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18 Tax Deductions for the Self Employed

Posted By Madison On In Tax Tips | Comments Disabled

Self employed tax deductions are an important part of offsetting your extra income [1] when filing your federal tax return. For example, if you are flying for business, one of the 7 Commonly Overlooked Tax Deductions [2] is baggage fees!

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

Tax Deductions for the Self Employed

The tax deadline [3] is just around the corner; 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.

You can use TurboTax [4] to enter your tax deductions yourself or you can provide the amounts to your tax accountant.

Self Employed Tax Deductions

  1. Internet Access. Both at home and in coffee shops that you 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. Did you buy a new business laptop before December 31? If so, it’s deductible.
  6. Advertising. Advertising costs are deductible. This includes prizes for giveaways if you purchase the prizes.
  7. Credit Card Fees to Pay Taxes. If you use a credit card to pay tax (to earn a profit) [5] you can deduct the convience fees you pay on business tax payments and on qualified personal tax payments.
  8. Tax and Accounting Software. Software you buy to keep the books for your business is deductible. I use Quickbooks [6].
  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 [7] 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 [8] or other qualified plan are deductible.
  15. Self Employment Tax. Half of the self employment tax [9] you pay can be deducted.
  16. Home Office Deduction. If you work from home, you can deduct the costs associated with maintaining an exclusive home office on form 8829 as a Home Office Tax Deduction [10]. You can include a portion of real estate tax, mortgage interest [11], insurance, maintenance, utilities, office furniture, casualty losses and depreciation.
  17. Health Insurance. Part of your self employed health insurance costs [12] are deductible if you were not eligible to take part in an employer-subsidized health plan. However, to determine the amount, there is an iterative calculation if you also qualify for the Health Insurance Premium Tax Credit [13].
  18. Cost of Goods. If you are selling products on Amazon [14] or any other platform, don’t forget to deduct the product costs when they are sold.

More Self Employed Tax Topics