Tax Deductions for the Self Employed

My new business partner wanted to know what he needed to keep track of for his new venture into self employment this year. I ran through the list of self employed business deductions I have used in the past to get him started.

While I was working on the list, it occurred to me that many of you could also benefit from this information. This list is not a complete list, but rather the deductions that I routinely use. Most of the deductions are taken on Schedule C unless otherwise noted.

Self Employed Tax Deductions

1. Internet Access. Both at home and in coffee shops that I work at for WI-FI access.
2. Website Expenses. Fees paid to purchase domains, hosting, and other fees associated with running a website.
3. Cell Phone. You cannot deduct the primary phone line at your house, but if you have multiple lines or a cell phone you use for business, the extra lines are deductible.
4. Contract Labor. Independent contractor’s that you hire to complete work are not employees, but the payments can be deducted.
5. Computer. I bought a new business laptop on December 31. You can either depreciate the cost over multiple years or deduct it all at once using section 179.
6. Advertising. Advertising costs are deductible.
7. Prizes for Giveaways. If you purchase the prizes, you can deduct the cost.
8. Tax and Accounting Software. Software you buy to keep the books for your business is deductible.
9. Filing Fees. You can deduct fees you pay to the state to maintain your business license.
10. Postage and P.O. Box Fees. Don’t want your business mail going to your home address? Set up a P.O. Box and deduct the cost.
11. Office Supplies. In addition to postage, you can deduct the cost of paper, pens, etc.
12. Mileage. You can deduct business mileage on your personal car. Make sure you keep good records.
13. Business meals. Business meals are deductible at a rate of 50%.
14. Retirement Contributions. Contributions to a Solo 401k or other qualified plan are deductible on line 28.
15. Self Employment Tax. Half of the self employment tax you pay can be deducted on line 27.
16. Home Office Deduction. If you work from home, you can deduct the costs associated with maintaining an exclusive home office on form 8829. You can include a portion of real estate tax, mortgage interest, insurance, maintenance, utilities, office furniture, casualty losses and depreciation.

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