20 Self-Employment Tax Deductions You Might Be Missing

Being self-employed means you have a lot of financial responsibilities, but it also means you can get a lot of tax breaks that can lower your taxable income. Self-employed people can deduct many different things, but it’s easy to forget about some of them, which can cause you to pay more in taxes in the long run. These breaks can help you save the most money on your taxes while following the rules. If you’re a freelancer, consultant, or small business owner, knowing about these deductions can greatly help your bottom line.

1. Home Office Deduction

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You can deduct some of the business costs if you work from home. These costs depend on how much of your home is used for work, including rent, mortgage interest, utilities, and even repairs. To stay in line, make sure you keep good records and only deduct the area that is only used for business.

2. Business Use of Your Car

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You can deduct business-related costs like gas, maintenance, insurance, and mileage. To get the correct deduction, keep track of your business miles separately from your personal miles. Using an app makes tracking your trips easier.

3. Health Insurance Premiums

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Self-employed people can deduct the cost of their health insurance premiums. This includes the costs of health, dental, and vision insurance premiums. You can deduct these costs if you also pay for your family’s insurance.

4. Retirement Contributions

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You can lower your taxable income by putting money into a retirement plan like a SEP IRA or Solo 401(k). These contributions to a retirement account are good to save for the future and a smart way to lower your tax bill. Talking to a tax expert might help you figure out the best way to save for retirement.

5. Business Supplies and Equipment

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You can deduct anything you need for your business, like computers, software, and office supplies. There are lots of small things that can add up and lower your taxable income. Always keep the receipts and records of the things you buy.

6. Marketing and Advertising Expenses

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You can deduct costs like social media ads, flyers, and website hosting that you use to promote your business. These costs directly help your business grow, whether online or off, and you can deduct them all. Keep track of all the money you pay advertising platforms or agencies for easy reporting.

7. Professional Services

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If you hire accountants, lawyers, or consultants, you can deduct the money they charge you. The cost of hiring someone else to do some of your work can help your company’s taxable income go down. Make sure you keep all of the contracts and invoices for these services.

8. Education and Training

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You can deduct the costs you have to pay to learn new skills for your business. This includes classes, workshops, and seminars that help you do your job better. Don’t forget that the training you get should be useful for your business, not just for your growth.

9. Interest on Business Loans

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You can write off the interest you pay on a loan you took out to fund your business. This deduction can significantly lower your taxable income, especially if you have a bigger loan. Ensure you only deduct interest on business loans, not personal ones.

10. Depreciation

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Depreciation can be spread out over several years for bigger purchases like machinery or expensive tools. Similarly, the cost of big business assets can be spread out over time. Knowing the rules and guidelines for the correct depreciation of business property is important.

11. Travel Expenses

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Flights, hotels, and meals you need for business travel are tax-deductible. To back up the deduction, you must keep careful records, such as receipts and travel plans. This deduction is only good for costs directly related to running a business.

12. Meals with Clients or Business Partners

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Do you have lunch with clients or possible business partners? You can deduct half of the cost of it. The meal has to be related to business, and you should keep the receipts and write down what the meeting was for. You can get this deduction for both in-person and online meetings.

13. Business Insurance

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You can deduct any insurance premiums you pay for your business, like property and liability insurance. These premiums protect your business and lower the money you have to pay taxes. Keep track of how much your business insurance premiums cost you.

14. Client Gifts

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For business gifts, you can deduct up to $25 per client per year. This could be a thank-you gift or a promotional item. To stay within the rules, keep receipts and keep track of each gift you give a client.

15. Internet and Phone Bills

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You can deduct the part of your bill related to business use if you use your phone or internet for work. Keep track of how much of these services you use for business and how much for fun. The Internal Revenue Service (IRS) wants a fair split between personal and business use.

16. Rent or Lease Payments

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The money you pay to rent office space or equipment is fully tax-deductible. This is true in both short-term and long-term rental agreements. To get this deduction the right way, make sure you keep contracts and records of payments.

17. Software Subscriptions

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Software subscriptions for business use are tax-deductible. Software for marketing, accounting, project management, and talking to each other is included. To get these deductions every year, keep track of your subscription fees and when they are due to be renewed.

18. Bank Fees

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If you keep a separate bank account for your business, you can deduct the fees that come with it. This includes service fees, overdraft fees, and transaction fees every month. Keep your bank statements every month for your records.

19. Bad Debts

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If you tried to get paid for invoices that weren’t paid but failed, you might be able to write off the amount as a bad debt. In this case, the money you earned but won’t get is included. Keep track of everything you did to get the debt paid off and make sure this deduction is allowed.

20. Business Licenses and Permits

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You can deduct the cost of getting business licenses and permits or renewing them. These fees are necessary to run your business legally, regardless of whether you need a local, state, or federal license. Write down all the license and permit fees you paid during the year.

• Tags:
• Tax
• Deductions
• Self-Employed
• Taxable