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Common Tax Deductions for Self-Employed Workers

Do you work for yourself? According to a Pew survey, approximately 15 million people in the United States are self-employed. When you work for yourself, you won’t have the luxury of receiving employee benefits like minimum wage, overtime pay and paid vacations. On the other hand, however, you can write off more expenses on your taxes. By taking advantage of the available tax deductions for self-employed workers, you’ll be able to increase your annual profits. So, what are some of the most common tax deductions for self-employed workers?

Common Tax Deductions for Self-Employed Workers

Home Office

If you work from your home office, you can claim it as a deduction on your taxes. As explained on the official Internal Revenue Service (IRS) website, there are two options available for deducting your home office: the regular method or the simplified method. The regular method, which is more complex, involves adding up the actual cost of your home office, whereas the simplified method involves multiplying the number of square feet in your home office by $5, with a maximum of 300 square feet.

Vehicle

Another common tax deduction for self-employed workers is vehicle expenses. If your business or work requires you to drive, you should claim this deduction on your taxes. Like with a home office, the IRS allows for one of two methods when deducting the cost of your vehicle: the standard mileage option or the actual expense option. The standard mileage option is the easier of the two options, though the actual expense option may offer a higher level of savings since it involves calculating the actual cost of using and maintaining your vehicle.

Travel

Of course, you can claim travel-related expenses as a tax deduction. This includes transportation — taxi, Uber, airplane, etc — as well as lodging and even food. For food, however, the IRS only allows you to claim a 50% deduction, meaning if you spend $100 on a meal while traveling, you’ll only be eligible for a $50 deduction for that meal.

Marketing and Advertising

You can also claim marketing and advertising expenses as a tax deduction. According to WordStream, the average small business owner spends $10,000 per month on Google Ads — and that’s just one of many advertising channels. Whether you use Google Ads or any other channel to promote your business, you should keep track of how you spend so that you can deduct it from your taxes.

Accounting and Tax Preparation

Don’t forget to deduct accounting and tax preparation costs from your taxes. Even if you don’t have an accountant, you probably spend some money on accounting and tax preparations. The good news is that you can deduct these costs from your taxes.

This article was brought to you by Intrepid Private Capital Group – A Global Financial Services Company. For more information on startup and business funding, or to complete a funding application, please visit our website.

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Intrepid Private Capital Group • July 5, 2019


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