employed-Federal-Income-Taxes/INF14455.html Thank you, Lisa Reply
Hi Lisa, What tax deductions could my wife & I use to offset our taxes. We earn approximately $190,000 yr combined. Renting a house with 4 children.
Are you considered owning your own business if you rent out a home to someone? I know you have to claim the income and can deduct expenses you put into the home yourself, but can I deduct my expenses of my home office where I keep track of the rental payments; sending letters; driving to the property to take care of maintenance; and all those “outside” costs of things I do “not” on the property itself? Reply
Hi Kathy, If you are a real estate professional as defined by the tax code, it is possible to qualify for a home office deduction, but most people will not qualify. Mary Ellen Reply
If you are self-employed and paid for health insurance for yourself and your family, it is considered self-employed health insurance and can be deducted as such, unless you or your spouse also qualify for medical coverage through an employer. Mary Ellen Reply
Can a right off a portion of my cell phone bill and internet service bill for my home office? These are shared for business and personal use… Reply
You cannot write off the entire amount, only the % used for business unless they are dedicated strictly to your business, and I don’t imagine they are.
I do contracted work for a nonprofit that I interned with this summer. I set aside 20% of the income I receive from them each pay check. Am I considered self employed if I do contracted work? Reply
You will receive a 1099 for the money that was paid to you. No taxes withheld, of course. That is what you will use in place of the standard W-2 form that is mailed to regular employees. Yes, you are an independent contractor and will need to file the appropriate forms related to being self-employed, along with your regular income from work sources if you have any. Pretty strict record-keeping is needed so you can make all the appropriate deductions on your taxes, so I hope you have kept a record of your work-related expenses, either by receipt (which you should keep anyway) and also perhaps a Quicken program on your computer that will also help track your expenses. There are a lot of items connected to your being self-employed that will be fully or partially deductible. If you are using a tax program like TurboTax, you will want to use the Home and Business edition that will walk you through the items you need and figure your taxes for you, including your state taxes. I get the one that includes a free state tax preparation. I efile my federal taxes with no cost. The state filing I do by printed return, as there is a fee associated with electronically filing the state, so I don’t spend that money. I print out my state return and mail it off. Just be sure to follow all the directions for keeping copies of your returns. I always keep a hard copy of my returns, as well as the ones on my computer. Good luck. Reply
Received renewal notice for business Turbo tax. Tried to renew on line. It just does not work. Need a spot to check renew Reply
Hi Joseph, The IRS will tax up to 85% of your social security benefits, based on your wages and other income. Louisiana does not tax social security benefits. Thank you, Mary Ellen Reply
Hi, Joseph, Yes, you will be taxed on up to 85% of your social security income based on your total income. TurboTax will do the proper calculations for you. Louisiana does not tax your social security. Thank you, Mary Ellen Reply
I am quailify for fully retirement but I still work full time making $56,000.00 per year, will my social security be taxed by the federal and state governemnt. I live in louisiana Reply