Self-employment brings not only freedom but also the responsibility to accurately file taxes and leverage available deductions. Here are nine essential tax deductions for self-employed individuals to consider:
1. Phone and Internet Costs: Deduct a portion of your personal phone and internet expenses if used for business purposes. Keep track of usage percentages for accurate deductions.
2. Health Insurance: Self-employed individuals can deduct health insurance premiums for themselves, spouses, and dependents.
3. Meals: Entertain clients? Deduct 50% of meal expenses incurred during business meetings. Maintain records of attendees and meeting purposes.
4. Car Expenses: Use your personal vehicle for business? Deduct gas, repairs, and other expenses. Keep meticulous mileage records.
5. Subscriptions: Deduct costs of business-related subscriptions, such as publications or online services.
6. Business Mileage: Claim deductions for business-related mileage, currently at 56 cents per mile for 2021.
7. Rent: If you have a dedicated office space, deduct a portion of your rent proportionate to your home’s size.
8. Educational Expenses: Deduct costs of courses or seminars aimed at improving your business skills.
9. Home Office: Claim deductions for a dedicated home office, covering utilities, repairs, and related expenses.
In summary, self-employment entails significant tax responsibilities. By leveraging these nine tax deductions, you can reduce your tax burden and retain more of your earnings. Remember, accurate record-keeping and professional tax advice are crucial for maximizing deductions.
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