![]() If you use your mobile phone and internet to conduct business, you can deduct the portion reserved for business use. You can deduct a maximum of $1,500 for a 300 sq. The simplest way is to measure the square footage of your office space (no more than 300 square feet) and multiply the square footage by five-$5 per square foot. There are multiple ways to calculate your home office deduction. It doesn’t matter if you rent or own your home it qualifies as long as your home is your principal place of business. If you work from home as an independent contractor, and you have a space that you use exclusively for your business, you may qualify for the home office deduction. That means you could deduct $3,825 as your self-employment tax deduction. If you make $50,000 in self-employment income, your self-employment tax would amount to $7,650. Luckily, the IRS views this tax as a business expense, so you can deduct half of your self-employment tax from your net income. W2 employees, by contrast, have half of their Social Security and Medicare taxes covered by their employer. This 15.3% tax can be burdensome for a self-employed individual, as you have to pay the full amount yourself. The self-employment tax comprises both the Medicare and Social Security taxes. The following deductions are not intended as tax advice (everyone’s situation is unique and should be considered with the help of a tax expert), but hopefully they should give you a general idea of the deductions for which you may qualify. Still, if you keep close track of your business expenses, you can significantly reduce your taxable income and maximize your refund when April 15th rolls around. We all know that tax time can be brutal for the self-employed worker, as you don’t have an employer to share the tax burden. IRS restrictions apply for all items listed above.If you’re a gig worker, sole proprietor, or any other type of independent contractor, there are some tax deductions you need to know about. Please review and comply with IRS guidelines for items listed in this article. This can include new and used machinery, heavy equipment, furniture and fixtures, and certain vehicles, mainly SUVs and pickup trucks (over 6,000 pounds).ĭisclaimer: Please consult a tax professional for details and limitations. Vehicles and Equipment used in Business: Tax Code 179 allows businesses to write off up to $1 million worth of depreciable assets in the year that they are purchased.Retirement Plan Contributions: You can also deduct any contributions to self-employed retirement plans such as SEP-IRAs, SIMPLE IRAs, and solo 401(k)s.Advertising: If you pay for advertising on LinkedIn, Google or Facebook, you can deduct those expenses as well.Interest: Any interest paid on a business loan is tax deductible.Percentage of deduction depends on business use. Phone and Internet Expense: You can deduct your business phone, fax, and Internet expenses. ![]()
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