- August 30, 2023
Are you a self-employed person and looking to reduce the tax liability burden? Then this article is curated for you! There are various advantages and tax benefits available for self-employed individuals to minimize the overall tax liabilities. Most of them are not aware of the strategies that they can get deductions from paying their taxes. In this article, Tax2efile provides you the advice on how to maximize your savings that every self-employed individual should be aware of.
Tax deductions for freelancers and Self-employed Individuals
Under some eligible criteria, Freelancers and independent contractors have several opportunities to minimize their overall tax liabilities. Utilizing those benefits, you can compensate for your business expenses and reduce your payable income tax.
Home Office Deduction
To get the home office deduction benefit you must meet two IRS rules. First, to run your business you should allocate a portion of your home exclusively for your business. Second, it should be your primary business location. Then, identify and measure the square footage of the home’s portion that you allocated for your business and the percentage is considered as the deductible from your rent, utilities, mortgages, and more. Alternatively, calculate $5 per square foot allocated to your home for business.
Startup Businesses
Startup businesses started in the same year have the opportunity to claim deductions that they spend for research, initial marketing efforts, product purchases, professional fees, etc. Startups like S Corporation or LLC can also deduct their expenses.
Transportation Deduction
Self-employed individuals and freelancers can use transportation deduction tax when traveling to meet their clients. Business-related travels, purchase of goods and supplies, and attending official meetings, and conferences are included in the transportation deduction tax. If you are using your own vehicles for business transportation purposes, you should maintain your expense logs, billing receipts for repairs, fuel filling, and mileage report.
Tax Deduction for Self-Employment Health Insurance
To get the benefit of self-employed health insurance tax, self-employed individuals must own the business and should achieve the net profit of the year. Self-employed people can use this program for themselves, their spouses, and any dependents in their family. The plan also covers children under the age of 27. This discount does not apply when your spouse is covered by a health insurance plan.
Credit Card and Loan Interest Deduction
Self-employed individuals who use credit cards or loans for business purposes could receive tax deductions. Using credit cards to buy products for your business or travel expenses for business purposes, the interest you pay on the debt is deductible. If you are using loans and credit cards for personal expenses, it is not applicable.
IRS Tax Deductions for Keeping Your Business Skills Sharp
IRS allows self-employed individuals to develop their skills in their current profession. Self-employed can get a tax deduction to pursue courses or skill development pieces of training that are related to their professions. Paying tuition fees, expenses for buying study materials, lab fees, transportation expenses and more can self-employed individuals claim. However, these benefits are not applicable if pursuing a course or training for a new profession.
Get Assistance from Authorized Tax Professionals
Getting support from authorized tax professionals is a wise choice for self-employed individuals. Experts from Tax2efile have the knowledge and experience to solve the complexities of tax-related problems and assist in getting maximum benefit by deducting your payable tax liabilities. Our online tax filing application offers you a seamless tax filing process and ensures your filings are safe and secure.
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