6 Money Saving Tax Tips for the Self-Employed (1440 × 600 px)
6 Money Saving Tax Tips for the Self-Employed (411 x 600)

6 Money Saving Tax Tips for the Self-Employed

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Self-employment can be hard, but if it was easy, everyone would do it, right? In an attempt to lighten your load and ease your burden, whether you are just trying to get ready to file your 2024 taxes, figuring out estimated taxes, or are gearing up for next tax season, take a look at these tax tips for the self-employed and some of the most missed tax deductions.

Work Expenses and Related Fees

It’s time to think inside, outside, and around every corner of the box for this one. What does it cost to run your business? You can deduct office equipment such as printers and computers – even replacement ink and toner. The paper you’re printing on? Your company letterhead and business cards? Yep, all of those relatively small and possibly overlooked costs can be deducted from your taxable income. Just make sure they are costs dedicated 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? Do you pay 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

Not only are you able to write off your equipment expenses, but you’re actually able to take the home office deduction for the space you use in your house as a home office as long as it is 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 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. And even if you choose not to take the home office deduction, you can still deduct your office supply expenses.

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.

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

Doctors have journals and teachers have in-service training to help keep them educated and up to date about current strategies and the best new ideas. For the self-employed, keeping up to date with the latest and greatest trends 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, we have to pay for travel, we might even have to get a hotel room 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 65.5  cents per mile for 2023 or actual expenses like lease payments and repairs depending on the business use of your car. If you put an SUV in service that is rated more than 6,000 pounds gross vehicle weight and up to 14,000 pounds gross vehicle weight, you may be able to deduct up to $28,900 in 2023 if it was the first year you put the car in service and if you use the vehicle at least 50% of the time for your business.

Hardware and Software

Did you buy a desktop computer, a laptop, a new monitor, an iPad, or any other piece of technology to help grow your business? It all may be deductible. Just be sure your iPad is strictly for business purposes and not your child’s favorite toy!

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 spending off. This is an especially important deduction to remember because, as we all know, software gets expensive . . . 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 and 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.

And 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!

19 responses to “6 Money Saving Tax Tips for the Self-Employed”

  1. 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

  2. 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

  3. 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?

    • 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

    • 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

  4. 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…

  5. 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?

    • 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.

  6. Received renewal notice for business Turbo tax. Tried to renew on line. It just does not work. Need a spot to check renew

  7. 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

  8. 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

  9. 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

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