As you may know when you become self-employed your taxes
become much harder to keep up with. To save money in this economy you will need
all the self employed tax deductions you
can get. So here are ten tax tips that can save you some real cash.
1. Your home office can be a good place to start. Put
together a map that outlines your work space in your home including the
restroom. You cannot deduct your entire home but just the part you work in.
Things like a portion of mortgage, utilities, home insurance, property tax and
maintenance done that year can all be a self employment tax deduction based on
how much of a percent of your home is for work.
2. You can deduct all of your health and dental insurance
premiums if you pay for it yourself and you are not able to qualify for your
spouse's employer plan. If you cover your whole family then you can deduct them
as well. This is only for self employed people so take advantage of it.
3. Meals and entertainment can also be a good source for tax
deductions. Just make sure you keep the receipts and do some work before or
during the activity. You can get up to 50% off. Keep a chart of who you were
with and when it took place. Also what business was discussed. Do this right so
you will not get audited.
4. Your phone and internet use too can be a deduction. Make
sure you only take out the portion that relates to your business. But if you
keep a second line that is only for business then you can take the full cost
off.
5. The interest occurred on the business loans and credit
cards can also save you some money. With credit cards you must only deduct the
interest that you got when you purchase something that is for your business.
6. The miles you put on your car for business travel is a
difficult self employment tax deduction. The tip here is to use the standard
mileage rate determined annually by the IRS. Keep track of the miles you drive
and the dates. Then add up all the miles and multiply the total miles by that
years rate and that will give you your amount. You can use the actual expense
method but that requires much more detail work. If not done right then prepare
to be audited.
7. If you have a specific publication that is related to
your work then you can deduct the cost. This is not your local newspaper. If
you are a fisherman and you subscribe to a fishing licensing journal then you
could deduct that expense.
8. 100% of your travel expenses are deductible for out of
town visits only. If you stay over night then you can deduct the hotel cost and
50% of meals and entertainment. If not then you can only take out the cost to
get there and back.
9. Any education you acquired that is related to your
business can also be a tax deduction. But do not try to save on classes that
have nothing to do with your current company.
10. Self employment retirement plans can be the best tax
deduction of all. If you make around $250,000 a year you can contribute up to
25% of your net income to a Simple IRA or Keogh plan. If you make less than
that then you can contribute to both a self employed retirement plan and an
IRA. You must be in the IRA's income phase-out limit.
Hope you found these ten tax tips useful. These self
employment tax deductions can save you a lot of money when you do your taxes.
Just make sure you follow the tax laws very carefully or you could end up on
the IRS's audit list.
If you are looking for to get information about pension plans, safe harbor 401(k) plans visit www.pensiondeductions.com
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