If you’re self-employed, you know that taxes can be complicated. As a self-employed individual, you’re required to pay self-employment tax, as well as income taxes. Fortunately, the IRS offers a range of tax deductions that can help you lower your tax bill. Here are some of the most common tax deductions for self-employed individuals.
Business Expenses
When you’re self-employed, you can deduct certain business expenses from your taxes. This includes expenses related to the operation of your business, such as the cost of supplies, equipment, and office space. You can also deduct costs associated with travel and business entertainment. However, you must keep accurate records of all your business expenses so that you can prove them to the IRS.
Home Office Expenses
If you use a portion of your home for business purposes, you may be able to deduct home office expenses. To qualify for this deduction, you must have an area of your home that is used exclusively for business purposes. You can deduct a portion of your rent, mortgage interest, utilities, and other expenses related to the home office.
Self-Employment Tax Deduction
When you’re self-employed, you’re required to pay self-employment tax. This tax is composed of Social Security and Medicare taxes, which are normally paid by employers. Fortunately, you can deduct the amount of self-employment tax you pay from your taxable income.
Health Insurance
Self-employed individuals can deduct the cost of health insurance premiums from their taxes. This includes premiums for health, dental, and long-term care insurance. However, the deduction is only available if you’re not eligible for coverage under an employer-sponsored plan.
Retirement Contributions
If you’re self-employed, you can contribute to a retirement plan and deduct the amount of your contribution from your taxable income. This includes contributions to a traditional IRA, a Roth IRA, and a Simplified Employee Pension plan.
Charitable Contributions
You can deduct charitable contributions from your taxes if you itemize deductions. This includes cash donations as well as the fair market value of goods or services you donate. However, you must keep accurate records of all your donations in order to qualify for the deduction.
Education Expenses
If you’re self-employed, you can deduct the cost of continuing education related to your business. This includes tuition, books, and other related expenses. You can also deduct the cost of professional development seminars and conferences.
These are just some of the tax deductions available for self-employed individuals. The IRS offers a range of deductions and credits that can help you reduce your tax bill. Make sure to do your research and consult with our tax professionals to make sure you’re taking advantage of all the deductions and credits available to you.
