Self-Employed 6 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 Modified Dec 16, 2022 5 min read Reviewed by Katharina Reekmans, Enrolled Agent Sign in to view my next refund 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 2022 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 tax deduction as long as it is a dedicated workspace for your self-employed business. The IRS allows you to deduct part of your home expense 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 come 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 58.5 cents per mile for the first 6 months of 2022 and 62.5 cents per mile for the last 6 months of 2022 (effective July 1, 2022) 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 $27,000 in 2022 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! All the Rest There are so many tax deductions related to being self employed – they just couldn’t all fit into one single article. Don’t worry about knowing all of these tax deductions. TurboTax Self-Employed will ask simple questions about you and your business and give you the business deductions you deserve based on your answers. TurboTax Self-Employed uncovers industry specific deductions. Some you may not even be aware of. You can also fully hand over your taxes to a TurboTax Live Full Service Self-Employed tax expert who specializes in self-employed and incorporated small business taxes who can prepare your taxes from start to finish in one meeting. You can use QuickBooks Self-Employed year-round to track income expenses and mileage, and estimate taxes. The information can then easily transfer to your TurboTax Self-Employed tax return so you are ready for tax-time. Sign in to view my next refund Previous Post Don’t Forget These 7 Stimulus Relief Related Last Minute Tax… Next Post End of Year Retirement Tips Written by Philip Taylor More from Philip Taylor 19 responses to “6 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 Reply Cancel reply Browse Related Articles Self-Employed Self-Employed Tax Deductions Calculator 2021-2022 Self-Employed How Much are Medicare Deductions for the Self-Employed? Self-Employed Tax Tips for People New to Freelancing Self-Employed 6 Tips to Help Side Hustlers and Self-Employed Bosses S… Self-Employed Self-Employed Tax Tips & Summer Jobs Self-Employed TurboTax and Create & Cultivate Bring You #Solopren… Self-Employed Making Money by Streaming Your Gaming Sessions? Here… Self-Employed Tax Tips for “The Sharing Economy” Self-Employed Tax Tips for Coaches Tax Planning 3 Tax Tips for Freelancers
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
